ANIL KUMAR BATAR,SIKAR vs. PCIT-JAIPUR-2, JAIPUR

PER DR. S. SEETHALAKSHMI, J.M. This appeal by the assessee is directed against the revision order dated 10.03.2025 passed by the ld. Principal CIT-2, Jaipur under section 263 of the IT Act for the assessment year 2018-19. 2. The assessee has raised the following grounds of appeal :-

4. The appellant prays your honors indulgence to add, amend or alter all or any of the grounds of the appeal on or before the date of hearing.”

In response thereto assessee has filed the stating that “With reference to your above notice wherein your good self has alleged that assessee has received advance of Rs. 75,00,000/- form M/s Matrix JEE, Sikar. This cash receipt of Rs. 75,00,000/- stand unexplained cash receipts in the hands of the assessee. In this regard it is submitted the assessee has given his premises to M/s Matrix JEE, Sikar on rent against which he has received the Rs. 19,60,875.00 as rental income and has shown in his return of income filed during the year vide copy of ITR of total income enclosed. But the assessee has not received such advance cash receipts of Rs. 75,00,000/- from M/s Matrix JEE, Sikar during the year.(PB9).However despite the ld. AO issued the notice u/s 148A(d)/ Thereafter, the assessee filled return declaring the same income and issued the notice u/s 142(1) time to time (PB16-27), in response thereto the assessee filed the details and reply(PB 28-38).

In the replies which is also reproduced in the assessment order has explained all the things and details. Thereafter the ld. AO completed assessment on 18.03.2023 u/s 143(3) r.w.s. 147/144B of the Income Tax Act in the “FACELESS MANNER” by NFACafter carried out through a teamwork of assessment unit, technical unit, review unit, verification unit etc.Where the ld. accepted the contentions i.e. the ld. AO considered, examined and verified the same and also examined. Thereafter the assessment was completed u/s 147/144B on dt.18.03.2023 after examination all the details. During the course of assessment proceedings the assessee had filed various details as required by the ld. AO.

3. The ld. AO noted that at page 2 and 3 of the assessment order that in response to the query, the assessee replied to these notices on 21.08.2022 and 09.03.2023, reply submitted by the assessee was taken into consideration. Final Show Cause Notice on 07.03.2023 was served to the assessee. The assessee submitted his reply on dated 09.03.2023 Subject to the above discussion, total Income of the assessee is assessed at Rs.19,89,250/-. Vide assessment order u/s 147/143(3) dt.18.03.2023 by taking a reasonable and possible view.

4. Thereafter the ld. Pr. CIT-2, Jaipur has issued the notice u/s 263 on dt.28.01.2022 by alleging that “In view of the above the assessment order prima facia is found to be erroneous as theassessing officer has erred in correctly computing the total income u/s 143(3) r.w.s 147/144Bof the Act. on the issue vide notice dt.28.01.2025(PB41-42). In this notice the ld. Pr. CIT has alleged that:

The AO has failed to determine proper tax liability attributable to the cash transactions made by you during the FY – 2017-18 relevant to AY – 2018-19. Since, the AO vide order dated 18/03/2023 has failed to compute total taxable income in respect of the above cash transactions made by you duringFY – 2017-18, therefore, the said assessment order “In view of the above the assessment order prima facia is found to be erroneous as theassessing officer has erred in correctly computing the total income u/s 143(3) r.w.s 147/144Bof the Act.

Hence the ld. Pr. CIT has issued notice u/s 263 to the assessee on dt.28.01.2025.

5. In response thereto the assessee has prepared the detailed reply explanation with details explaining all the facts, details on 10.02.2025 by stating all the details/informations (PB43-54).

6. However the ld. PR. CIT did not feel satisfy with the reply and summarily has observed as under:

A perusal of records clearly shows that the AO had not verified the cash transaction of Rs. 75,00,000/-. Thus, the reply of the assesseis found not tenable. The same reply was again furnished by theassesse on 05/03/2025.

4. In view of above, the undersigned hereby proposes to revisethe assessment order dated 18/03/2023 passed by the AO, which isfound to be erroneous.

Explanation 2 to section 263 explicitly deems an ordererroneous if it is passed without making inquiries or verificationwhich should have been made or by allowing any relief withoutinquiring into the claim. This provision, introduced by theFinance Act, 2015, clarifies that the lack of due inquiry orverification by the Assessing Officer constitutes valid groundsfor invoking jurisdiction under section 263.

6. Applying these judicial principles to the present case, it isevident that the Assessing Officer failed to verify the financialtransactions of Rs. 75,00,000/- made by the assesse during the FY– 2017-18 relevant to AY- 2018-19. Therefore, by virtue of powersconferred to under the provisions of section 263 of the Income TaxAct 1961, I hold that the order passed on 18/03/2023 for A.Y. 2018-19 by the Assessing Officer is erroneous and prejudicial to theinterest of revenue.

Sh. Anil Kumar Batar, Sikar. 7. Accordingly, the AO is directed to make a fresh assessmentafter making a proper verification of the transaction of Rs.75,00,000/- made with Matrix JEE Academy, Sikar and afterfollowing the due process of law.

Thus the ld. Pr. CIT has setaside the assessment to be made afresh. Hence this appeal:

SUBMISSIONS: 1. Wrong order and action u/s 263: 1.1 Action of the Pr. CIT is invalid and without jurisdiction: It is submitted the action and direction of the ld. Pr. CIT is without jurisdiction and invalid on the facts and legal position because the ld. Pr. CIT has right or jurisdiction of revision u/s 263 only when the order of the AO (i) is erroneous in so far as (ii) it is prejudicial to the interests of the revenue. S. 263 provides as under “263. (1) The Pr. Commissioner or Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the [Assessing] Officer is erroneous in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment.” [Explanation 2.—For the purposes of this section, it is hereby declared that an order passed by the Assessing Officer shall be deemed to be erroneous in so far as it is prejudicial to the interests of the revenue, if, in the opinion of the Principal Commissioner or Commissioner,— (a) the order is passed without making inquiries or verification which should have been made; (b) the order is passed allowing any relief without inquiring into the claim; (c) the order has not been made in accordance with any order, direction or instruction issued by the Board under section 119; or (d) the order has not been passed in accordance with any decision which is prejudicial to the assessee, rendered by the jurisdictional High Court or Supreme Court in the case of the assessee or any other person.] We would like to submit that the assessment order shall be erroneous in so far as it is prejudicial to the interests of the revenue, if the four Sh. Anil Kumar Batar, Sikar. conditions laid down in explanation-2 of 263 is fulfilled but in the present case the same is not applicable because of following reasons (a) the order is passed without making inquiries or verification which should have been made:- In the present case the ld. AO passed the assessment order after making all the in inquiries or verification which is very clear from the record itself that is why the ld. Pr. CIT has used the word proper verification which is not given u/s 263. (b) the order is passed allowing any relief without inquiring into the claim :-In the present case the ld. AO passed the assessment after examining the details after making the inquiring on the issue on the basis of which the case was reopened u/s 148 which is very clear from the record itself that is why the ld. Pr. CIT has used the word failed to verify which is wrong and which is not given u/s 263. (c) the order has not been made in accordance with any order, direction or instruction issued by the Board under section 119:- There is no any direction in the present case admittedly (d) the order has not been passed in accordance with any decision which is prejudicial to the assessee, rendered by the jurisdictional High Court or Supreme Court in the case of the assessee or any other person.]:- there is no such decision. If so then how the action can be taken u/s 263, hence liable to be quashed. 1.2. Notice u/s 263 itself illegal invalid void-ab-initio: Firstlythe notice u/s 263 itself invalid and not as per sec. 263, because the notice u/s 263 can be given only if in the view of the ld. PCIT the assessment order passed by the ld. AO are “erroneous in so far as it is prejudicial to the interests of the revenue”. However in the notice u/s 263 in concluding parai.epara 2 page 2 of the SCN u/s 263 (PB42) the ld. CIT(A) has stated only that “In view of the above the assessment order prima facia is found to be erroneous as theassessing officer has erred in correctly computing the total income u/s 143(3) r.w.s 147/144Bof the Act.” Thus in the notice u/s 263 by the ld. PCIT held only one condition “erroneous” not held second condition “in so far as it is prejudicial to the interests of the revenue” when there is no proper satisfaction of the ld.PCIT as per sec. 263 and not fulfilled both the condition and primary condition in the SCN, hence when the Notice u/s 263 itself illegal invalid void-ab-initio, then all the consequent proceedings and order is illegal and bad in law and liable to be quashed.

1.3On perusal of the order of the ld. AO as well as the order of the ld. Pr. CIT itself it is very clearly proved that the order of the AO has neither erroneous nor prejudicial to the interests of the revenue. Because aswe would like to draw kind attention of the honble bench that in the above Sh. Anil Kumar Batar, Sikar. matter the case of the assessee has been reopened u/s 148 was issued for purpose to verify and examination of alleged cash receipts of Rs.75,00,000/- from M/s Matrix JEE, Sikar and this very issue replied u/s 148A(b) and also in the course of assessment itself. 1.4 Thereafter the ld. AO has issued the detailed query letter to the assessee u/s 142(1) raising various query (PB 16-27) and asked to the assessee to produce the all the details and replies. In response thereto the assessee has furnished all the details admittedly vide replies to AO (PB 28-38) with the details. As the ld. AO has also raised the query regarding to this issue itself vide page 3 of the query letter 142(1) dt.26.08.2022 (PB19) which have also respond by the assessee vide reply to AO (PB38-33). Thus during the course of assessment proceedings the AO verified the all the details and query as taken by the ld. Pr. CIT in his notice u/s 263. And the AO did examine all these details, record and discussion with the assessee, after that the ld. AO had taken a possible view being a quasi judicial authority. That is why the ld. AO has noted same in the assessment order at page 2-7. Thereafter he completed assessment at Rs.19,89,250/- vide assessment order u/s 147/144Bdt.18.03.2023 by taking a reasonable and possible view. Here we want to say that if the ld. AO has not examined the issues he could have not made the assessment. When the assessee has filed reply on the same (PB28-38) with all the details and income and verified the same. 2.Covered Matter:On these preposition kindly refer the recent or direct decision of this Honble ITAT Jaipur bench in the case of Sajjad Ali v/s DCIT(Intl.) Jaipur in dt.24.06.2024where under the same facts and circumstances the Honble ITAT quash the 263 order, copy enclosed, and we rely upon the finding given at page 34 to 46 of this judgment as our submission before your honor. 2.1Also refer decision of the Honble ITAT Jodhpur bench in the case ofLodha Offset Ltd. vs. Pr. CITITA No. 155/Jodh/2018 19th March, 2020Prateek Metals Pvt. Ltd. vs. Pr. CIT 19th March, 2020NokhaAgroSevices vs. Pr. CIT ITA No. 171/Jodh/2018 20th March, 2020 2.2 Further the ld. Pr. CIT has not gone in to the merit of the assessee’s case or argument or contentions, if so than how it can be said or found out whether any prejudice in fact has been caused to revenue or not by lack of inquiry on the part of the AO. If no loss of revenue is caused and the result remains the same even after conduct the inquiry. It is very settled principal and legal position by various courts or judgments that it will be wrong to say that merely because proper enquiry or verification was not conduct, the assessment would become prejudicial also. It was incumbent upon the PR. CIT to have shown as to how the order was Sh. Anil Kumar Batar, Sikar. prejudicial to the interest of the Revenue. In the present case the appellant has furnished a detailed reply (PB 43-54)with the details(1-40) to the show cause notice by making the reference to the facts of the case and legal position. Despite that the Pr. CIT did not prove or bring any material or circumstantial evidence on record that the details contentions of the assessee on these issues are not genuine, bogus, not verifiable and not correct.

