MAHAVEER PRASAD JAIN,JAIPUR vs. PRINCIPAL CIT-2, NEW CENTRAL REVENUE BUILDING

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”B” JAIPUR Mk0 ,l- lhrky{eh] U;kf;d lnL; ,oa Jh jkBksM deys'k t;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ITA. No. 02/JP/2023 fu/kZkj.k o"kZ@Assessment Years : 2017-18 cuke Mahaveer Prasad Jain Principle CIT-2 Teli Darwaja Road, Sambhar Vs. New Central Revenue Building, Jaipur Lake Jaipur LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: ADBPJ 9174 G vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Sh. Ashish Khandelwal (C.A.) jktLo dh vksj ls@ Revenue by : Sh. Avadesh Kumar (CIT) a lquokbZ dh rkjh[k@ Date of Hearing : 16/03/2023 mn?kks"k.kk dh rkjh[k@Date of Pronouncement :17/04/2023 vkns'k@ ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM This appeal is filed by the assessee aggrieved from the order of the Pr. Commissioner of Income Tax, PCIT, Jaipur-2 [ Here in after referred as Ld. PCIT ] for the assessment year 2017-18 dated 29.03.2022 as per provision of section 263 of the Act, which in turn arises from the order passed by the ITO, Ward-7(3), Jaipur passed under Section 143(3) of the Income tax Act, 1961 (in short 'the Act') dated 09.05.2019.

2 ITA No. 2/JP/2023 Mahaveer Prasad Jain vs. PCIT, Jaipur

delay of 220 days in filing of the appeal by the assessee for which

the ld. AR of the assessee filed an application for condonation of

delay with following prayers:

“I, Mahaveer Prasad Jain, the above named assessee-appellant would like to submit that: 1. That the appellant is carrying on business of whole sale & retail trading of Sugar, Edible Oil & etc. in Sambhar Lake, District Jaipur which is rural or sub- urban area and there are very few counsels undertaking Income tax practice and having in depth knowledge of Income Tax laws. 2. That the original assessment for the relevant year was passed by ITO ward 7(3) on 09.05.2019. Subsequently, the revisionary proceedings u/s 263 was initiated by the worthy Pr. CIT-2, Jaipur and thereafter the revisionary order u/s 263 of the Income Tax Act was passed by worthy Pr. CIT (2)-Jaipur setting aside the original assessment order u/s 143(3) on 29.03.2022 which was duly served upon the appellant on 29.03.2022 through e-mail. 3. That the appeal against impugned order was statutorily required to be filed before worthy tribunal by 28.05.2022 and therefore there is delay of 214 days in filing form 36 which the appellant requests your honour to condone and allow admission of the appeal. 4. That the delay in filing Form 36 is solely due to lack of advice from the local counsel (Sambhar Lake), who was not aware that the revisionary order u/s 263 is appealable order before worthy ITAT 5. That the factum of impugned revisionary order was appealable before worthy ITAT came to the knowledge of the appellant only when the notice u/s 142(1) was issued from the NFAC, New-Delhi Dated 16.12.2022 for making fresh assessment for relevant year and thereafter appellant contacted new counsel at Jaipur,who updated the appellant regarding the same. 6. That the delay in filing the form 36 is bona fide & unintentional and backed by reasonable cause. It is therefore, humbly prayed to kindly condone the delay of 214 days in filing Form 36 and allow admission of appeal and oblige.”

3 ITA No. 2/JP/2023 Mahaveer Prasad Jain vs. PCIT, Jaipur

2.1 In addition to the petition for condonation of delay is also

supported by an affidavit duly swooned and executed wherein it

has been contended that;

4 ITA No. 2/JP/2023 Mahaveer Prasad Jain vs. PCIT, Jaipur

2.2 Based on the stated facts in the petition and affidavit filed by

the assessee it is noted as even confirmed by the registry that this

present appeal is delayed by 220 days. As pleaded that the period

of delay in filling this appeal is absolutely inadvertent and has

occurred due to incorrect advise of the counsel and in support of

this the assessee has filed the affidavit also. The counsel who

appeared in the assessment proceedings and has not advised to

file an appeal against the order of the PCIT passed under section

263 of the Act. There was no malafide of deliberate delay in filling

the present appeal and when the assessee came to know about

the absolute right of filling an appeal against the order of the PCIT

they moved this present appeal with the prayer for condonation of

delay. The ld. AR of the assessee further submitted that in the

assessment proceeding the other chartered accountant

represented the assessee. Whereas the present appeal is filled by

another chartered accountant. In support of this contention the

assessee filed an affidavit and in the interest of the justice he

prayed to condone the delay. The ld. AR of the assessee also

submitted that the assessee has not gained anything and there is

5 ITA No. 2/JP/2023 Mahaveer Prasad Jain vs. PCIT, Jaipur no prejudice caused to the department of present dispute as the

assessee has merits of his case.

