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Income Tax Appellate Tribunal, JAIPUR BENCHES,”A” JAIPUR
per reply dated 22.03.2022, final order was passed on 23.03.2022 even though without recording reasons after discussion. Therefore, by making generalized statement that order could not be held to be erroneous or prejudicial. We do not find merit in the observation of the ld. PCIT that this issue had not been examined at all by the ld. AO.
in the case of Jagdish Kumar case (Supra), we note that ld. AO proposed the addition for whole amount, but after having considered the reply of the assessee, the facts submitted by the assessee were accepted, and as such it cannot be said that the assessment order was erroneous or prejudicial to the interest of the revenue. Thus, the facts of the case on hand are different from the facts of the case relied on, and as such does not help the revenue.
As regards the invocation of powers u/s. 263 of the Act we note that even the Expl. 2(a)& (b) do not confer unlimited powerson the PCIT, and it is held that despite there being an amendment, enlarging the scope of the revisionary power of the ld. PCIT u/s 263 to some extent, it cannot justify the invoking of the Expl. 2(a) and (b) in the facts of the present case.
Newly inserted Explanation 2(a) to Sec. 263 does not give unfettered powers to Commissioner to revise each order. Said power can be exercised if in his (subjective) opinion, the order has been passed without making enquiries or verification which should have been made. Herein, having regard to the totality of facts and circumstances, it cannot be said to be a case where the subject assessment order dt. 23.03.2022 should be alleged to be erroneous or prejudicial to the interests of the revenue. There is the AO as regards facts or of law, as alleged by the ld. PCIT.
In the light of these discussion ground no 1 to 4 raised by the assessee are allowed.
Ground no. 5 being general does not require our adjudication.
As a result of the discussion and findings, we find merit in the grounds of the assessee and while considering the binding force of judicial precedents cited above, the impugned order passed u/s 263 deserves to be quashed.
This second mentioned appeal has been filed by the assessee feeling aggrieved by the order passed on 31.03.2024 by PCIT, Jaipur-2.
While challenging the order, the assessee has raised the following grounds.
“1. That in the facts and in the circumstances of the case and in law, the learned Principal Commissioner of Income Tax [PCIT], Jaipur-2 erred in initiating proceedings u/s. 263 of the Income Tax Act, 1961.
That in the facts and in the circumstances of the case and in law, the appellant prays that the order of the learned PCIT, Jaipur-2 passed u/s. 263 of the Income Tax Act, 1961 may be cancelled being void ab-initio and bad in law.
That in the facts and in the circumstances of the case and in law, learned Principal Commissioner of Income Tax, Jaipur-2 erred in holding that assessment & 818/JP/2024 Shree Shyam Buildstructure Pvt. Ltd. order dated 20.03.2022 passed by the Assessing Officer u/s 147 of the Act was erroneous and prejudicial to the interest of the revenue and the issues raised having been duly considered by the learned Assessing Officer while framing the assessment u/s 147 of the Act.
That on the facts and in the circumstances of the case and in law, the learned PCIT, Jaipur-2 erred in not himself conducting necessary/ proper enquiry and verification of issues mentioned in the notice issued u/s. 263 of the Act and setting aside the assessment order for a de-novo adjudication on issues mentioned therein which is wrong and contrary to the provisions of the Act, and the Rules made thereunder.
That the appellant craves permission to add to or amend to any of the above grounds of appeal or to withdraw any of them.”
12. Succinctly, put the facts as culled out of the records is that the return of income in ITR-6 for the A.Y. 2016-17 was filed by the assessee on 30.03.2017 declaring total income of Rs. NIL. The same was processed u/s 143(1) of I. T. Act, 1961 at the returned income. Later on, information was received from the DDIT(Systems), New Delhi that the assessee had deposited cash amounting to Rs.55,15,000/- in his Bank Account during the F.Y. 2015-16 relevant to the assessment year 2016-17, but, the assessee failed to declare the same in the return of income. So, difference in income of the assessee to the extent of Rs. 55,15,000/- was found to have escaped assessment. In order to assess this escaped income, proceedings u/s 147 of I. T. Act, 1961 were initiated by issuing notice u/s 148 of I.T. Act, 1961 on 31.03.2021. In response to the notice, the assessee filed his return of notice u/s 142(1) were issued requiring the assessee to file certain information.
