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Facts
The assessee challenged an order passed under Section 263 of the Income Tax Act, which had directed a fresh assessment. The original assessment was based on cash deposits made by the assessee, which were claimed as gifts and business receipts. The Revisional Authority found the original assessment order to be erroneous and prejudicial to the revenue.
Held
The Tribunal held that the Revisional Authority, without conducting further inquiry or appreciating further material, had given a finding that the assessment order was prejudicial. The Tribunal found that the impugned order was not sustainable under law as the Revisional Authority had not sufficiently demonstrated that the AO's inquiry was inadequate.
Key Issues
Whether the Revisional Authority was justified in directing a fresh assessment without sufficient material and inquiry? Whether the original assessment order was erroneous and prejudicial to the revenue?
Sections Cited
143(3), 147, 263, 68, 148
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Income Tax Appellate Tribunal, DELHI BENCH, ‘A’: NEW DELHI
Before: SHRI S RIFAUR RAHMAN, ACCOUNTNAT MEMBER & SHRI ANUBHAV SHARMA
ORDER
PER ANUBHAV SHARMA, JM,
This appeal has been preferred by the assessee against order dated 26.03.2021 of the learned Principal Commissioner of Income Tax, Faridabad in Appeal No.PCIT, Faridabad/Revisioini-263/100000196524/2021 arising out of order dated 24.12.2018 passed u/s 143(3)/147 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) by National Faceless Assessment Centre, New Delhi, pertaining to Assessment Year 2011-12.
2. At the time of hearing, it was submitted by the ld. AR that there is a delay of 1047 days in filing the appeal for which it is submitted that earlier the appeal was filed by the assessee and by order dated 27.02.2025 the coordinate Bench had found that the grounds raised were not as per the impougned order but challenge was of assessment order and needed to be recast all over. Therefore, the assessee was given liberty to file a fresh appeal against the order u/s 263 of the Act. Thus, given the peculiar circumstances, the delay is explained and the same is condoned. The appeal is admitted for hearing.
Now, the assessee has challenged the impugned order u/s 263 of the Act primarily on the basis that on the same set of facts the assessment was reopened and while challenging the impugned order u/s 263 of the Act the assessee has also challenged the assessment order u/s 147/143(3) of the Act alleging that the reopening itself was bad.
It comes up from the impugned order u/s 263 of the Act that the ld. Revisional Authority had found the assessment order dated 24.12.2018 to be erroneous and prejudicial to the interests of the Revenue for the reason that (i) The assessee had not filed Income Tax Return for AY 2011- 12. Later on the case was selected for scrutiny under 148 as the assessee has made cash deposits of Rs.33,49,000 on various dates in his bank accounts maintained with Oriental Bank of Commerce. Subsequent to service of Notice u/s 148, the assessee filed ITR declaring income of Rs.1,14,470/-.
(ii) The assessee stated that Rs. 28 lakhs was received as gift from wife and Rs.3,49,000/- was his business receipts. Further, the assessee’s wife sold 4 properties and received Rs. 28 Lakhs. She further got into transaction with Shiv Kumar for purchase of land and paid 28 lakhs as advance. After cancellation of deal, she received back 28 lakhs and gifted to her husband. The affidavit for purchase of land of Rs.56 lakh was signed on 18.12.2018 and agreement to sell authenticating the purchase of such land was attached of dated 05.12.2018 rather than FY 2010-11. Further no such withdrawals from her wife’s account authenticating such deal was attached as she sold land in year 2008 and this cash deposits belong to FY 2010-11. Hence, the cash deposit of Rs.33,49,000/- remains unexplained which requires to be taxed u/s 68.
The assessee had responded by submitting that Rs.28,00,000/- was received by him as gift from his wife and Rs.3,49,000/- relate to business receipts. Further, it was claimed that the assessee's wife sold 4 properties and received Rs. 28 Lakhs and further she got into transaction for purchase of land and paid Rs. 28 lakhs as advance and subsequently, after cancellation of deal, she received back 28 lakhs and gifted to her husband. The evidence to this effect is an affidavit for purchase of land for Rs. 56 lakh and cancellation of agreement to sell, signed by Notary on 18.12.2018.
6. The revisional authority in impugned order observes that evidences of other land sold by the wife of the assessee relates to the year 2008 and the cash deposits pertains to the financial year 2010-11. There appear no such withdrawals from wife’s account in the year under consideration, i.e. F.Y. 2010-11. The evidence on the record about the nature of business claimed by the assessee also needs verification. Hence, the cash deposits requires to be treated as unexplained in the year under consideration. The ld. Revisional Authority was not satisfied and considered it to be a case of assessment order being erroneous and prejudicial to the interests of the Revenue in the light of the Explanation 2 to section 263 of the Act and had accordingly directed the AO to do a fresh assessment.
Although the ld. DR has defended the impugned order, we find that on 13.03.2018 the AO had issued a notice u/s 148 primarily on the basis of information available with the AO through Non-filer Management System that the appellant had made cash deposit of Rs.33,491/- in his bank account. On 12.06.2018, the return of income was filed by the assessee declaring an income of Rs.1,14,470/- in response to his notice. Further, on 21.12.2018, the assessee filed a reply submitting that this amount was deposited having received Rs.28 lakhs as a gift from wife and Rs.3,49,000/- was his business receipt. A copy of affidavit dated 19.12.2018 of wife in respect of the gift was placed before the AO. In support of source of source in the hands of wife the assessee also submitted before the AO that the wife of the assessee had sold 2008-09 relevant to assessment year 2009-10 and the copies of sales deeds were also filed. This amount was given by the assessee’s wife as advance for purchase of another land aggregating to Rs.56 lakhs from one Shiv Kumar on 14.08.2008 and the copy of agreement to sell was also placed before the AO. The case of the assessee is that this agreement was cancelled and on 28.04.2010 the cash was received back. Copy of affidavit of the seller stating the fact of agreement to sell in 2008 and its cancellation was also filed during the course of assessment proceedings. The AO having considered all these evidences passed the order by making addition of Rs.72,000/- on the basis of household expenses being not explained.
In the light of the aforesaid discussion, if the impugned order u/s 263 of the Act is considered, very apparently, the ld. Revisional Authority, without any further inquiry or appreciating any further material, has given a finding that the assessment order is prejudicial to the interests of the Revenue. To establish that there is a lack of inquiry or investigation by the AO, the ld. Revisional Authority should at least point out in the order itself as to what all was reasonably required to be done in due course of assessment which has not taken place or escaped the attention of the AO making the order erroneous so far as prejudicial to the interest of Revenue. If the AO has examined all the material evidences and has taken a view, then, by merely underscoring some deficiency in the view or possibly an alternative view, the ld. Revisional Authority cannot justify a finding that the assessment order is erroneous and prejudicial to the interests of the Revenue. There should be something to show that the order of the AO is unsustainable in law on the basis of some minimal inquiry independently conducted, more so, in a case where on the same set of grounds the AO has reopened and show caused the assessee and having considered the response, concluded the assessment, then, there is all the more onus on the ld. Revisional Authority to show that the order was unsustainable in law. Thus, in the given facts and circumstances, we are of the considered view that the impugned order is not sustainable under law. The grounds no 3-8 are sustained. Remaining grounds are left superfluous and academic so need no separate adjudication. The appeal is allowed. The impugned order is quashed.
Order pronounced in the open court on 19th November, 2025.