3. Case reopened u/s 148 for limited issue: Further when the very basis of reopening of the case under section 148 was on account of same issue i.ealleged advance of Rs.75,00,000/- from M/s Metrix JEE, Sikar as alleged unexplained cash receipts”, then how it can be said that the AO has failed to make the inquiry, where the scope of inquiry is limited only to the extent of that issue and in the action u/s 148 this same issue was taken and also examined in assessment. And till date the position is same there is no change. It was not a regular assessment it was a reassessment for the limited purpose or issue and on perusal of the entire record or detailed it cannot be said that the ld. AO has not made inquiries. ”. Vide copy of reasons recorded (PB8). If so then how the ld. Pr. CIT can assume the jurisdiction on this issue again when the same already has been examined u/s 148 in this preposition we would like to draw your kind attention to the following (3.1) In the case of CIT vs. Software ConsultantsDelHC (2012) 341 ITR 0240 it has been held that Revision—Revision by Commissioner of orders prejudicial to Revenue—Erroneous and prejudicial order— Lack of enquiries—AO reopened the assessment on ground that assessee had made investment in form of FDR of Rs.20 lakhs but in the assessment order passed under s. 147/143(3), AO accepted that assessee had established and proved the source and their capacity to invest Rs.20 lakhs and accordingly no addition was made on this account—The return filed by assessee showing loss was accepted— CIT viewed that AO had earned in determining loss after issue of notice under s. 148 as no necessary enquiries conducted by AO in respect of share application money—Tribunal held that the order of AO could not be regarded as erroneous even if AO had failed to carry out necessary verification and required enquiries in respect of share application money, as no addition had been made on account of the reasons for reopening, which were recoded before issue of notice under s. 148—Thus, AO had failed to carry out necessary verification and required enquiries in respect of the share application money, as no addition had been made on account of the reasons for reopening, which were recorded before issue of notice under s. 148 of the Act—It has been held that the AO could not have made an addition on account of share application money as no addition has been made on account of Sh. Anil Kumar Batar, Sikar. FDRs of Rs.20 lakhs—Held, AO did not make any addition for the reasons recorded at the time of issue of notice under s. 148—That position was not disputed and disturbed by CIT(A) in his order under s. 263 of the Act—Hence, AO could not have made an addition on account of share application money in the assessment proceeding under s. 147/148—Accordingly, assessment order was not erroneous—Thus, CIT could not have exercised jurisdiction under s. 263 (3.2) Also covered by the decision of this Honble ITAT in the case of Palsana Gram SevaSahakariSamiti Ltd. V/S PCIT-3 Jaipur in to 37/Jp/2021 dt. 02.11.2021 Where it has been held that ”we found that for the year under consideration, the A.O. on the basis of information from DDIT(System) issued notice U/s 148 of the Act on 30/03/2017 after recording the reasons, as the reason was cash deposits of Rs.50,55,800/- in the bank account. In response of which the assessee filed its return of income on 28/04//2017 declaring total income of Rs.1,08,464/- and claimed the deduction u/s 80P. Thereafter, Scrutiny assessment was started by the A.O., who had issued statutory notice U/s 143(2) and also 142(1) of the Act dated 06/06/2017 thereby raising query and in his query letter which has been responded by the assessee vide filing reply which has already been placed on record at page No. 3-4 and 6-11 of the paper book. The A.O. thereafter considered, examined and verified the same and also examined the books of account which have been placed on record by the assessee. Thereafter, the assessment was completed U/s 148 r.w.s 143(3) of the Act by the A.O. vide his order dated 30.06.2017 after examining all the details.

12. We observed that the ld. PT.CIT or the Commissioner may call for and examine the record of any proceeding U/s 263 if he considers that any order passed therein by the A.O. is erroneous in so far as it is prejudicial to the interests of the revenue. However, on perusal of the order passed by the A.O. as well as order passed by the ld. Pr.CIT, we found that it is clearly manifest that in the present case, the case of the assessee was reopened U/s 148 of the Act on the ground that the A.O. had got information from the DDIT(System) that there was cash deposits of Rs.50,55,800/- in the assessee's bank account maintained with Punjab national Bank of India during F.Y. 2009-10 relevant to A.Y. 2010-11 and the assessee has not filed return of income. Thereafter, the A.O. issued statutory notices and seeking queries from the assessee and in reply thereof, as discussed above, the assessee had produced all the details, copies of all the sources of income, submitted details of all the bank accounts, details of cash deposits in the bank accounts, cash book and bank book and relevant books of account for verification. In response thereto, the assessee had also furnished all the details admittedly vide replies to the A.O. which is at page No. 3 to 4 and 6 to 11of the paper book and this fact has also not been disputed by the ld. PT.CIT in its order which goes to show that after examining all the documents, verifying all the details, the A.O. had taken a plausible view being a quasi judicial authority i.e. on Sh. Anil Kumar Batar, Sikar. the reason the A.O. in his order of assessment had categorically mentioned that "the assessee attended and submitted the requisite details, information and clarifications sought for as per notices and order sheet entries. The above specific finding recorded by the AO goes to show that the AO had taken a reasonable and plausible view after examining all the details as were required for surviving the A.O. in respect of the issue of cash deposits, which was under consideration before the A.O.