2.3 Per contra the ld. DR appearing on behalf of the revenue

strongly objected to the condonation petition on reasons placed

before the bench. The assessee is a regular tax payer availing the

tax professional services. So, the assessee has no merits on this

condonation petition and the appeal should not be entertained as

the assessee failed to justify the delay in filling the present appeal.

The affidavit filed by the assessee has no support of any evidence

to support the contention so raised.

material available on record made available by both the parties.

The bench noted that there is no dispute about the number of days

delay by both the parties that this appeal is filed by the assessee

after a delay of almost 220 days. To support the reason for the

delay the ld. AR of the assessee submitted that they have

reasonable reasons for not filing an appeal in time and the

assessee live in remote area where the professional tax practioner

may not have much knowledge and based on the advice so

received there has been a delay and the assessee should not be

deprived from the justice on mere technicalities.

6 ITA No. 2/JP/2023 Mahaveer Prasad Jain vs. PCIT, Jaipur

3.1 There is also no dispute that under section 253(5) of the Act,

the Tribunal may admit an appeal filed beyond the period of

limitation where it is satisfied that there was sufficient cause on the

part of the assessee for not presenting the appeal within the

prescribed time. Section 253(5) deals the power of the tribunal and

the same is reiterated here in below:

Section 253 (5) The Appellate Tribunal may admit an appeal or permit the filing of a memorandum of cross-objections after the expiry of the relevant period referred to in sub-section (3) or sub-section (4), if it is satisfied that there was sufficient cause for not presenting it within that period.

3.2 Thus, based on that provision tribunal may admit an appeal

filed beyond the period of limitation where it is satisfied that there

exists a sufficient cause on the part of the assessee for not

presenting the appeal within the prescribed time. The explanation

of the assessee therefore, becomes relevant to determine whether

the same reflects sufficient and reasonable case on its part in not

presenting the present appeal within the prescribed time. In the

present case, the assessee filed an affidavit stating that due to lack

of advice from the local counsel(Sambhar Lake) who was not

aware of the legal position that the revisionary order u/s. 263 is

appealable order before worthy ITAT.

7 ITA No. 2/JP/2023 Mahaveer Prasad Jain vs. PCIT, Jaipur 3.3 That the fact the revisionary order was appealable before

ITAT came to the knowledge of the assessee only when the notice

u/s. 142(1) was issued from the NFAC for making the fresh

assessment for relevant year and the assessee contacted new

counsel at Jaipur who update the assessee about the right of

appeal against the impugned order. As advised by the said

counsel the present appeal lies against the order passed u/s. 263

of the Act for which the ld. AR prayed for condonation.

3.4 It has been held by the Hon'ble Bombay High Court in case

of Vijay Vishin Meghani vs. DCIT wherein it has referred to the

decision in case of Concord of India Insurance Co. Ltd. Vs. Smt.

Nirmala Devi & Ors. AIR 1979 SC 1666 wherein the Hon'ble

Supreme Court has held that a legal advice tendered by a

professional and the litigant acting upon it one way or the other

could be a sufficient cause to seek condonation of delay and

coupled with the other circumstances and factors for applying

liberal principles and then said delay can be condoned. Eventually,

an overall view in the larger interest of justice has to be taken.

None should be deprived of an adjudication on merits unless the

Court of law or the Tribunal/Appellate finds that the litigant has

deliberately and intentionally delayed filing of the appeal, that he is

8 ITA No. 2/JP/2023 Mahaveer Prasad Jain vs. PCIT, Jaipur careless, negligent and his conduct is lacking in bona fides. The

Hon'ble High Court thereby condoned the delay of 2984 days in

filing the appeals holding that the explanation placed on affidavit

was not contested nor we find that from such explanation, can we

arrive at the conclusion the assessee was at fault, he intentionally

and deliberately delayed the matter and has no bona fide or

reasonable explanation for the delay in filing the proceedings and

the position is quite otherwise.

