MEENA JAIN,BAGHPAT vs. PR. CIT, MEERUT

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ITA 6921/DEL/2017Status: DisposedITAT Delhi14 August 2018AY 2013-147 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the PCIT erred in assuming jurisdiction under Section 263 as the assessment order was not erroneous or prejudicial to the revenue. The sundry debtors were a brought forward debit balance, and the 'trestcheck account' was a normal practice for cash handling in the petrol pump business.

What were the facts?

The Principal Commissioner of Income Tax (PCIT) initiated proceedings under Section 263, citing the Assessing Officer's (AO) failure to examine sundry debtors and a 'trestcheck account' balance. The assessee argued that the PCIT erroneously assumed jurisdiction and that the issues raised were either brought forward balances or misinterpretations of cash handling practices.

What were the issues?

Whether the PCIT correctly invoked Section 263 powers when the AO's assessment was not erroneous or prejudicial to revenue, and whether the AO's examination of sundry debtors and cash balances was adequate.

Which sections of the Income-tax Act were involved?

Section 263,Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI ‘E’ BENCH,

Before: SHRI N.K. BILLAIYA, & SHRI K.N. CHARY

For Appellant: Shri Sanjay Malik, Adv
Hearing: 13.08.2018Pronounced: 14.08.2018

PER N.K. BILLAIYA, ACCOUNTANT MEMBER,

1.

With this appeal, the assessee has challenged the correctness of the order of the Principal Commissioner of Income Tax [Appeals] Meerut dated 21.09.2017 framed u/s 263 of the Income-tax Act, 1961 [hereinafter referred to as 'the Act']. pertaining to assessment year 2013-14.

2. The assessee alleges that the ld. PCIT erroneously assumed jurisdiction u/s 263 of the Act and erred in treating the assessment order dated 19.09.2015 framed u/s 143(3) of the Act as erroneous and prejudicial to the interest of the Revenue.

3.

The representatives of both the sides were heard at length and the case records carefully perused.

4. Facts on record show that the assessee is a trader in petroleum products and is running a petrol pump. Return for the year was selected for scrutiny assessment and after examining the books of accounts of the assessee on test check basis with relevant documentary evidences, the AO framed assessment u/s 143(3) of the Act vide order dated 19.09.2015.

5.

Assuming powers vested upon him by the provisions of section 263 of the Act, the ld. PCIT issued notice u/s 263 of the Act, which reads as under:

“On examination of the records, it has been noticed that; (a) From the balance sheet filed by the assessee it is observed that the assessee has shown M/s Harsh Telecom Services as sundry debtors of Rs. 1300023/-, This amount outstanding in the balance sheet for the A. 1. 2012-13 also. It means that no payment was received by the assessee from this debtor. Therefore, the genuineness of this amount and corresponding liability side was required to be examined by the AO during the assessment proceedings. Bui the AO has not examined this issue and accepted the submission of the assessee without making any enquiry.

(b)The assessee has shown cash in hand of Rs.55425.63 and bank balance of Rs. 921143.57 in the balance sheet. The bank balance also includes an amount of Rs. 470500/' as trestchest account. As per the provisions of law the cash should be kept either in hand or at bank. The exact nature and genuineness of balance shown on account of trestchest account along with corresponding liability side was required to he examined by the AO. But the AO -has not made any enquiry on this issue.

2.

In view of the Para 2 above, the assessment order passed by the Income Tax Officer, Ward-1 (5), Baraut is erroneous and prejudicial to the interest of revenue since the AO has not examined the above mentioned issues.

4.

You are hereby called upon to show cause as to why an appropriate order under section 263 of the IT Act, 1961 may not be passed in your case. You may attend my office and furnish your explanation on 24.08.2017 at 12:30 P.M. either in person or through an authorized representative with documentary evidences in support of your contention along with complete books of accounts, bill, vouchers, registers <£ copies of bank statements etc. as maintained by you.”

6.

Vide reply dated 24.08.2017, it was specifically pointed out to the ld. PCIT that the assessee expired on 12.04.2017. In spite of this, the ld. PCIT, in his wisdom, framed the order in the name of the deceased assessee, which means that the order u/s 263 of the Act is on a dead person. We can set aside the order of the ld. PCIT on this very issue itself. However, for the sake of completeness of the adjudication, let us consider the points raised by the ld. PCIT in his notice.

I DEBTORS AMOUNTING TO Rs. 13,00,023/-.

7.

It can be seen from the notice itself that the ld. PCIT himself has admitted that this is a brought forward debit balance. We fail to understand how the brought forward balance could make the present assessment erroneous and prejudicial to the interest of the Revenue, keeping in mind that the brought forward balance is a debit balance.

II Trestcheck Account Rs. 4,70,500/-

8.

It appears that the ld. PCIT has completely misunderstood the facts. The assessee has shown cash in hand of Rs. 55,425/- and bank balance of Rs. 9,21,143/- in the balance sheet. The cash in hand further includes an amount of Rs. 4,70,500/- as trestcheck account. In this line of trade upto the banking hours the cash sales received are deposited in the bank. After the banking hours, petty cash is kept in the petrol pump itself and balance is either kept in chest in the petrol pump itself or is taken to the residence for safety purposes. Moreover, the cash in hand is generated out of the cash sales, which is invariably done in this line of trade. Once the books of account have been examined and no adverse inference has been drawn in so far as the sales are concerned, we do not find how a debit entry can make the assessment order erroneous and prejudicial to the interest of the Revenue. Considering the facts of the case in totality, we have no hesitation in setting aside the order of the ld. PCIT. We, accordingly, restore the assessment order dated 19.09.2015 framed u/s 143(3) of the Act.

9.

In the result, the appeal filed by the assessee is allowed.

The order is pronounced in the open court on 14.08.2018.

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