Sh. Anil Kumar Batar, Sikar. which was not challenged by assessee—Subsequently, on basis of certain audit objections, PCIT issued notice u/s 263—Assessee submitted that it is a case outside jurisdiction of Commissioner of Income tax to raise objections outside scope of limited scrutiny—PCIT ordered for 'Denovo' assessment without considering reply filed by assessee—Held, there is no dispute that scope of enquiry in case of limited scrutiny is only to extent of issues for which case was selected for scrutiny under CASS—CBDT has issued instructions from time to time in this respect and has specifically instructed taxing authorities that scope of enquiry should be limited to verification of all particulars for which limited scrutiny was taken up under CASS—However, in case during assessment proceeding if AO is of view that substantial verification of other issue is also required then case may be taken up for comprehensive scrutiny with approval of Pr.CIT/DIT concerned— It is also instructed that such an approval shall be accorded by Pr.CIT/DIT in writing after being satisfied about merits of issue(s) necessitating wider and detailed scrutiny in case—AO is duty bound to follow instructions in case limited scrutiny assessment proceeding are proposed to be converted into complete scrutiny and without following said procedure and necessary approval of competent authority conducting an enquiry on issue which is outside limited scrutiny would be beyond jurisdiction of AO—As a necessary corollary, Pr. CIT u/s 263 cannot be permitted to traverse beyond jurisdiction that was vested with A.O while framing assessment as what cannot be done directly cannot be done indirectly—Therefore, where matter was selected for limited scrutiny, revisional jurisdiction cannot be exercised for broadening scope of jurisdiction that was originally vested with A.O while framing assessment—As per PCIT, reason for which matter was selected for limited scrutiny i.e, mis-match of sales turnover vis-à- vis ITR, CIB & AIR has a direct bearing on opening and closing stock of cost of construction and W.I.P and in turn, on taxable income, therefore, AO was duty bound to examine these issues and AO having failed to examine these issues, AO has effectively failed to examine issues for which matter was selected for limited scrutiny—As far as matters for which case was selected for limited scrutiny in terms of mis-match of sales turnover, same has been duly examined by AO and even PCIT has not recorded any adverse findings in terms of lack of enquiry or inadequate enquiry on part of AO—Order passed by PCIT u/s 263 is set aside—Assessee’s appeal allowed.” (2.4)In the case of Paul Bharwaj vs. Pr.CIT in 13, 2021 (2021) 62 CCH 0120 ChdTribRevision— Order erroneous or prejudicial to revenue—Overexercise of power— Assessee an individual filed his return declaring income and agricultural income—Case was selected for limited scrutiny for reason that there was a substantial increase in capital during year relevant to assessment year under consideration—AO accepted return filed by assessee—Pr. CIT issued notice to assessee u/s 263 and directed AO to Sh. Anil Kumar Batar, Sikar. make assessment afresh on issues mentioned in notice—Held, Tribunal in case of M/s Su-Raj Diamond Dealers Pvt. Ltd. CIT Mum has quashed order passed u/s 263 in case of limited scrutiny assessment, holding that Pr. CIT under garb of section 263, cannot exceed his jurisdiction holding that when case of assessee was selected for limited scrutiny for reasons viz. (i) Large other expenses claimed in P&L A/c; and (ii) Low income in comparison to High Loans/advance /Investment in shares, therefore, no infirmity could be attributed to assessment framed by A.O on ground that he had failed to deal with other issues which though did not fall within realm of limited reasons for which case was selected for scrutiny assessment—In other words, Pr. CIT in garb of his revisionaljurisdiction u/s 263 cannot be permitted to traverse beyond jurisdiction that was vested with A.O while framing assessment—As A.O had aptly confined himself to issues for which case of assessee was selected for limited scrutiny, therefore, no infirmity can be attributed to his order, for reason, that he had failed to dwell upon certain other issues which did not form part of reasons for which case was selected for limited scrutiny under CASS— Case of assessee was selected for limited scrutiny under CASS for reason that there is substantial increase in capital in relevant year and AO passed assessment order and accepted return filed by assessee after examining issue regarding increase in capital account as assessee had credited his capital account with agricultural income and capital gain from sale of flat—Assessee has reflected that same in its capital account—Further in response to letter issued by AO during assessment proceedings, assessee submitted his reply explaining reason for increase in capital—However, Pr. CIT exercising jurisdiction under section 263, directed AO to make fresh assessment on issues which were not subject matter of limited scrutiny—Since, issue raised by assessee in this case has already been decided in favour of assessee Pr. CIT(A) has exceeded jurisdiction u/s 263 by directing AO to make fresh assessment on issues which were not subject matter of assessment framed on basis of limited scrutiny—Assessee’s appeal allowed. Thus in the present case the position are same and the principal of the above judgments are also applicable in the present case.

Thus in the light of the facts and position the Pr. CIT cannot be said to be justified in holding that assessment order was passed without making inquiry or verification when firstly the case of reopened for the limited purpose secondary despite the same assessee has produced all the details which examined and deduction allowed 4.As before the ld. Pr. CIT through letter dt.10.02.2025(PB43-54) we had explained that Sh. Anil Kumar Batar, Sikar. “7. Regarding the issue in hand theassessee has submitted before the ld. AO as under: “ Regarding advance amount in cash Rs.75,00,000/-: In this regards it is humbly submitted that your humble assessee has not received any advance amount in cash from M/s Matrix Jee Academy, Sikar. The amount paid in cash as shown in the table was never received by the assessee as Advance against for building construction. In this context it is worth to mention here that any advance amount cannot be commensurate as for part of income and cannot be taxed. It is further submitted that the impugned reason are merely based upon a third party information that are too unreliable and misinterpreted. Third party information only an information and does not constitute “reason to believe” until and unless the third party information is subjected to further investigation i.e. in our case where and how this handsome amount reflect in the books of accounts of Matrix Jee Academy and why paid in cash by M/s Matrix Jee Academy. Finally it is again humbly submitted that we have not taken any advance payment for building construction from M/s Matrix Jee Academy. Following are some other facts of the para which are also replied as under for your kind consideration. i. During the year under consideration the assessee received Rental Income 53,40,603.00 (Including from M/s Matrix Jee Academy, Sikar Rs.19,60,875/-) which has already been shown under the head of Income from House Property. Hence all the Rental Receipts under the heads of Income from House Property has been properly shown in the head of Income from House Property has been properly shown in the return of income for the year under consideration. ii. As it has already been stated in Para1 as above that assessee earned rental income and interest income, therefore not liable for maintain any cash book and bank book. Hence such cash book and bank book is not available with the assessee. iii. The same fact has already been submitted with the hon’ble assessing officer in response on notice u/s 147 that assessee has never any cash amount in advance from Matrix Jee. The said reply has been uploaded at ITD Portal on 21.03.2022.