3.5 Moreover, in case of Collector, Land Acquisition vs MST

Katiji, the Hon'ble Supreme Court has held that the expression

'Sufficient Cause' employed by the legislature is adequately elastic

to enable the Courts to apply the law in a meaningful manner to

sub-serves the ends of justice that being the life-purpose of the

existence of the institution of Courts. It was further held by the

Hon'ble Supreme Court that such liberal approach is adopted on

one of the principles that refusing to condone delay can result in a

meritorious matter being thrown out at the very threshold and

cause of justice being defeated. As against this, when delay is

condoned, the highest that can happen is that a cause would be

decided on merits after hearing the parties. Another principle laid

down by the Hon'ble Supreme Court is that when substantial

9 ITA No. 2/JP/2023 Mahaveer Prasad Jain vs. PCIT, Jaipur justice and technical considerations are pitted against each other,

the cause of substantial justice deserves to be preferred for the

other side cannot claim to have vested right in injustice being done

because of a non-deliberate delay. It was also held by the Hon'ble

Supreme Court that there is no presumption that delay is

occasioned deliberately, or on account of culpable negligence, or

on account of male fides. A litigant does not stand to benefit by

resorting to delay. In fact, he runs a serious risk. In the instant

case, applying the same principles, we find that the assessee has

all along acted diligently in safeguarding his legal rights and

availing the remedies available to him and has acted based on the

advice and assistance sought from his legal Counsels. He was

initially advised not to file appeal by the earlier counsel, however,

due to subsequent advice of another counsel the assessee was

advice to file the present appeal, we find that there is no culpable

negligence or malafide on the part of the assessee in delayed filing

of the present appeal and he does not stand to benefit by resorting

to such delay. Similar view is taken by the apex court in the case of

Improvement Trust, Ludhiana in civil appeal no. 2395 of 2008,

wherein the court ruled that in the legal arena, an attempt should

always be made to allow the matter to be contested on merits

10 ITA No. 2/JP/2023 Mahaveer Prasad Jain vs. PCIT, Jaipur rather than to throw it on such technalities. The apex court further

held that it is the duty of the court to see to it that justice should be

done between the parties.

3.6 In light of above discussions and in the entirety of facts and

circumstances of the case, we are of the considered view that the

assessee in his averments has made out a clear case that there

was sufficient cause which being beyond his control, prevented

him from filing the present appeal in time before the Tribunal. The

assessee has sought advice from his Counsels and was not guilty

of negligence on his part and it cannot be said that the delay was

due to the negligence and inaction on the part of the assessee,

which could have been avoided by the assessee if he had

exercised due care and attention. We find that there is no culpable

negligence or malafide on the part of the assessee in delayed filing

of the present appeal and he does not stand to benefit by resorting

to such delay. Therefore, in the factual matrix of the present case,

we find that there exists sufficient and reasonable cause for

condoning the delay of 220 days in filing the present appeal and as

held by the Hon'ble Supreme Court, where substantial justice and

technical considerations are pitted against each other, the cause of

substantial justice deserved to be preferred. Therefore, in exercise

11 ITA No. 2/JP/2023 Mahaveer Prasad Jain vs. PCIT, Jaipur

of powers under section 253(5) of the Act, we hereby condone the

delay of 220 days in filing the present appeal as we are satisfied

that there was sufficient cause for not presenting the appeal within

the prescribed time and the appeal is hereby admitted for

adjudication on merits.

marched this appeal on the following grounds of appeal:

“1. That the ld. Pr. CIT has erred in law as well as in facts of the case in exercising revisionary jurisdiction u/s 263 of the IT Act by making observation which are contrary to assessment records 467945/-

carrying on business of whole sale & retail of of cotton seed, cotton

seed cake, edible oil tin sugar bag and wheat bag and other food

products in Sambhar Lake area, District Jaipur which is rural or

sub-urban area. The assessee has filed its e- return u/s 139(1) of

the Income-tax Act 1961 on 28.10.2017 declaring total income of

Rs 4,89,340/- On selection of the case for scrutiny through Manual,

notice u/s 143(2) of the income-tax Act, 1961 was issued on-line on

29.09.2018 on ITBA Portal which was served upon the assessee

12 ITA No. 2/JP/2023 Mahaveer Prasad Jain vs. PCIT, Jaipur through E- Mail or Regd. Post. Notice u/s 142(1) along with query

letter was issued on 18/11/2018 fixing the case for submit/produce

the document online mode on or before 03.12.2018. Due to change

of incumbent notices u/s 142(1) were issued time to time and in

compliance of these notices, assessee submitted reply through

electronically "E Proceeding" on ITBA Portal. Subsequently on

30.04.2019 notice u/s. 142(1) was issued for provide/furnish books

of accounts i.e cash book, bank book, bills/vouchers, ledger and

details/supporting document of expenses debited in profit and loss

account. On 02.05.2019 the AR of the assessee attended and

furnished books of accounts i.e. cash book, bank book,

bills/vouchers, ledger and supporting document of expenses.

