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Income Tax Appellate Tribunal, “A” BENCH, MUMBAI
Before: SHRI SAKTIJIT DEY & SHRI G. MANJUNATHA
Captioned appeal has been filed by the assessee challenging the order dated 16th March 2015, passed under section 263 of the Income- tax Act, 1961 (for short "the Act") by the learned Principal Commissioner of Income-tax–18 (for short “the learned PCIT”), Mumbai, for the assessment year 2010–11.
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Brief facts are, the assessee is an individual deriving income from salary, other sources as well as agricultural. For the assessment year under consideration, the assessee filed his return of income on 27th July 2010, declaring total income of ` 2,57,580. The assessment in case of the assessee was completed under section 143(3) of the Act vide order dated 30th November 2012, determining the total income at ` 2,71,790. After completion of assessment as aforesaid, learned PCIT called for the assessment records and after examining it was of the view that the assessment order is erroneous and prejudicial to the interests of Revenue due to non–examination of certain issues. Therefore, he issued a show cause notice under section 263 of the Act, pointing out various defects and deficiencies in the assessment order. In response to the show cause notice issued by the learned PCIT, the assessee filed a detailed reply on 12th March 2014, objecting to the initiation of proceedings under section 263 of the Act as well as explaining/clarifying the issue raised in the show cause notice. After considering the submissions of the assessee, learned PCIT observed that during the year under consideration, the assessee had deposited cash on various dates totaling to ` 15,57,840, in an account held with State Bank of India, Umargaon Branch. He observed, in course of assessment proceedings, the Assessing Officer has neither enquired into nor verified the source of cash deposit in bank account which 3 Arun Baid rendered the assessment order erroneous and prejudicial to the interests of Revenue. Accordingly, he set aside the assessment order with a direction to the Assessing Officer to complete the assessment afresh after verifying the issue raised by him in the revision order.
The learned Authorised Representative submitted, the cash deposits in the bank account is out of agricultural income earned by the assessee and this fact was properly enquired into by the Assessing Officer in the course of assessment proceedings. The learned Authorised Representative submitted, in fact the information relating to cash deposit in the bank account was available with the Assessing Officer through Annual Information Report (AIR). He submitted, in course of assessment proceedings, the Assessing Officer had issued notice dated 25th July 2012 under section 142(1) of the Act calling for various information from the assessee. He submitted, in the Annexure to the said notice, the Assessing Officer had specifically directed the assessee to reply to and reconcile the AIR information. He submitted, in response to the notice issued and query raised by the Assessing Officer, the assessee furnished the reply on 16th July 2012, explaining all the details with supporting evidence. Drawing our attention to the query raised by the Assessing Officer and the reply furnished by the assessee as placed in the paper book, the learned Authorised Representative submitted, the assessee not only explained the AIR
4 Arun Baid information but also furnishing supporting evidence establishing the nexus between the cash deposit in the bank account and the agricultural income earned. He submitted, subsequently, the Assessing Officer issued one more notice to the assessee on 7th September 2012, calling upon the assessee to furnish the details of agricultural income earned with supporting evidences. He submitted, in response to the said notice, the assessee furnished his reply on 18th September 2012, submitting the details called for in relation to agricultural income earned. He submitted, the fact that the assessee is earning agricultural income cannot be doubted as he has furnished all supporting evidences relating to land holding and sale of agricultural produce. He submitted, apart from cash received from sale of agricultural produce, the assessee has also received cheque payment towards sale of agricultural produce. He submitted, these facts and evidences were brought to the notice of the Assessing Officer and after conducting proper enquiry he has completed the assessment. Therefore, learned PCIT was not justified in holding the assessment order to be erroneous and prejudicial to the interests of Revenue alleging lack of enquiry by the Assessing Officer. He submitted, merely because the Assessing Officer has not discussed in detail regarding the cash deposits in the bank account, it cannot be said that no enquiry was made by him during the assessment proceedings. The learned Authorised
5 Arun Baid Representative submitted, the assessee has properly explained the source of cash deposits not only with reference to the AIR information but in response to the query raised by the Assessing Officer along with the supporting evidences. Therefore, the Assessing Officer being satisfied with the explanation of the assessee has accepted the source of cash deposits in the bank account, hence, not made any addition. Therefore, he has not discussed the issue in detail in the assessment order. The learned Authorised Representative submitted, in any case of the matter, the assessee does not have any control over the way the Assessing Officer passes the assessment order. He submitted, before learned PCIT also, the assessee has filed all the details as were filed before the Assessing Officer. He submitted, without making any observations with regard to the evidences filed by the assessee explaining the source of cash deposit, learned PCIT has set aside the assessment order with a direction to the Assessing Officer to make a fresh assessment after enquiry. He submitted, when the Assessing Officer has already enquired into the issue, there is no necessity of any further enquiry. Thus, he submitted, the assessment order passed being neither erroneous nor prejudicial to the interests of Revenue, the order passed under section 263 of the Act is wholly without jurisdiction, hence, should be set aside. In support of such contention, he relied upon the following decisions:–
6 Arun Baid i) Grasim Industries Ltd. v/s CIT, [2010] 321 ITR 92 (Bom.); ii) CIT v/s Nirav Modi, [2017] 390 ITR 292 (Bom.); iii) CIT v/s Fine Jewellery India Ltd., [2015] 372 ITR 303 (Bom.); and iv) Small Wonder Industries v/s CIT, ITA no.2464/Mum./2013, dated 24.02.2017.