5. The copy of bank statements (3 nos.) are also enclosed herewith for your kind consideration.”

6. The assessee has also filed the affidavit of the tenant (PB 39-40) where he has clearly stated that he has not given any cash amount as an advance to him(assessee) in any year or any time. However the ld. PCIT has not speak a single word on this while passing the orderi.e he has not rebutted the affidavit filed by the assesseeand the contention made in the letter of affidavit should be accepted as truth unless rebutted. Because these affidavits have not been rebutted by lower authority by bring any contrary evidence or without examining. It is very settled legal position that in the cases where affidavit has been filed yet the contents thereof have not been rebutted by the AO/authority, the facts mentioned therein have to be read as the facts binding upon the Income Tax authorities. Kindly refer Mehta Pareek& Co. 30 ITR 181 (SC), ITO v. Dr.TejgopalBhatnagar 20 TW 368 (Jp)Paras Cotton Company vs. CIT (2003) 30 TW 168 (JD)., CIT v/s LunardDimond Ltd. 281 ITR 1 (Del). Recently in CIT v/s Bhawani Oil Mills (P) Ltd 239 CTR 445/49 DTR 212(Raj.)- It has been held that contents of affidavit could not be treated as of a lesser importance than the statement given by the creditor before the AO. Recently this Honble ITAT in the case of NarayaniBaiDangi v/s ITO Ward 2(1), Udaipur in dt.13.10.2023 it has been held that we respectfully relied on the order Mehta Parikh & Co, (supra). The revenue has not acted in proper manner to verify the nature of land and had not confronted the affidavit filed by assessee. The ld. DR was unable to submit any contrary judgment against the submission of the assessee. In our considered view, the revenue has not taken any pain to complete the verification or has not confronted the affidavit of the assessee during the appeal stages. So, the ground of the assessee is accepted by the bench. We set aside the appeal order and the addition amount to Rs. 15,53,112/- is quashed. Also refer the decision of VimalChatur v/s ITO Ward 2(2), Udaipur 351/Jodh/2023 dt. 26.04.2024 where the it has been held that We have heard the rival contention and perused the material placed on record. We observed that the assessee and his wife namely Smt. KanakLatChajed both are Senior Citizen, Retired Govt. Employee and pensioner. The assessee has filed the cash flow statements of last five years available at page 16 of the CIT(A) order and at page 18 of the paper book alongwith cash flow statements. The assessee has also filed the day wise cash withdrawals and deposit which are available at Page 19 to 30 of paper book. The lower authorities have only doubted the Sh. Anil Kumar Batar, Sikar. cash flow statements but could not disproved with any contrary evidences about the withdrawal of cash and its source. The assessee has also filed a family settlement of her wife family vide PB31-32, where she got Rs.3,61,000/- which is also available with the assessee and the lower authorities has discarded or disbelieved without examining and without bringing any adverse evidence. The assessee has also filed the affidavit of his wife namely Smt. KanakLataChhajed before CIT(A), which is produced before us at page 16-17of paper book. We note in the affidavit she clearly stated that the bank accounts were jointly owned and she had deposited the cash of Rs.15,59,000/- in these bank accounts, this affidavit has also been remained uncontroverted. It is settled law that the contents of an affidavit should be read correct and full unless not controverted. 8.1 To support his arguments the Ld. AR for the assessee has also drawn our attention to the judgments of Hon'ble Supreme Court in the case of Mehta Parikh & Co. v. Commissioner of Income-tax, [1956] 30 ITR 181 (SC) wherein Court has held as that:- " It has to be noted, however, that beyond these calculations of figures, no further scrutiny was made by the Income-tax Officer or the Appellate Assistant Commissioner of the entries in the cash book of the appellants. The cash book of the appellants was accepted and the entries therein were not challenged. No further documents or vouchers in relation to those entries were called for, nor was the presence of the deponents of the three affidavits considered necessary by either party. The appellants took it that the affidavits of these parties were enough and neither the Appellate Assistant Commissioner, nor the Income-tax Officer, who was present at the hearing of the appeal before the Appellate Assistant Commissioner, considered it necessary to call for them in order to cross-examine them with reference to the statements made by them in their affidavits. Under these circumstances it was not open to the Revenue to challenge the correctness of the cash book entries or the statements made by those deponents in their affidavits. This being the position, the state of affairs, as it obtained on 12th January, 1946, had got to be appreciated, having regard to those entries in the cash books and the affidavits filed before the Appellate Assistant Commissioner, taking them at their face value. The entries in the cash books disclosed that, taking the number of high denomination notes at 18 on 2nd January, 1946, there came in the custody or possession of the appellants after 2nd January, 1946, and up to 12th January, 1946, 49 further notes of that high denomination, making 67 such notes in the aggregate, out ofwhich 61 such notes could be encashed by the appellants on 18th January, 1946, through the Eastern Bank. A mere calculation of the nature indulged in by the Income-tax Officer or the Appellate Assistant Commissioner was not enough, without any further scrutiny, to dislodge the position taken up by the appellants, supported as it was, by the entries in the cash book and the affidavits put in by the appellants before the Appellate Assistant Commissioner.” Considering the reconciliation and cash flow statement filed by the assessee along with family settlement deed and affidavit of assessee’s wife, wherein she owned responded of having deposited of cash out of her owned source and saving., Therefore, without controverting the Sh. Anil Kumar Batar, Sikar. fact stated of affidavit by the wife of the assessee, the addition made by the lower authorities even for an amount of Rs. 12,87,100/-is also not sustainable in the hands of the assessee and therefore, the same is directed to be deleted.” Here also the same position Same view has been expressed in the case of Kamal Kumar Gupta v/s Pr. CIT 142 TTJ 9(Jp) wherein it has been held that “assessee was asked by the AO to file the details of trade creditors which are shown in the name of agriculturalist. In the reply, assessee filed written submission enclosing the list of creditors. Thus, the AO made the inquiry and it is not a case of lack of inquiry but can be case of insufficient enquiry. Pr. CIT was not justified in passing the order u/s 263.” In the present case also is the same position. And also followed in the case of Sh. Gyan Chand Jain v/s Pr.CIT 50 TW 109(Jp). Thus in the light of the facts and position the Pr. CIT cannot be said to be justified in holding that assessment order was passed without making inquiry or verification. The ld. Pr. CIT has presented himself that there is a big scams in the case of the assessee. 7.1 No fix formula or limit or extent of Inquiry: Thus, here it is wrong or incorrect case of the Pr. CIT that no inquiry or verification or proper inquiry has been made by the AO on the issue. The AO has made the inquiry admittedly on the above issue.Which is clear on perusal of the query letter and replies and details filed and explained and the AO made inquiry and assessee filed all the details related thereto. No one (AO) can read the mind of other person (Pr. CIT) while doing the work on its sprite and cannot guess the expectation or manner of his superior authority. Here the meaning is that non making of an enquiry may render the subject assessment erroneous, however the process of making enquiries may be endless. For someone, some enquiries may be sufficient (here AO), however, the same may be insufficient for the other (here Pr. CIT). There is no definition of proper inquiry in the act. There is no straight jacket formula or parameter to make inquiry in the assessment proceedings. What is required is that the AO should frame the assessment in accordance with the provisions of the Act, as interpreted and in the light of the relevant judicial pronouncements, as available on the date of framing the assessment or material available before him. The AO being a quasi-judicial authority can also take support from one set of the decisions, if there, in case is a diversions of opinion. He can’t be directed to make an assessment in a particular manner, as specifically prohibited by S.

Sh. Anil Kumar Batar, Sikar. 3909/Mum/201928th December, 2020(2021) 209 TTJ 0409 (Mumbai) delivered by the honble President and vice president as under: “20. Undoubtedly, the expression used in Explanation 2 to Section 263 is “when Commissioner is of the view,” but that does not mean that the view so formed by the Commissioner is not subject to any judicial scrutiny or that such a view being formed is at the unfettered discretion of the Commissioner. The formation of his view has to be in a reasonable manner, it must stand the test of judicial scrutiny, and it must have, at its foundation, the inquiries, and verifications expected, in the ordinary course of performance of duties, of a prudent, judicious and responsible public servant- that an Assessing Officer is expected to be. If we are to proceed on the basis, as is being urged by the learned Departmental Representative and as is canvassed in the impugned order, that once Commissioner records his view that the order is passed without making inquiries or verifications which should have been made, we cannot question such a view and we must uphold the validity of revision order, for the recording of that view alone, it would result in a situation that the Commissioner can de facto exercise unfettered powers to subject any order to revision proceedings. To exercise such a revision power, if that proposition is to be upheld, will mean that virtually any order can be subjected to revision proceedings; all that will be necessary is the recording of the Commissioner’s view that “the order is passed without making inquiries or verification which should have been made”. Such an approach will be clearly incongruous. The legal position is fairly well settled that when a public authority has the power to do something in aid of enforcement of a right of a citizen, it is imperative upon him to exercise such powers when circumstances so justify or warrant. Even if the words used in the statute are prima facie enabling, the courts will readily infer a duty to exercise a power which is invested in aid of enforcement of a right—public or private—of a citizen. [L HirdayNaranVs Income Tax Officer [(1970) 78 ITR 26 (SC)].As a corollary to this legal position, when a public authority has the powers to do something against any person, such an authority cannot exercise that power unless it is demonstrated that the circumstances so justify or warrant. In a democratic welfare state, all the powers vested in the public authorities are for the good of society. A fortiorari, neither can a public authority decline to exercise the powers, to help anyone, when circumstances so justify or warrant, nor can a public authority exercise the powers, to the detriment of anyone, unless circumstances so justify or warrant. What essentially follows is that unless the Assessing Officer does not conduct, at the stage of passing the order which is subjected to revision proceedings, inquiries and verifications expected, in the ordinary course of performance of duties, of a prudent, judicious and responsible public servant- that an Assessing Officer is expected to be, Commissioner cannot legitimately form the view that “the order is passed without making inquiries or verification which should have been made”. The true test for finding Sh. Anil Kumar Batar, Sikar. out whether Explanation 2(a) has been rightly invoked or not is, therefore, not simply existence of the view, as professed by the Commissioner, about the lack of necessary inquiries and verifications, but an objective finding that the Assessing Officer has not conducted, at the stage of passing the order which is subjected to revision proceedings, inquiries and verifications expected, in the ordinary course of performance of duties, of a prudent, judicious and responsible public servant that the Assessing Officer is expected to be.

dt. 05.02.2021 it has been held that if the AO makes inquiry, examines the issue which is born out from the record of the assessment proceedings, then reaches a conclusion in favour of the assessee which is legally possible, the assessment order cannot be characterized as erroneous and prejudicial to the interest of the Revenue. Since none of the four clauses of the Expln.2 to s. 263(1) appies to the case under consideration, revisionary power, even under the enlarged scope of the Expl. 2, was not legally exercisable. 9.1 No requirement of deep investigation: Thus, on the perusal of the order of the Pr. CIT it is very clear that he was of the view that the AO must have made deep investigation or inquiry and in the case of ArvindBhartiyaVidhyalayaSamiti v/s ITO 94 TTJ 614(Jp). Where in held that Deep investigation is outside of the preview of assessment procedure”. And also held there is no case laws which say for deep investigations Because there is no limit of deep investigation. In the Act also no reference of the Deep inquiry or investigation.Alsorefer Gaberial India Ltd. 203 ITR 108 (Bom). That is why Hon’ble SC held in Malabar Fisheries Industries Ltd. 243 ITR 82 (SC) that in each and every type of mistake/ error cannot be made a basis to invoke Sec.263. The case laws available on the subject on this aspect, are distinguishable in as much as those were the cases where no inquiries at all (or very minor reflecting from a short assessment order), which is not at all a case here. Also refer Gyan Chand Gupta V/s PR. CIT 135 TTJ 01(Jp), M/s. Om RudraPriya Holiday Resort Pvt. Ltd. vs. Pr. CIT(2018) 54 CCH 0597 JaipurTrib In CIT v/s Jain Construction 257 CTR 336(Raj.) It has been held that Revision u/s 263—Order erroneous and prejudicial to interest of revenue—CIT issued a Sh. Anil Kumar Batar, Sikar. notice u/s 263 to assessee on ground that assessment order of AO passed u/s 143 (3) was an order erroneous and prejudicial to interest of revenue— Tribunal allowed appeal of assessee—Held, safeguard provided to assessee in section 263 is that mere erroneous orders are not revisable but revisional authority has to further establish with material on record that such erroneous order is also prejudicial to interest of revenue—Twin conditions of assessment order being erroneous and it also being prejudicial to interest of revenue,keeps initial burden on Commissioner, who invokes such jurisdiction—Premise for invoking revisional jurisdiction on the ground that the Assessing Authority made insufficient enquiry or improper enquiry and failed to verify closing stocks in record of assessee, before passing assessment order, falls flat by a bare perusal of assessment order itself—Thus, Tribunal was justified in holding that Commissioner was in error in invoking revisional jurisdiction u/s 263—Mere alleged insufficiency of enquiry in opinion of Commissioner by Assessing Authority, could not permit him to invoke revisional jurisdiction u/s 263—Therefore, essential twin conditions for invoking revisional jurisdiction, were not satisfied. In the case of V.B. Construction (P) Ltd. vs. CIT (2009) 28 CCH 0434 KolTrib held that Revision—Erroneous and prejudicial order—Lack of proper enquiry—There was a time of two years for investigation, the AO had issued questionnaire, the assessee had produced books of account, bills, etc. and replied to various issues raised by AO—Thus, it could not be said that order was passed in haste without making any inquiry on the issues—AO had taken one view where two views are plausible and such view cannot make the order erroneous and prejudicial to the interest of the Revenue—CIT’s view cannot be invoked to substitute the view of the AO—Assessment also does not become erroneous where queries raised during the assessment proceedings are not recorded in the final assessment order. 9.2. On perusal of the order in the present case the ld. CIT has taken action u/s 263 only on the assumption and presumption that the no inquiry has been made by the AO on the issues and not verified. Kindly refer CIT v/s Paras Cotton Co. 288 ITR 211(Raj.) where held that CIT could not have acted on mere assumption. Mere suspicion cannot take place of proof and the order of CIT u/s 263 cannot be sustained. 9.1In CIT V/s GirdhariLal 258 ITR 331(Raj.) it has been held,“When the Assessing Officer after going through the material on record and after considering the explanation of the assessee, made some additions and rejected the books of accounts, it could not be said that he had not applied his mind. It is not always necessary that every assessee in the line of business should have the same rate of profit. The tribunal was correct in cancelling the order under sec 263 of Income Tax Act.” When the assessing officer had considered all the relevant material on record, it was basically a question of facts and it could not be interfered with unless Sh. Anil Kumar Batar, Sikar. the finding of the Tribunal was found perverse. Considering the material on record, it could be said that finding of the Tribunal was perverse. Therefore, the Tribunal was correct in cancelling the order under section 263.” 9.2 Also refer CIT v/s Ganpat Ram Bishnoi 296 ITR 292(Raj.)The record of proceedings clearly shows that the AO has framed his assessment after due application of mind and holding enquiries into all areas, which, according to the CIT have not been at all enquired into and the AO has acted merely on furnishing evidence on one single date. The Tribunal noticed that as per the record of the proceedings, the AO required the assessee to produce documents or material in relation to 10 different items, which included the details of capital contributed by partners, details of purchases made in excess of Rs. 20,000 with evidence, confirmation of unsecured loans, amongst other matters, which the AO desired to enquire into. The assessee has produced desired information. The AO studied the sundry creditors, unsecured loans and desired to furnish affidavits of unsecured loans and details of interest paid. The AO again required the assessee to furnish the details of partners capital accounts and also to produce voucher for expenses and the matter was adjourned. After that, assessment was completed by passing assessment order. These matters clearly indicate that the AO particularly made reference to the matters, which the CIT has opined were not inquired. Thus, according to the Tribunal, the foundation to exercise power under s. 263 was not existing. In the aforesaid circumstances on the finding reached by the AO, no question of law really arises for consideration in this appeal. From the record of the proceedings, no presumption can be drawn that the AO had not applied its mind to the various aspects of the matter. In such circumstances, without even prima facie laying foundation for holding that assessment order is erroneous and prejudicial to interest in any matter merely on spacious ground that the AO was required to make an enquiry, cannot be held to satisfy the test of existing necessary condition for invoking jurisdiction under s.