Based on the examination the documents and details the

assessment was completed by making a disallowance of Rs.

43,814/- by the assessee officer.

has called for the records of the assessment. On examination and

perusal of the assessment order, it is seen that while completing

the assessment the Assessing Officer has not raised the issue of

deposit of old bank notes for which no detailed enquiry had been

13 ITA No. 2/JP/2023 Mahaveer Prasad Jain vs. PCIT, Jaipur

conducted by the AO. The ld. PCIT further contended that the AO

has not called for the deposit receipt from the bank including the

counterfoils and has not verified the cash deposited in the bank vis

a via cash book. Further, no cash flow statement has been filed by

the assessee which could reflect the availability of cash with the

assessee. No cash book has been filed during the assessment

proceedings where from the cash deposited in the bank could be

verified. Therefore, he is of the view that the ld. AO has not

properly addressed the issue while completing the assessment.

Based on these propositions the ld. PCIT hold a view that the order

passed by the assessing officer is erroneous in so far as it is

prejudicial to the interest of the revenue and thereby issued a show

cause notice dated 08.03.2022. The assessee filed its reply dated

23.03.2022. The ld. PCIT after considering the reply passed the

the order u/s. 263 of the Act and the relevant observation of the ld.

PCIT is reiterated here in below:

“9. From the above facts and circumstances of the case and having regard to the material available on record, the Assessing Officer failed to consider/apply his mind to the information available on record with regard to the cash deposited in the bank in old SBN of Rs. 16,80,000. This is turn has resulted in passing of an erroneous order by the Assessing Officer in the case due to non-application of mind to relevant material, reflecting non appreciation of facts and an incorrect application of mind to law which is prejudiced to the interest of the revenue. 10. Accordingly, by virtue of powers conferred on the undersigned under the provisions of section 263 of the Income Tax Act 1961, I hold

14 ITA No. 2/JP/2023 Mahaveer Prasad Jain vs. PCIT, Jaipur

that the order under Section 143(3) of the IT Act dated 09.05.2019 for AY 2017-18 passed by the Assessing Officer is erroneous in so far as it prejudicial to the interest of revenue as the said order has been passed by the Assessing Officer in a routine and perfunctory manner without considering/applying his mind to the information available on record. The order of the Assessing Officer is therefore liable to revision under the clause (a) & (b) of Explanation (2) to section 263 of the Income Tax Act. Hence, the assessment order is set aside as discussed above.”

marched this appeal. To support the contentions so raised the ld.

AR of the assessee has relied upon the written submission and the

same is reiterated here in below:

”The Appellant is an individual and exclusively engaged in retail & wholesale trading of cotton seeds , Sugar , Edible Oil & etc. under the trade name of M/s Mohan Lal Mahaveer Prasad . The business place of the assessee is situated at Teli Darwaja , Sambhar Lake , District Jaipur . The peculiar line of business involves frequent cash deposits into bank account as a regular phenomenon due to cash sales & cash realization from debtors (farmers & small retailers) and the appellant’s business is not exception to same . During the course of demonetization period , the appellant deposited cash to the tune of Rs. 51,60,000/- into Bank account comprising of Specified Bank Notes (SBN) &Non Specifed Bank Notes (Non-SBN ) to the tune of Rs. 16,80,000/- & 34,80,000/- respectively . Subsequently the return was filed u/s 139(1) vide e-filed acknowledgment No. 263605631281017 dated 28.10.2017 . Thereafter , the statutory notices u/s 143(2) & questionaries u/s 142(1) were issued , which were duly responded and source of cash deposit , which formed the sole reason for triggering 143(2)/143(3) proceedings , was explained in detail along with corroborative evidences. Even the Books of Accounts were called for & thoroughly examined by the AO , for verifying the contention claimed in the letter and thereafter satisfying about the claim & contention of the appellant , the detailed & judicious assessment order was passed on 09.05.2019 .

