SMT. RESHMA,KARNAL vs. CIT, KARNAL

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ITA 241/DEL/2016Status: DisposedITAT Delhi27 February 2017AY 2011-125 pages

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

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the Assessing Officer had not conducted sufficient inquiry into the source of cash deposits, rendering the assessment order erroneous and prejudicial to the interest of revenue. Therefore, the CIT was justified in exercising jurisdiction under Section 263.

What were the facts?

The assessee deposited a significant amount of cash in her bank account. The Assessing Officer passed an assessment order after making an agreed addition, but the CIT believed the order was erroneous and prejudicial to revenue due to insufficient inquiry into the cash deposits.

What were the issues?

Whether the CIT correctly invoked Section 263 to revise an assessment order passed by the AO due to alleged lack of inquiry into cash deposits. Whether the assessment order was erroneous and prejudicial to the interest of revenue.

Which sections of the Income-tax Act were involved?

Section 263,Section 143(3),Section 44AD

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH “G”: NEW DELHI

Before: SHRI H.S.SIDHU & SHRI PRASHANT MAHARISHI

Hearing: 16/01/2017Pronounced: 27/02/2017

Assessee by : Sh. Gautam Jain, Adv Revenue by: Sh. SS Rana, CIT DR Date of Hearing 16/01/2017 Date of pronouncement 27/02/2017 O R D E R PER PRASHANT MAHARISHI, A. M.

1.

The assessee against the order of ld CIT files this appeal, Karnal dated 11.12.2015 for AY 2011-12 u/s 263 of the Income Tax Act, 1961 wherein the order passed by the ld Assessing Officer u/s 143(3) of the Act dated 07.11.2013. The assessee has raised following grounds of appeal:- “1 That order dated 11.12.2015 u/s 263 of the Act by learned Pr. Commissioner of Income Tax, Karnal has been made without satisfying the statutory preconditions contained in the Act and is therefore without jurisdiction and thus, deserves to be quashed as such. 1.1 That learned Pr. Commissioner of Income Tax has erred both in law and on facts in holding that source of cash deposits of Rs. 42,67,500/- have not been properly explained by the assessee, as the Assessing Officer has not made the requisite enquiries/verifications about the source of these cash deposits of Rs. 11,89,5007-. This finding is factually incorrect and legally misconceived, contrary to record and untenable. 1.2 That the learned Pr. Commissioner of Income Tax has failed to appreciate that once the learned Assessing Officer on examination of the facts on record and after making all possible enquiries had accepted claim of the appellant then such an order of assessment could not be regarded as erroneous in as much as prejudicial to the interest of revenue merely because the learned Commissioner of Income Tax had a different opinion and that too, without having established in any manner that, view adopted by the learned Assessing Officer was an impossible view. 1.3 That various findings and observations made by the learned Pr. Commissioner of Income Tax in order are vague, verbose, contradictory based on fundamental misconception of facts and law, arbitrary and unjustified and therefore untenable. 1.4 That farther the learned Pr. Commissioner of Income Tax has also failed to appreciate that, u/s 263 of the Act, an order of assessment cannot be set-aside to simply to make further enquiries and thereafter pass fresh order of assessment and as such, impugned order is contrary to law and hence, unsustainable.”

2. However, the only issue is that the order passed by the ld CIT(A) is without jurisdiction as there is no error in the assessment order and it is not prejudicial to the interest of revenue. The fact of the case is that the assessee has deposited cash of Rs. 4267500/- in the saving bank account maintained with Oriental Bank of Commerce, Karnal. Therefore, the return of income filed by the assessee on 30.01.2012 declaring total income of Rs. 187480/- was selected for scrutiny. The ld Assessing Officer that the assessee is engaged in the business of trading of milk near Doon Valey College, Karnal and has filed return showing income u/s 44AD of the Income Tax Act noted it. subsequently, assessment u/s 143(3) of the Act was passed on 07.11.2013 by making an agreed addition of Rs. 2 lakhs to the returned income and assessed at Rs. 387480/-. Subsequently, on examination of the records the ld CIT issued show cause notice on 01.09.2015 wherein according to him the order passed by the ld Assessing Officer is erroneous as the enquiry with respect to cash deposit to the extent of Rs. 1189500/- was not made at all. Therefore, he passed u/s 263 of the Act on 11.12.2015 holding that the order passed by the ld Assessing Officer is erroneous and prejudicial to the interest of revenue for the reasons mentioned in para No. 6 of this order.

3. The ld AR of the assessee submitted that the Assessing Officer has examined the issue during the course of assessment proceedings and for this he referred to query letter dated 02.07.2013 and reply of the assessee dated 29.07.2013. He further referred to submission of various bank accounts before the Assessing Officer. He further referred that a sum of Rs. 545878/- is on account of maturity of fixed deposit and Rs. 9 lakhs and Rs. 1123227/- were received on sale of land and compensation. He further submitted that all remaining deposits have been done form mil trading business run by the assessee. Therefore, according to him the ld Assessing Officer has correctly examined the cash deposited by the assessee. Therefore, according to him the order is correct and it can also not be said to be prejudicial to the interest of revenue. He therefore submitted that ld CIT has erred in assuming the jurisdiction. He also place written synopsis before us for our consideration. The ld DR submitted that ld Assessing Officer during the course of original assessment proceedings the ld Assessing Officer did not examine the fact of cash deposit of Rs. 48.67 lakhs completely and he has left enquiry with respect to sum of Rs. 11.89 lakhs. Therefore, ld CIT found the assessment order erroneous and prejudicial to the interest of revenue.

4.

We have carefully considered the rival contentions. The fact is not disputed that in her return of income the assessee has shown income mainly from Sewing, knitting and trading and during the course of assessment proceeding she submitted that it is engaged in business of

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