The learned Departmental Representative strongly defending the order passed under section 263 of the Act submitted, the assessment order does not reveal even a semblance of enquiry made by the Assessing Officer. Drawing our attention to the assessment order passed under section 143(3) of the Act, the learned Departmental Representative submitted, the assessment order passed is very cryptic and has been passed in a summary manner with some general observations. He submitted, absolutely no discussion has been made by the Assessing Officer with regard to the cash deposits in the bank account in spite of AIR information available on record. He submitted, the assessment order reveals complete non–application of mind by the Assessing Officer. He submitted, on the face of AIR information, the minimum the Assessing Officer should have done is to enquire into the source of cash deposit by calling for necessary information from the assessee, which has not been done. Thus, he submitted, due to lack of inquiry by the Assessing Officer, the source of cash deposit remained unexplained which made the assessment order erroneous and 7 Arun Baid prejudicial to the interests of Revenue. He submitted, in such circumstances, learned PCIT had the authority and jurisdiction to exercise power under section 263 of the Act to revise the assessment order. In support of such contention, he relied upon the following decisions:–
i) Toyota Motor Corporation v/s CIT, [2008] 306 ITR 52 (SC); ii) PCIT v/s India Finance Ltd., [2016] 389 ITR 242 (Cal.); iii) Man Mohan Properties Ltd. v/s CIT, [2013] 152 ITD 606 (Mum.); and iv) Shore Line Hotel Pvt. Ltd. v/s CIT, dated 11.09.2018 (Bom.).
We have considered rival submissions and perused material on record. We have also applied our mind to the decisions relied upon. Though, in the show cause notice issued under section 263 of the Act, learned PCIT has raised various issues on which he considered the assessment order to be erroneous and prejudicial to the interests of Revenue, however, ultimately he has confined his decision to the cash deposit of ` 15,57,840, in the account with the SBI, Umargaon Branch. The learned PCIT has observed that non–examination of the source of cash deposit in bank account by the Assessing Officer has made the assessment order passed under section 143(3) of the Act erroneous and prejudicial to the interests of Revenue. Therefore, it is necessary to examine whether the Assessing Officer in the course of assessment
8 Arun Baid proceedings has made any enquiry with regard to source of cash deposit in the Bank account. It is evident, at the time of assessment proceedings, the AIR information was available with the Assessing Officer revealing cash deposit of ` 16,95,750, in an account with SBI, Umargaon Branch. In the course of assessment proceedings, the Assessing Officer had issued notice under section 142(1) of the Act dated 25th June 2012. In the Annexure to the said notice, the Assessing Officer has called for various information from the assessee. In Item no.13 of the said Annexure, the Assessing Officer has not only called upon the assessee to explain the source of cash deposit in the bank account with supporting evidence but also forwarded a copy of AIR information to the assessee. In response to the query raised by the Assessing Officer, the assessee had filed his reply on 16th July 2012, furnishing all the details including the statement of SBI, Umargaon Branch, as well as explaining the source of deposit through supporting evidence to indicate that such deposits were out of amount received towards sale of agricultural produce. After perusing the aforesaid reply of the assessee, the Assessing Officer again on 7th September 2012, issued one more notice to the assessee calling upon her to furnish the details of agricultural land holding along with the supporting evidence as well as the details of persons who purchased agricultural produce from the assessee. In response to the said notice,
9 Arun Baid the assessee furnished her reply on 18th September 2012, with further supporting evidence. Thus, from the aforesaid facts it is evident that in the course of assessment proceedings, the Assessing Officer did enquire into the source of cash deposit in the bank account and in response to the query raised by him the assessee also produced a number of documentary evidences explaining the source of cash deposit. That being the case, learned PCIT was not correct in holding that the Assessing Officer has not examined the source of cash deposit in the bank account. The aforesaid finding of learned PCIT is factually incorrect and contrary to the material on record. Though, it may be a fact that the impugned assessment order is cryptic and the Assessing Officer has not discussed in detail the issue relating to cash deposit in the bank account, however, the facts on record clearly reveal that the Assessing Officer did enquire into the source of cash deposit in the bank account. Therefore, it can be concluded that the Assessing Officer being satisfied with the explanation furnished by the assessee with regard to the source of cash deposit, did not find it necessary to discuss the issue in detail in the assessment order as he did not consider it appropriate to make any addition in this regard. That being the case, it cannot be said that the assessment order is erroneous and prejudice to the interests of Revenue. More so, when learned PCIT has not made any adverse observation with regard to the source of cash
10 Arun Baid deposit in the bank account, though, all the evidences were available before him. Therefore, he has not been able to demonstrate the prejudice caused to the Revenue. In view of the aforesaid, we hold that the exercise of power under section 263 of the Act to revise the assessment order passed under section 143(3) of the Act in the instant case is not justified. Accordingly, we set aside the impugned order passed by the learned PCIT and restore the assessment order passed under section 143(3) of the Act. Grounds raised are allowed.