Subsequently , The ld PCIT-II , Jaipur by making finding that the ld AO failed to make any verification relating to source of cash deposit made during demonetization period & also holding non application of mind to the

15 ITA No. 2/JP/2023 Mahaveer Prasad Jain vs. PCIT, Jaipur

issue, assumed reversionary jurisdiction u/s 263 of the Act and thereafter passed the order setting aside the original assessment u/s 143(3) dated 29.03.2022 by holding the original order to be erroneous & pre judicial to the interest of the revenue , Aggrieved by the same, appellant is in appeal before your honour . With this background , the grounds of appeal & brief submission covering both the grounds (as both are interconnected) of the appellant is encapsulated as under:- GOA 1 :- That the ld Pr. CIT has erred in law as well in facts of the case in exercising revisionary jurisdiction u/s 263 of the IT Act by making observation which are contrary to assessment records. GOA 2:- That the ld Pr. CIT has erred in law as well in facts of the case in not appreciating that alleged order u/s 143(3) was passed by the AO after due verification of the books of accounts & information supplied by the appellant during course of assessment proceedings. Contention of the PCIT The ld PCIT assumed the revisionary jurisdiction u/s 263 by making following finding , reproduced (in verbatim from impugned order) as below :- 1. It is seen that the A.O. while framing the assessment have not verified the cash deposited by the assessee of Rs. 16,80,000 which were old SBNs. ( Para 1 Pg 4 of Impugned order)

16 ITA No. 2/JP/2023 Mahaveer Prasad Jain vs. PCIT, Jaipur

At the very outset , It is submitted that the condition precedent for exercise of jurisdiction u/s 263 by the PCIT is that the order of the AO is established to be erroneous in so far as it is prejudicial to the interest of the revenue. Thus, for exercising the jurisdiction both the twin conditions are mandatorily required to be satisfied . This provision cannot be invoked to correct each and every type of mistake or error committed by the AO; it is only when an order is erroneous as also prejudicial to Revenue’s interest, that the provision will be attracted. Adverting to the facts of the case , It is submitted that assumption of jurisdiction u/s 263 of the Income tax by the PCIT was uncalled for & unwarranted, in as much , the original assessment order dated 09.05.2019 was passed after judicious & meticulous appreciation & verification of the information and examination of books of accounts and therefore even if same could be hold to be prejudicial to Interest of revenue but in any stretch of imagination cannot come under the ambit of erroneous order .The assumption of Jurisdiction is erroneous & unwarranted , for want of the following submitted point wise as under :- 1. That there was no occasion for the ld PCIT to assume revisionary jurisdiction by holding order to be erroneous by making finding as to absence of inquiry & no application of mind what so ever , in as much , the assessment order was passed after due verification & examination of cash deposit made during course of demonetization period. 1.1 That from the bare perusal of the order of PCIT , it is evident that it is not the the case of the PCIT that the AO has not made enquiries or verification which should have been made in respect of verification of cash deposit during demonetization but it is the case where in PCIT made specific finding that there is no verification at all of the issue involved by the AO & hence non application of mind by the AO in any manner what so ever . Thus , the assumption of the jurisdiction by the PCIT is built upon finding that there is “complete absence of enquiry ” by the AO . In this regard , It is submitted that whole edifice over which foundation of the case is being built “complete absence of enquiry by the AO ” is altogether absent & contrary to information & document on assessment record , the finding is controverted point wise as under:-

1.1.1 The AO has made proper enquiries & verification and only thereafter accepted the documents filed during the course of assessment and passed the order after due application of mind.

1.1.2 The sequence of events which took place before passing of assessment order is narrated as under , for fortifying the contention that there was enquiry and that too proper & adequate :-

The Notice u/s 143(2) was issued on 29.09.2018 . The AO on receipt of detailed reply of the assessee on 10.10.2018 to notice u/s 143(2) in connection with source of cash deposit during demonetization , did not

17 ITA No. 2/JP/2023 Mahaveer Prasad Jain vs. PCIT, Jaipur

accepted the issue of cash deposit summarily but shown appetite for further inquiry & verification , which is palpable from notice dated 18.11.2018 where in he seek copy of bank statements so as to verify the trend of cash deposit through out the year vis-à-vis demonetization period & subsequently through notice dated 10.04.2019 , further seek copy of sales & purchase ledger along with confirmation from parties from whom purchases exceeding Rs. 5 lakhs were made so as to verify that there was no backdating of sales (cash sales )not backed by purchases & ultimately called for production of books of accounts viz. cash book , bank book , stock register , sales & purchase bill through notice dated 30.04.2019 . Therefore , the observation of the PCIT that there was no enquiry & complete absence of application of mind is contrary to information on assessment records.

1.1.3 The ld AO , even in in body of order duly incorporated & discussed the submission of the appellant and also observed that “AR of the assessee also furnished details/supporting documents of cash deposit made by him during the year under consideration (what to say of demonetization period) .Even the factum of calling & verification of books of accounts is contained in assessment order therefore in any stretch of imagination , the finding of PCIT that there was complete absence of any enquiry has no legs to stand .

1.1.4 The thorough & meticulous verification of submission & examination of books of accounts including but not limited to cash book , bank book , sales book , purchase book , sales & purchase bills , stock register was undertaken by the AO before arriving at the satisfaction that cash deposit was explained ,which echoes that there was due application of mind by the AO & thus foundation for exercise of jurisdiction u/s 263 by the PCIT is apparently missing . 2. The Invoking of Explanation 2 to S. 263 is without jurisdiction for the reasons submitted pointwise as under :- 2.1 The Pr.CIT had observed that order of AO is erroneous with in the purview of Explanation 2 of section 263(1) and therefore liable to revision under clause (a) & (b) of explanation (2) to section 263(1) of the Income Tax Act , however there is no whisper in the show-cause notice issued under section 263 dated 08.03.2022 , that she is going to invoke the Explanation 2 to 263, therefore invocation of Explanation in the order without confronting the assessee is not appropriate and unsustainable in law. (Refer Pg 24 of PB) 2.2 The law is well settled that any proposed action which do not find place in the SCN u/s 263 or without specifically confronting the assesse of such proposed action before invoking S. 263, shall vitiate the entire proceeding and therefore, the resultant order u/s 263 has to be quashed.

18 ITA No. 2/JP/2023 Mahaveer Prasad Jain vs. PCIT, Jaipur

2.2.1 This aspect is directly covered by recent decision of Hon’ble Supreme Court in the case of Principal Commissioner of Income-tax, Surat- 2 Vs. Shreeji Prints (P.) Ltd. [2021] 130 taxmann.com 294 (DPB 43-48) wherein vide the Hon’ble Supreme Court held as under”-

“Section 69, read with section 263, of the Income-tax Act, 1961 Unexplained investments (Unsecured loans)- Assessment year 2013-14 Assessee-company had. received unsecured loans from two different companies Commissioner noting that said loans were shown as investment in assessee’s name in balance sheet of respective companies exercised his revisionary powers and passed an order without giving an opportunity to assessee of being heard, invoking Explanation 2 to section 263 High court by impugned order held that since Assessing Officer has made inquiries in details and accepted genuineness of loans received by assessee, such view of Assessing Officer was a plausible view and same cannot to be considered erroneous or prejudicial to interest of revenue Whether SLP against said impugned order was to be dismissed-Held, yes (Para 21 [in favour of assessee)” Since the facts are admitted and undisputed hence the impugned order deserved to be quashed in toto.

2.2.2 It is well settled that the amendment (Expl. 2(a) &(b) ) does not confer blind & unbridled powers to the PCIT , 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) in the facts of the present case. The power of PCIT subsequent to amendment was dealt with & lucid finding was made in following judgements :-

In Narayan Tatu Rane Vs. ITO, (2013) 7 NYPTTJ 1493 (Mum) , it was held that newly inserted Explanation 2(a) to S. 263 does not authorize or give unfettered powers to Commissioner to revise each and every order, if in his (subjective) opinion, same has been passed without making enquiries or verification which should have been made. As submitted above here also the AO having already applied its mind (directly or indirectly), the assessment order was not erroneous.

19 ITA No. 2/JP/2023 Mahaveer Prasad Jain vs. PCIT, Jaipur

to have been emanated out of trading operations of the business and therefore the alleged observation is bereft of any merit & contrary to assessment records .It is mysterious how PCIT reached to the conclusion that there was no reply of the assessee on issue of cash deposit .

20 ITA No. 2/JP/2023 Mahaveer Prasad Jain vs. PCIT, Jaipur

judiciously and conducted enquiries in the course of assessment proceedings . (Reliance placed upon Plastic Concern vs ACIT [61 (TTJ) 87(Cal)] 7. That one of the alleged observation of the PCIT in justifying his arbitrary assumption of jurisdiction is the “failure of the AO in calling deposit receipts from the bank including the counterfoils and has not verified the cash deposited in the bank account vis-a-vis cash book “ .Further No cash book has been filed during the assessment proceedings . The alleged observation has no legs to stand and is hereby controverted point wise as under :- 7.1 That with due respect to the contention of the PCIT & as per our understanding of IT law there is no provision in the law which mandates filing of cash book through ITBA portal only , as a condition precedent for explaining the source of cash deposit . (Emphasis Supplied) 7.2 The cash book was produced before AO and same was examined & verified by him,before arriving at satisfaction regarding cash deposits during demonetization .That it is mysterious & not understandable how the bank counterfoils /deposit receipts can decipher about source of cash deposit and more interestingly how can they weight over the cash book , sales voucher & sales book , which were duly verified & examined for reaching to the satisfaction about source of cash deposit .

