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Income Tax Appellate Tribunal, “B” BENCH, PUNE
Before: SHRI INTURI RAMA RAO, AM & SHRI PARTHA SARATHI CHAUDHURY, JM
आयकर अपीलीय अिधकरण “बी” �यायपीठ पुणे म� । IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, PUNE (Through Virtual Court) BEFORE SHRI INTURI RAMA RAO, AM AND SHRI PARTHA SARATHI CHAUDHURY, JM आयकर अपील सं. / ITA No.170/PUN/2021 िनधा�रण वष� / Assessment Year : 2015-16 Shergil Harjit, 6, Penton Road, Opp. Moti Buag, Officer’s Enclave, Ahmednagar Camp, Ahmednagar- 414002. .......अपीलाथ� / Appellant PAN : EVHPS1971N बनाम / V/s. Pr. CIT-1, ……��यथ� / Respondent Pune. Assessee by : Shri Prasad Bhandari Revenue by : Shri Subhakant Sahu सुनवाई क� तारीख / Date of Hearing : 18.01.2022 घोषणा क� तारीख / Date of Pronouncement : 20.01.2022 आदेश / ORDER PER PARTHA SARATHI CHAUDHURY, JM: This appeal preferred by the assessee emanates from the order of the Ld. Pr.CIT-1, Pune dated 17.03.2021 for the assessment year 2015-16 as per the following grounds of appeal on record :- “1. On the facts and in the prevailing circumstances of the case, respected PCIT – Pune -1 erred passing the impugned Revision Order under section 263 as the original assessment order under section 143(3) was passed after full satisfaction of the Ld. Assessing Officer. Hence, the impugned order under section 263 may please be squashed. 2. On the facts and in the prevailing circumstances of the case, respected PCIT, Pune -1 erred passing the impugned Revision Order under section 263 ex- parte inspite of duly filed submissions by the assessee before time. Thus, the order passed without considering the submissions of the assessee may please be treated as bad in law and hence, the impugned order under section 263 may please be squashed. 3. The Appellate craves the permission to add, amend, modify, alter, revise, substitute, delete any or all grounds of the appeal, if deemed necessary at the time of hearing of the appeal.”
2 ITA No.170/PUN/2021
The facts, in brief, are that the assessee had filed return of income for A.Y. 2015-16 on 22.11.2016 declaring total income of Rs.4,52,490/-. The assessment was completed u/s 143(3) of the Act. That during the course of assessment proceedings, it was found out by the Assessing Officer that the assessee is engaged in the business of Readymade Garments and also had derived income from bank interest. The assessee had shown business income of Rs.3,05,400/- and interest income of Rs.1,57,086/-. The assessee had also deposited cash in bank of Rs.15,68,000/- as against the gross turnover of business of Rs.7,88,900/-. During the course of assessment proceedings, as evident from para 4 of the assessment order, the assessee had filed explanation in respect of cash deposits in the bank and had further submitted that she had filed the return of income as per the provisions of section 44AD of the Act. The Assessing Officer made an addition of Rs.3,00,000/- and added to the total income of the assessee for which supporting evidences were not filed by the assessee. That in the proceedings u/s 263, the Pr.CIT observed that though the turnover of the assessee’s business was Rs.7,88,900/- during the F.Y. 2014-15, the assessee had deposited Rs.15,68,000/- as cash in the bank. Therefore, cash deposits made to the extent of Rs.7,79,100/- were not made from the disclosed sources. The Assessing Officer had, however, made addition of Rs.3,00,000/- only wherein, the actual difference of deposit and the gross business turnover of the assessee during the relevant assessment year was Rs.7,79,100/-. That therefore, as a matter of fact, the Pr.CIT held that the assessment was erroneous so as to be prejudicial to the interests of the Revenue. The Pr.CIT further opined that the addition in the assessment order of Rs.3,00,000/- was charged to tax at normal rate which actually as unexplained cash deposit, which was required to be taxed u/s 69 of the Act as unexplained
3 ITA No.170/PUN/2021 investment in view of the insertion of section 115BBE(1) by the Finance Act, 2012 w.e.f. 01.04.2013, any income referred to in section 68, 69, 69A, 69B, 69C & 69D was required to be taxed at the rate of 30% (flat rate) and no other deduction is allowed to the assessee against such income. Whereas, in this case, the Assessing Officer has levied the tax on the addition made on account of unexplained cash at normal rate instead of rate specified in section 115BBE(1) of the Act. 3. At the time of hearing, ld. Counsel for the assessee submitted that it was scrutiny assessment u/s 143(3) as conducted by the Assessing Officer wherein, all the details of cash deposit and business turnover has been filed before the Assessing Officer. It has been also explained before the Assessing Officer that the gross business turnover was Rs.7,88,900/- during the F.Y. 2014-15 whereas the cash deposit in bank was Rs.15,68,000/- and the difference of Rs.7,79,100/- has also been explained before the Assessing Officer vide letter dated 27.07.2017 written to the Assessing Officer. The said letter has been annexed at page 14 in the paper book and for ready reference, the same is being made part of this order :- “To, The Income Tax Officer, Ward-2, Ahmednagar Respected Madam, Sub:- Scrutiny assessment for A.Y. 2015-16 Ref:- Notice U/s. 143(2) dated 06.07.2017 fixing the case for hearing on 31.07.2017 On the face of notice it is mentioned that my case for A.Y. 2015-16 is selected for scrutiny on the ground that there are cash deposits of more than Rs.10,00,000/- in my S.B. Account with Bank. I give herewith back ground of my family and financial status including my activities of earning income for kind perusal and consideration as under:- I am a house wife and have done some business during the previous year relevant to assessment years 2015-16 for which a return of income declaring total income of Rs.452490/- is on 22.11.2016 comprising of business