10. On Merit our submissions are as under: 10.1 kindly refer our Submissions which has also been filed before the ld. CIT vide PB 43-54 also above para4””as part of our WS before your honor. 10.2Contradictory approach of the Revenue: Further it is very admitted facts that the assessee had not received any cash amount from M/s Matrix Jee Academy, Sikar. If the ld. PCIT was of having any doubt or documents which proves that the assessee had received cash advance receipts, then he must have bring the same before on record and out to have confronted to the assessee, but he has failed to do so rather taken action u/s 263 on assumption, presumption and suspicion. And it is the settled legal position of law that the observation based on assumption, presumption and suspicion and his own guess workand it is the settled legal position of law that suspicion may be strong however cannot take the place of reality, are the settled principleskindly refer Dhakeshwari Cotton Mills 26 ITR 775 (SC) also refer R.B.N.J. Naidu v/s CIT 29 ITR 194 (Nag), Kanpur Steel Co. Ltd. v/s CIT 32 ITR 56 (All).Also refer CIT v/s KulwantRai 291 ITR 36( Del). In CIT v/s Shalimar BuildwellPvt Ltd 86 CCH 250(All) it has been held that the AO made the addition merely on suspicion which was not desirable in the eye of law.

Sh. Anil Kumar Batar, Sikar. Alternatively and without prejudice the ld. PCIT has also ignored that if any person received any advance the same will not be the income the same is liability as held as under In ‘K.K. Khullar V. Deputy Commissioner of Income Tax’ – 2008 (1) TMI 447 - ITAT DELHI-I the assessee received certain amount for services to be performed over a period of time. The amount relatable to the services rendered in the year under consideration was shown as income, the reason being that the assessee became entitled to receive that amount from the client in respect of the services rendered. In other words, the High Court held that debt to the extent of the amount pertaining to services rendered only got vested in the assessee. The rest of the amount was taken as liability to be adjusted in subsequent years as and when the service was rendered. It is but clear that the excess amount would have to be returned in case the service was not performed in subsequent year and therefore in respect of such amount no debt came into existence in favor of the assessee. Therefore this amount did not become the income. The High Court was of the view that the Commissioner (Appeals) erred in finding that the assessee was following the hybrid system of accounting on the ground that the whole of the amount received from the clients was not declared as income in the year of the receipt of the amount. In ‘R.S. Suriya V. Deputy Commissioner of Income Tax’ – 2010 (1) TMI 969 - ITAT CHENNAI the Commissioner (Appeals) has confirmed the advance professional fee of ₹ 55 lakhs as income for the impugned assessment year 2006 – 07 relying on his own decision for the assessment years 2004 – 05 and 2005 – 06. The Tribunal found that it is clear from the assessment order itself that the amounts received by the assessee from M/s Photon Factory and M/s Studio Green were not against any particular films. The assessee contended that the income could not be recognized till the artist had acted in the film, for which the advances were received. Story line was not fixed, neither was the name, not even the co-artists were known. Just because the assessee was following the cash system, it was not obliged to consider all sums received by it as income unless such receipt could be categorized as income. The Tribunal had held in the assessee’s own case for the earlier years that it would not be proper and appropriate to treat professional advance received as income, unless and until proposed assignments had materialized. The Tribunal held that the amount of ₹ 55 lakhs received by the assessee as advance could not have been treated as his income for the impugned assessment year. Such addition stands deleted. In ‘R.S. Suriya V. Assistant Commissioner of Income Tax’ – 2015 (11) TMI 339 - ITAT CHENNAI the appellant is a cine artist. There was a search in the premises of the appellant on 19.01.2010. The appellant filed returns for the assessment years 2004-05 to 2006-07 in response to the notice under Section 153A. The assessments were completed and the Assessing Officer brought to tax advances received from various producers as income of the assessee. The appellant contended that these amounts received by the appellants are only advances and since the films were not commenced these advances cannot be treated as income of the appellant and it should be taxed in the year in which film shooting/production commenced as income of the assessee. The Sh. Anil Kumar Batar, Sikar. Commissioner (Appeals) upheld the additions treating the said amount as income of the appellant for the reason that the appellant is following cash system of accounting and therefore they have to be considered as income of the assessee. The Hon’ble Delhi High Court in the case of Uttam Singh Duggal& Co. (P) Ltd Vs CIT (1981) 127 ITR 21 (Delhi) held that an amount received in advance converts into an income only when the work corresponding to the amounts received in advance is actually done. In the said case work against the advance received earlier was done in subsequent two years and it was held that the advance receipts proportionate to work done in subsequent years is income by way of accrual only in those succeeding years.