On perusal of the data available with the department and from the bank statement supplied by the assessee in response to show cause notice, it was noticed by the AO that the assessee had made cash deposits amounting to Rs.15,000/- and other credit entries to the tune of Rs.55,00,000/- during the year under consideration, but, when asked to explain the sources of the deposits and furnish the documents for the same, the assessee failed to submit any satisfactory explanation. So, notice alongwith draft assessment was issued on 15.03.2022 asking the assessee to show cause on or before 19.03.2022 as to why addition, as proposed in draft assessment order, should not be made. The assessee filed reply on 19.03.2022.
After considering the reply, AO noted that the assessee had done no business. Hence, the amount credited in the bank account amounting to Rs.
55,00,000/- was added as income from other sources and treated as taxable income of the assessee. With those observations the assessment determined at Rs. 54,63,520/-.
On culmination of the assessment proceeding, ld. PCIT called for and examined the assessment record and noted that FAO had failed to conduct due inquiry and verification on the issue of unexplained cash deposit of Rs. 15,000/-and on unaccounted cash of Rs. 1 Crore i.e. received as regards sale of property by way of advance from Shri Upendra.
Ld. PCIT noted that proper inquiries by AO would render the assessment order erroneous as well as prejudicial to the interest of revenue in view of following decisions:
• Jagdish Kumar Gulati vs. CIT [2004] 269 ITR 71 (All) • Gee Vee Enterprise vs. ACIT [1975]99ITR375 (Delhi) • K.A. Rama Swami Chettiar Ld. PCIT held that the assessment order was passed by the ld. AO in a routine and casual manner without applying relevant provisions of the Act.
As further observed, the Assessing Officer did not verify the details which were required to be verified under the scope of scrutiny. Therefore, the order of the Assessing Officer was considered to be fit to be revised as per same was set aside.
In support of the grounds raised in appeal, Ld. AR of the assessee has filed following written submission -
Brief Facts of the Case:
1. 1. Simultaneously, the Ld. A.O. has reopened the case of appellant for 3 years on 31.03.2021, which is as follows:- (i). A.Y. 2013-14 (ii). A.Y. 2014-15 (iii). A.Y. 2016-17 2. That the reason for reopening was on cash and other credit entries amounting to Rs. 55,15,000/-.
3. That the Ld. A.O. made conduct detailed, proper & deep enquiry regarding sources of deposit of Rs. 55,15,000/- in the following query letters:- (i). Notice u/s. 142(1), dated 28.06.2021 (placed on paper Book Page No. 5 to 6). (ii). Notice u/s. 142(1), dated 24.11.2021 (placed on Paper Book Page No. 7 to 8). (iii). Notice u/s. 142(1), dated 03.03.2022 (placed on paper Book Page No. 9 to 10). (iv). SCN dated 15.03.2022 (placed on Paper Book Page No. 11 to 12). (v). Draft Assessment order, dated 15.03.2022 (placed on Paper Book Page No. 13 to 14).
4. That assessee-company submitted detailed reply along with documentary evidences on 19.03.2022.
5. That the Ld. A.O. passed an assessment order on 20.03.2022 and discussed the whole deposits in details in assessment order & made addition amounting to Rs. 55,00,000/- & satisfied about sources of cash deposit of Rs. 15,000/-.
6. That the Ld. PCIT, Jaipur-2 issued Show Cause Notice dated 04.03.2024 for Revision proceeding u/s. 263 of the I.T. Act, 1961 on the following 2 issues, which are as follows:-
& 818/JP/2024 Shree Shyam Buildstructure Pvt. Ltd. (i). The Ld. A.O. has not at all verified & made proper inquiry about Rs. 1.00 Crore as advance payment received by the appellant in Axis Bank from Shri Bhupendra Singh Yadav. (ii). The Ld. A.O. has not at all verified and examined the unexplained cash credit of Rs. 15,000/-. Arguments & Our Submission:- A. It is not a case of no enquiry or independent enquiry:-
1. 1. That the so called advance of Rs. 1.00 Crore was received in 2 tranches Rs. 20,00,000/- through RTGS on 09.12.2015 and Rs. 80,00,000/- on 27.12.2015 through cheque No. 082911, but the cheque was neither lodged in bank nor encashed.
2. That Rs. 20,00,000/- falls in the year under consideration & the Ld. A.O. made addition of Rs. 20,00,000/- in the assessment order (i.e. included in addition of Rs. 55,00,000/-).
3. That regarding Rs. 80,00,000/-, appellant received this amount of Rs. 80,00,000/- as advance vide agreement dated 27.12.2015. But on request of advance giver Mr. Bhupendra Singh Yadav, the appellant did not deposit the said cheque of Rs. 80,00,000/-.
4. That Mr. Bhupendra Singh Yadav made advance payment of Rs. 80,00,000/- on 07.05.2016 vide RTGS of Kotak Mahindra Bank bearing UTR No. KKBKR52016050700615624 in lieu of the said cheque 5. That the Ld. A.O. examined the transaction of Rs. 80,00,000/- in the subsequent year and conducted enquiry in detail & gathered evidences. The same facts described in line & length in the Assessment order for A.Y. 2017- 18, order dated 24.12.2019. (placed on Paper Book Page No. 52 to 53).
6. Hence, this is not a case of without enquiry 7. If the same enquiry has been conducted in the year even it is not prejudice order for the revenue as this was an advance.
8. That the PCIT, Jaipur-2 is of the opinion that the same can be treated as income in the year than it is a case of change of opinion. B. Regarding Rs. 15,000/-:- (i). It is not a case of no enquiry or non-examination or non verification, as 3 notices u/s. 142(1) was issued for specific enquiry of this cash deposit Rs. 15,000/-, dated 28.06.2021, 24.11.2021, 03.03.2022, SCN dated 15.03.2022 & Draft assessment order dated 15.03.2022.
& 818/JP/2024 Shree Shyam Buildstructure Pvt. Ltd. (ii). Ld. PCIT’s claim about ‘not verification & not examined at all’ is incorrect. Therefore, the order passed by Ld. PCIT, Jaipur-2 is totally incorrect and unlawful in the eyes of Law. Kindly quash the proceeding.
To support the contentions, reliance has been placed on the following record :
S. No. Particular Page No. 1 Copy of Notice us. 148 of the I.T. Act, 1961, dated 1 31.03.2021. 2 Copy of Approval u/s. 151 and reasons for reopening u/s. 2-4 147 of the I.T. Act, 1961 3 Copy of Notice u/s. 142(1) of the I. T. Act, 1961 dated 5-6 28.06.2021. 4 Copy of Notice u/s. 142(1) of the I.T. Act, 1961 dated 7-8 24.11.2021. 5 Copy of Notice u/s. 142(1) of the Act, dated 03.03.2022. 9-10 6 Copy of Show Cause Notice dated 15.03.2022. 11-12 7 Copy of Draft Assessment Order dated 15.03.2022. 13-14 8 Copy of reply along with documentary evidence dated 15-26 19.03.2022. (i). Reply. (ii). Bank Account statement for the period from 01.04.2015 to 31.03.2016. (iii). Copy of Cash Book for the period from 01.04.2015 to 31.03.2016. 9 Copy of Assessment order dated 20.03.2022. 27-34 10 Copy of Show cause Notice for Revision Proceeding u/s. 35-38 263 of the I.T. Act, 1961, dated 04.03.2024. 11 Copy of SCN reply along with documentary evidence dated 39-68 18.03.2024. (i). Reply (ii). Assessment Order for A.Y. 2017-18 &where finding of Rs. 80 Lakh was considered. (iii). Reply to ITO during scrutiny of A.Y. 2017-18. (iv). Mutual Agreement dated 27.12.2015. (v). Receipt of amount. (vi). List of election Roll. (vii). Mutual agreement dated 27.01.2020 and 13.09.2020.
Ld. AR of the assessee has submitted that the assessment in this case has been completed by making entire credit made in the bank account i.e. an amount of Rs. 55,00,000/- whereas out of said amount, a sum of Rs. 20,00,000/- formed part of amount already added by the AO, and the balance amount of Rs. 80,00,000/- received in the subsequent year, and as such, there is no error on the part of the Assessing Officer.
As regards the credit of Rs. 15,000/- deposited in the bank account it has been contended that when the whole credit was added, there was no question of making further inquiry by the AO into the matter.
The contention is that on both the issues order is not erroneous or prejudicial to the interest of the revenue.
Per contra, Ld. DR heavily relied upon the findings recorded in para 5 of PCIT order, and also relied upon the decisions cited by ld. PCIT, and also in the case of Jagdish Kumar Gulati vs. CIT [2004] 269 ITR 71 (All), Gee Vee Enterprise vs. ACIT [1975]99ITR375 (Delhi) and the decision of Court.
DR referred to para 24 of judgment in the case of Jagdish Kumar Gulati (supra), wherein Hon’ble Court held that when a case is picked up for scrutiny surely the duty of the Assessing Officer is to do a thorough investigation, but he did not do so in this case, from which is indeed evident that the finding on the issue is missing.
While referring to the decision of Hon’ble Apex Court in the case of Amitabh Bachchan (supra), Ld. DR has pointed out that therein the Hon’ble court held that the different sets of power conferred on different authorities under the Act has to be exercised within the areas specifically delineated by the Act and the exercise of power under one provision cannot trench upon the powers available under another provision of the Act; that so far as the Revenue is concerned, the power conferred under the Act is to reopen the concluded assessment under Section 147 and/or to revise the assessment order under Section 263 of the Act, but the scope of the power/jurisdiction under the different provisions of the Act would naturally be different. It was also observed that powerand jurisdiction of the Revenue to deal with a concluded assessment, therefore, must be understood in the context of the provisions of the relevant sections noticed above. While in the Revenue any specific power to question an order of assessment by means of an appeal. Ld. DR has thus argued that though ld. AO issued a show cause notice, but did not give any finding on the submissions so made, the findings of the ld. PCIT are correct for the reasons recorded therein.
We have heard the rival contention and perused the material available on record.
Assessee has raised 5 grounds of appeal.
Ground no. 5 being general in nature does not require our adjudication.
By way of Grounds no. 1 to 4, assessee has challenged the findings of the ld. CIT(A) on the various technical as well as factual grounds raised therein.
Admittedly, the assessee furnished ITR declaring total income of Rs.
NIL. The same was processed u/s 143(1) of I. T. Act, 1961 at the returned income. Later on, information was received from the DDIT(Systems), New Delhi that the assessee had deposited cash amounting to Rs.55,15,000/- in his Bank Account during the F.Y. 2015-16, but, the assessee had failed to declare the same in the return of income. To assess escaped income of Rs. notice u/s 148 of I.T. Act, 1961 on 31.03.2021. In response to the notice the assessee filed his return of income on 06.08.2021. Thereupon, notice u/s 143(2) of the I.T. Act, 1961 and a notice u/s 142(1) was issued requiring the assessee to file certain information. On perusal of the data available with the department and from the bank statement supplied by the assessee in response to show cause notice, it was noticed that the assessee had made cash deposits amounting to Rs.15,000/- and other credit entries to the tune of Rs.55,00,000/- during the year under consideration but when asked to explain the sources of the deposits and furnish the documents for the same, the assessee failed to submit any satisfactory explanation. Therefore, a notice and draft assessment was issued on 15.03.2022 asking the assessee to show cause as to why addition as proposed in draft assessment order should not be made. The assessee filed a reply on 19.03.2022.After considering the reply AO noted that the assessee had done no business. Hence, the amount credited in the bank account amounting to Rs. 55,00,000/- was added as income from other sources and hence, treated as taxable income of the assessee. With said observations the assessment was completed as against the return loss of Rs. 36,480/- the total income determined at Rs. 54,63,520/-. the same the power vested upon her by section 263 of the Act. While doing so she noted that FAO failed to conduct due inquiry and verification on the issue of unexplained cash deposit of Rs. 15,000/- on unaccounted cash of Rs. 1 Crore in lieu of sale property. The advance received by the assessee company from Shri Upendra for the transaction examined by the FAO from the point of view taxability in terms of forfeiture of advance and parting performance of contract. Therefore, the order of the Assessing Officer was considered liable to be revised as per Explanation 2 clause (b) & (a) of section 263 of the Act, and accordingly, set aside.
So far as the issue of total cash deposited of Rs. 15,000 and credit transactions of Rs.1,00,00,000/- we find that as per claim of the assessee amount stands bifurcated into Receipt of Rs.20 lacs received in the year under consideration and Rs 80,00,000/- in the subsequent year.
So far as the amount of total credit is concerned the same was added which include Rs. 20,00,000/- and since assessee’s claim that the balance amount was not received in the year under consideration was considered by AO, the same cannot be considered to hold the order of the assessment as erroneous and prejudicial to the interest of the revenue. detailed explanation of the assessee and considered the explanation of the assessee. In this situation, finding of the ld. AO without considering it be erroneous or prejudicial to the interest of the revenue, could not be revised in a causal or routine manner without pinpointing any error on the part of the AO in considering all the facts placed on record by him before accepting the explanation of the assessee.
In the light of the discussion so recorded and in the light of the fact that ld. AO while making the assessment whole credit is added there is no other item left to be considered. When the assessee claimed that the said balance amount of Rs. 80 Lac had not been received in the form of cheque and the same was deposited in the subsequent year, the order of the ld. AO cannot be said to be either erroneous or prejudicial to the interest of the revenue.
When all the aspects were considered, we do not find any merit in the observation of the ld. PCIT that this issue had not been examined at all by the ld. AO. Rather, this observation is general without pointing out any failure on the part of the ld. AO.
As regards the decision cited and ratio in the case of Jagdish Kumar case (Supra) therein the Revenue had cited observations made by Hon’ble investigator cannot remain passive on the face of a return which is apparently in the order but calls for further enquiries; the decision in Gee Vee Enterprise deals with the issue that generally revenue does not scrutinize every case in detail, but, when a case is picked up for scrutiny, surely it is the duty of the Assessing Officer to conduct a thorough investigation.
We find that AO had proposed the addition for whole amount but after that he considered the reply of the assessee and accepted the version submitted by the assessee, and as such, it cannot be said that order passed by the AO is erroneous or prejudicial to the interest of the revenue.
The facts of the case on hand, and the facts of the above cited case are different and as such do not help the revenue.
As regards the invocation of powers u/s. 263 of the Act we note that even theExpl. 2(a)& (b) do not confer unlimited powerson the PCIT, and it is held that despite there being an amendment, enlarging the scope of the revisionary power of the ld. PCIT u/s 263 to some extent, it cannot justify the invoking of the Expl. 2(a) and (b) in the facts of the present case.
Newly inserted Explanation 2(a) to Sec. 263 does not give unfettered powers to Commissioner to revise each order. Said power can be exercised enquiries or verification which should have been made. Herein, having regard to the totality of facts and circumstances, it cannot be said to be a case where the subject assessment order dt. 23.03.2022 should be alleged to be erroneous or prejudicial to the interests of the revenue. There is neither any error of law or of factsnor a case of erroneous assumption by the AO as regards facts or of law, as alleged by the ld. PCIT.
In the light of these discussion ground no 1 to 4 raised by the assessee are allowed.
Hence, in view of these legal and factual submissions, and the binding judicial precedents, the impugned order passed u/s 263 deserves to be quashed.
As a result, both these appeals are allowed.
Order pronounced in the open court on 20/12/2024.
Sd/- Sd/- ¼ujsUnz dqekj½ ¼jkBkSM+ deys'k t;UrHkkbZ½ (NARINDER KUMAR) (RATHOD KAMLESH JAYANTBHAI) U;kf;d lnL;@Judicial Member ys[kk lnL; @Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 20/12/2024 *Ganesh Kumar, Sr. PS आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. The Appellant- Shree Shyam Buildstructure Private Limited, Sikar 2. izR;FkhZ@ The Respondent- ITO, Ward-1, Sikar & 818/JP/2024 Shree Shyam Buildstructure Pvt. Ltd. 3. vk;djvk;qDr@ The ld CIT 4. vk;dj vk;qDr¼vihy½@The ld CIT(A) विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 5. xkMZQkbZy@ Guard File (ITA Nos. 815 & 818/JP/2024) 6. vkns'kkuqlkj@ By order,
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