4 ITA No.170/PUN/2021 income of Rs.305400 declared U/s. 44AD and Bank interest of Rs.157086/- My husband retired as a colonel from Indian Army in 1991 after outing 35 years of service in Army. The husband of my sister was a prince Son of Maharaja Nalagad ( Himachal Pradesh) My sister mrs Rati Kanwarani expired on 07.09.2012 had made a will in favour of my Son Shri Indervivsing Shergil (Citizen of Canada) and accordingly he got substantial movable and immovable properties. Thus my family is well to do. My husband had income from salary and interest from Banks till his retirement in addition agriculture income from ancestral agricultural lands. After retirement he has been getting pension and also income from Bank interest. He is regularly assessed to tax. An appreciation letter from central Board of Direct Taxes has also been received by him for filing return of income for A.Y. 2016-17 and paying taxes as contribution towards building of the great Nation (Copy enclosed). He never had any income from any other activities for earning income except stated above. Madam, my husband as on today is above 75 years of age and I am aged 70 years of age. Our relatives reside at places far away from our residence. Considering the facts and our ages it was necessary to keep substantial cash i.e. liquid funds to meet contingency expenses including medical expenses for both of us. I therefore, used to have personal savings with me out of amounts given by my husband from time to time for household expenses and amounts given by my Son and daughter. The amounts lying with me were deposited in S.B. Account. I may bring to your kind notice that due to ignorance of law and ill advice given by my consultant and by friends having poor knowledge of law I deposited Cash of Rs.49000 on each occasion as can be seen from the Bank account extract (copy enclosed). I do not have activities to earn income to such extent but the deposits are out of past savings of many years. The total of deposits during the year amounted to Rs.1568000/-. Considering the financial status and standard of living of our family the deposits may kindly be considered as genuine past savings and reasonable. I do not have investment except Bank balance in account and a FD in Bank. Kindly consider and oblidge. Thanking You, Yours Faithfully Sd/- (Mrs. Harjit A. Shegil)” 4. That, as evident from the afore-stated letter both assessee and her husband are super senior citizens belonging to respectable social and economical background. It has been narrated specifically that because of old age, health ailments they have liquid funds/cash at their disposal to meet any urgent medical contingencies. That even the assessee’s husband retired as Colonel in Indian Army and is drawing pensions, the children i.e. both son and daughter of the assessee are well to do and they are also sending money to their parents for their day to day needs. These facts have not been disputed by the Department at all. That even in the order passed u/s 263 by
5 ITA No.170/PUN/2021 the Pr.CIT, he has not been able to bring out specifically under the given facts and circumstances why the assessment order is erroneous so as to be prejudicial to the interest of the Revenue when on the contrary all the facts were scrutinized by the Assessing Officer and he has arrived at a plausible opinion on application of mind. When all the explanations and documents from the assessee have been scrutinized and examined by the Assessing Officer in such scenario the order of the assessment cannot be held to be erroneous and prejudicial to the interest of the revenue. In this regard, reliance can be placed on the decision of the Hon’ble Bombay High Court in the case of CIT vs. Gabriel India Ltd., 203 ITR 108 (Bombay) which was followed by the Hon’ble Delhi High Court in the case of CIT vs. Sunbeam Auto Ltd., 332 ITR 167 (Delhi) and in the case of CIT vs. Anil Kumar Sharma, 335 ITR 83 (Delhi). The relevant paragraphs of the decision of the Hon’ble Delhi High Court in the case of Sunbeam Auto Ltd. (supra) are extracted hereunder :- “We have considered the rival submissions of the counsel on the other side and have gone through the records. The first issue that arises for our consideration is about the exercise of power by the Commissioner of Income-tax under section 263 of the Income-tax Act. As noted above, the submission of