11.However, we want to place on record our legal objection for initiating proceedings u/s 263 for revision of assessment as the original assessment made by the A.O. is neither erroneous nor prejudicial to the interest of revenue. At the time of Original Assessment, the A.O. has enquired all the issues discussed herein above and after being satisfied with the submissions and explanations has made the assessment.

12. Hence in view of the above facts, submission and legal positions of laws the order of the Pr. CIT u/s 263 may kindly may kindly be quashed and oblige.” 4.1 In support of the contentions so raised by the ld. A/R in the written submission, reliance was also placed on the following evidences / records / orders :- S. No. Particulars Page No.

1. Copy of ITR with Computation of total income A.Y. 1-6 2018-19 u/s 139 2. Copy of notice u/s 148 Dated 12.03.2022 7-8 3. Copy of Reply to notice u/s 148 9 4. Copy of Order passed u/s 148A(d) Dated 30.03.2022 10-13 5. Notice u/s 148 dated 30.03.2022 14 6. Copy of ITR filed in response of Notice u/s 148 15 7. Copies of various Notices issued u/s 142/143 issued by 16-27 NFAC during the Faceless Assessment proceedings.

8. Copies of various Replies made with NFAC during the 28-38 Faceless Assessment proceedings 9. Affidavit of the Assessee 39-40 10. Copy of notice u/s 263 41-42 11. Copy of reply to PCIT in response to notice u/s 263 43-54 Sh. Anil Kumar Batar, Sikar.

5. Thereafter the ld.AO after considering the reply, explanations, details and documents furnished by the assessee completed the assessment on 18.03.2023 u/s 143(3) r.w.s. 147/144B of the Income Tax Act in the “FACELESS MANNER BY NFAC”.

6. That on perusal of the above facts, issue it is a fact that faceless assessment completed was done, after carried out full examination inquiry and query on all the issue including above main issue for which the case was reopened u/s 148. The AO has applied his mind and considering all the material facts brought before him and to record findings thereon, then exercise the power under the Act. The reply also reproduced by the ld. AO in the assessment order.”

The ld. PCIT considered the reply of the assessee but found it not tenable. The ld. PCIT relying on some judgments as cited in his order, held that “ Applying these judicial principles to the present case, it is evident that the Assessing Officer failed to verify the financial transactions of Rs. 75,00,000/- made by the assessee during the FY 2017-18 relevant to AY 2018-19. Therefore, by virtue of powers conferred to under the Sh. Anil Kumar Batar, Sikar. provisions of section 263 of the IT Act, 1961, I hold that the order passed on 18/03/2023 for AY 2018-19 by the Assessing Officer is erroneous and prejudicial to the interest of revenue”. Accordingly, the ld. PCIT directed the AO to make a fresh assessment after making a proper verification of the transaction in question. We may note here that ld. PCIT evidently did not place on record any apparent error on the part of the AO to substantiate that order passed by AO is prejudicial to the interest of revenue. The ld. PCIT has not pinpointed as to on which aspect enquiry required to be made was not made by the AO. No defect was found from the record collected by the AO. Since, in this case, AO has clearly incorporated the extract of enquiry conducted in the body of the assessment order and revenue did not pinpoint any error on the part of the AO, the order passed after due application of mind could not be subjected to proceeding under section 263 of the IT Act, 1961. 6.1 The prerequisite for exercising the jurisdiction by the learned PCIT under section 263 of the Act is that the order of the AO is established to be erroneous in so far as it is prejudicial to the interest of the Revenue. The ld. PCIT has to satisfy by an order in writing that the twin conditions, namely (i) the order of the AO sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the Revenue. If any one of them is absent i.e., if the assessment order is not erroneous, but it is prejudicial to Sh. Anil Kumar Batar, Sikar. the Revenue, provision of section 263 cannot be invoked. This provision cannot be invoked to correct each, and every type of mistake or error committed by the AO; it is only when an order is erroneous as also prejudicial to Revenue's interest, then the provision will be attracted. An incorrect assumption of the fact or an incorrect application of law will satisfy the requirement of the order being erroneous. The phrase 'prejudicial to the interest of the Revenue’ must be read in conjunction with an erroneous order passed by the AO. Every loss of revenue, because of the order of the AO, cannot be treated as prejudicial to the interest of the Revenue. It is pertinent to mention that if the AO has adopted one of the two or more courses permissible in law and it has resulted in loss of revenue, or where two views are possible and AO has taken one view with which the ld. CIT does not agree, it cannot be treated as an erroneous order and it is prejudicial to the interest of the Revenue, unless the view taken by the AO is totally unsustainable in law. In this process, even the AO had no power to review his own order. Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. vs. CIT [(2000) 243 ITR 83 (SC) held: “Every loss of revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interests of the revenue, for example, when an ITO adopted one of the courses permissible in law and it has resulted in loss of revenue; or where two views are possible and the ITO has taken one view with which the Commissioner does not agree, it cannot be treated as an Thus, considering the aforesaid discussion and respectfully following the judicial precedents as cited hereinabove, we hold that the order of the ld. PCIT is not in accordance with the provisions of section 263 of the Act as the twin conditions have not been fulfilled in this case. Thus, we set-aside the order of the ld. CIT and restore the order passed by the A.O dated 18.03.2023. In the result, the appeal of the assessee is allowed. Order pronounced in the open Court on 09/09/2025.