7.3 That the ld AO vide letter dated 30.04.2019 directed for production of books of accounts on 02.05.2019 (Kindly refer Pg 22 of PB ) and even reference of same is contained in body of order . 7.4 That contention of the appellant that PCIT acted in haste and arbitrary manner & without understanding the geography of the case , also gets cemented from the fact that PCIT failed to appreciate that appellant ’s book of account were maintained manually and were in regional language(hindi) and therefore neither it was possible to upload voluminous cash book on portal nor without linking the same with sales & other ledger would have served any purpose . The ld AO was well acquainted with the fact and therefore specific notice for production of the books of accounts for examination & verification was made and same was thoroughly & vigilantly verified & examined on 02.05.2019 7.5 That the ld PCIT failed to appreciate the assessment records in true spirt gets fortified from the fact that appellant deposited Non SBN currency of Rs. 34,80,000/- during demonetization , which standalone was sufficient evidence by itself , to adduce that there was perennial receipt of cash in the form of cash sales & realization for debtors in the business carried on by the assessee .

21 ITA No. 2/JP/2023 Mahaveer Prasad Jain vs. PCIT, Jaipur

7.1 The ld. AR of the assessee in addition to the written

submitted that the ld. PCIT has not appreciated the line of business

where in the assessee is engaged. The receipt of the cash is the

nature phenomenal in the business of the assessee and the same

is verified by the ld. AO. The relevant observation is made at page

3 of the his order. The ld. AR of the assessee filed a letter dated

09.10.2018 where in the details of the money so deposited into the

22 ITA No. 2/JP/2023 Mahaveer Prasad Jain vs. PCIT, Jaipur bank account was mentioned (APB-page 11 para 1) where in

details of the money so for an Amount of Rs. 51.60 out of that Rs.

16.80 was demonetized currency. The reply is considered and

thereafter vide notice dated 18.11.2018. Assessee submitted reply

on 02.12.2018 in e-proceeding module and related

acknowledgement was placed on record at page 18 of the paper

book. Considering the nature of business that the assessee carries

there is persistent deposit of cash and the same is not disputed

even by the PCIT and objected only for an amount of the

demonetized currency. The ld. AO vide notice issued on

30.04.2019 (APB-page,22-23) specifically called for the cash book,

bank book, sales and purchase and sales bills ledger account bank

statement and other related records. The same has been produced

and verified is recorded in the part of the assessment order and the

same is not disputed. The ld. AO at the four instances verified the

issue including source of the money so deposited into the bank

account by calling the relevant circumstantial related evidence.

Thus, there is no lack of inquiry or inadequate inquiry by the ld. AO.

Based on these the ld. AR submitted that the PCIT has not find any

mistake and thereby intend to review the order of the ld. AO and

23 ITA No. 2/JP/2023 Mahaveer Prasad Jain vs. PCIT, Jaipur the same is not permitted in law and thus, the order passed is bad

in law.

and observation made in the order passed under section 263 of the

Act. The ld. Sr. DR further submitted that the focus of the ld. AO

was on turnover and GP and not only the demonetized currency

deposited and its source. The ld. AO has not raised any specific

query and no special efforts appears to be have been made on the

issue and therefore, she heavily supported the finding of the ld.

PCIT.

placed on record and also gone through the judicial decision relied

upon. Both the parties have not disputed the fact mentioned in the

assessment proceeding about the act of the assessee in depositing

a sum of Rs. 51.60 lac in the bank account during the period of

demonetization. Out of the cash so deposited a sum of Rs. 16.80

lac was consisting of high value notes of Rs. 500 and Rs. 1000.

The ld. PCIT in his order contended that the ld. AO has not

properly addressed the issue while completing the assessment.

24 ITA No. 2/JP/2023 Mahaveer Prasad Jain vs. PCIT, Jaipur Even the ld. DR did not place anything further to support the any

specific error on the part of the assessee. We have perused the

assessment order and the relevant submission on the issue that

the assessee has given details in the assessment proceeding at

four instance so as to support the fact that inquiry in relation to the

generation of the cash by the assessee is verified by the ld. AO. It

is also not disputed by the PCIT or ld. Sr. DR for the balance

amount deposited in the demonetized period which is that out of

51.60 lacs but disputed only for an amount Rs. 16.80 lac being the

demonetized currency. There is no evidence or material that has

been observed by the PCIT from the details so placed on record by

the assessee in the assessment proceeding to disbelieve the

averments about the source of the said demonetized currency.

Merely the PCIT said that in his opinion the ld. AO has not properly

addressed the issue. The observation so made is very general and

routine without pinpointing any specific defect the action of the

PCIT u/s. 263 is nothing but a review of the order of the ld. AO. It

has been held in so many cases by the various High Courts and

Tribunal that the amendment made in section 263 does not confer

blind and uncontrolled power to the PCIT, despite there being an

amendment, enlarging the scope of the revisionary power of the ld.

25 ITA No. 2/JP/2023 Mahaveer Prasad Jain vs. PCIT, Jaipur

PCIT. The newly inserted explanation 2(a) to section 263 does not

authorize or give unfettered powers to Commissioner to revise

each and every order, if in his opinion same has been passed

without making enquiry or verification. Here in this case the ld. AO

has made enquiry at four instance and recorded his satisfaction

after examined the books of account, bank statement and purchase

and sales records of the assessee. Here in this case even there is

no specific observation of the PCIT pinpointing any specific defect

in the records that has been placed on record instead he has

simply stated that AO has not addressed the issue this observation

is very much in general and without specifying any faults in the

assessment records, details submitted and verified by the ld. AO.

In fact on perusal of the assessment order we have noted the

following observation of the ld. AO.

“I have considered the reply of the assessee. Further, the assessee furnished the source of cash deposited during demonetization period”

verified the cash of demonetized currency will not hold the

assessment erroneous or prejudicial to the interest of the

assessee. Even we find that the assessee has submitted all the

details to substantiate the deposit of the cash be it may the

26 ITA No. 2/JP/2023 Mahaveer Prasad Jain vs. PCIT, Jaipur

demonetized currency. When the source of total cash deposited

during the demonetization period to the extent of Rs. 51.60 lac is

examined and not disputed by the ld. PCIT, how the part of that

cash consisting of Rs. 16.80 lac being the demonetized currency

for which the PCIT contended that ld. AO has not the addressed

issue is not the correct observation and by that observation the

order of the ld. AO cannot be considered as erroneous or

prejudicial to the interest of revenue and thereby invoking of the

provision u/s. 263 is unwarranted. To support this view we draw

strength from the decision of the Hon'ble Supreme Court in the

case of Malabar Industrial Co. Ltd. vs. CIT (2000) 159 CTR (SC) 1:

(2000) 243 ITR 83 (SC). We also draw strength from the decision

of the Hon'ble Supreme Court in the case of CIT vs. Max India Ltd.

(2007) 213 CTR (SC) 266: (2007) 295 ITR 282 (SC) wherein it was

held that:

"The phrase 'prejudicial to the interests of the Revenue' in s. 263 of the IT Act, 1961, has to be read in conjunction with the expression 'erroneous' order passed by the AO. Every loss of revenue as a consequence of an order of the AO cannot be treated as prejudicial to the interests of the Revenue. For example, when the AO adopts one of two courses permissible in law and it has resulted in loss of revenue, or where two views are possible and the AO has taken one view with which the CIT does not agree, it cannot be treated as an erroneous order prejudicial to the Revenue, unless the view taken by the AO is unsustainable in law."

27 ITA No. 2/JP/2023 Mahaveer Prasad Jain vs. PCIT, Jaipur 11. In view of foregoing discussion, we are of the considered

view that when the ld. PCIT has not disputed the source of other

cash deposited from the same set of books of accounts and record

maintained by the assessee was not justified in invoking the

provision of section 263 to the present matter of the assessee for

the balance amount of Rs. 16.80 lac. Being so, we quash the order

passed by Ld. PCIT passed u/s 263 for the year under

consideration.

In the result, appeal of the assessee is allowed.

Order pronounced in the open Court on 17/04/2023 Sd/- Sd/- ¼ Mk0 ,l- lhrky{eh ½ ¼ jkBksM deys'k t;UrHkkbZ ½ (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) U;kf;d lnL;@Judcial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 17/04/2023 *Ganesh Kr. आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू vihykFkhZ@The Appellant- Sh. Mahaveer Prasad Jain, Jaipur 1. 2. izR;FkhZ@ The Respondent- Principal CIT-2, New Central Revenue Building, Jaipur vk;dj vk;qDr@ CIT 3. vk;dj vk;qDr@ CIT(A) 4. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत. 5. xkMZ QkbZy@ Guard File { ITA No. 02/JP/2023} 6. vkns'kkuqlkj@ By order सहायक पंजीकार@Aेेज. त्महपेजतंत