learned counsel for the revenue was that while passing the assessment order, the Assessing Officer did not consider this aspect specifically whether the expenditure in question was revenue or capital expenditure. This argument predicates on the assessment order which apparently does not give any reasons while allowing the entire expenditure as revenue expenditure. However, that by itself would not be indicative of the fact that the Assessing Officer had not applied his mind on the issue. There are judgments galore laying down the principle that the Assessing Officer in the assessment order is not required to give detailed reason in respect of each and every item of deduction, etc. Therefore, one has to see from the record as to whether there was application of mind before allowing the expenditure in question as revenue expenditure. Learned counsel for the assessee is right in his submission that one has to keep in mind the distinction between "lack of inquiry" and "inadequate inquiry". If there was any inquiry, even inadequate, that would not by itself, give occasion to the Commissioner to pass orders under section 263 of the Act, merely because he has different opinion in the matter. It is only in cases of "lack of inquiry", that such a course of action would be open. In Gabriel India Ltd.'s case (supra), law on this aspect was discussed in the following manner : ". . . From a reading of sub-section (1) of section 263, it is clear that the power of suo motu revision can be exercised by the Commissioner only if, on examination of the records of any proceedings under this Act, he
6 ITA No.170/PUN/2021 considers that any order passed therein by the Income-tax Officer is 'erroneous insofar as it is prejudicial to the interests of the revenue'. It is not an arbitrary or unchartered power. It can be exercised only on fulfilment of the requirements laid down in sub-section (1). The consideration of the Commissioner as to whether an order is erroneous insofar as it is prejudicial to the interests of the revenue must be based on materials on the record of the proceedings called for by him. If there are no materials on record on the basis of which it can be said that the Commissioner acting in a reasonable manner could have come to such a conclusion, the very initiation of proceedings by him will be illegal and without jurisdiction. The Commissioner cannot initiate proceedings with a view to starting fishing and roving enquiries in matters or orders which are already concluded. Such action will be against the well-accepted policy of law that there must be a point of finality in all legal proceedings, that stale issues should not be reactivated beyond a particular stage and that lapse of time must induce repose in and set at rest judicial and quasi-judicial controversies as it must in other spheres of human activity. [See : Parashuram Pottery Works Co. Ltd. v. ITO[1977] 106 ITR 1 (SC) at page 10]. ......” 5. In the instant case, in our considered view the Pr.CIT has initiated proceedings starting a fishing and roving enquiry in the matter without bringing on record any material or evidence demonstrating that he has acted in a reasonable manner. 6. That with regard to the chargeability of cash deposit for the purpose of taxation and the applicability of section 115BBE(1) may be separately looked into by the Department. But, this is not a fit case for assuming revisionary jurisdiction u/s 263 of the Act. Before parting, we must also mention that the practicalities of given circumstances always has to be looked into by the quasi judicial authorities before resorting to any provisions of the Act. There are several families consisting of super senior citizens whose children are well-settled but staying away from them for sake of job. It is a matter of common practice in most of the household of our country that the children take care of their parents financially even though the parents may be financially well off on their own. It is a part of moral responsibility on the part of the children for taking care of their aged parents at least by sending finances irrespective of whether they require or not. These facts were
7 ITA No.170/PUN/2021 explained before the Assessing Officer as evident from para 4 of the assessment order and other relevant details were furnished as and when the Assessing Officer has examined thereafter he has taken a plausible view. In such facts and circumstances, the order passed by the Pr.CIT u/s 263 is held as unjustified, invalid and liable to be quashed. We order accordingly. 7. In the result, the appeal of the assessee is allowed. Order pronounced on this 20th day of January, 2022. Sd/- Sd/- (INTURI RAMA RAO) (PARTHA SARATHI CHAUDHURY) लेखा सद�य/ACCOUNTANT MEMBER �याियक सद�य/JUDICIAL MEMBER पुणे / Pune; �दनांक / Dated : 20th January, 2022. Sujeet आदेश क� �ितिलिप अ�ेिषत / Copy of the Order forwarded to : अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. 3. The Pr. CIT-1, Pune. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, “बी” ब�च, 4. पुणे / DR, ITAT, “B” Bench, Pune. गाड� फ़ाइल / Guard File. 5. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune.