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Income Tax Appellate Tribunal, VISAKHAPATNAM BENCH, VISAKHAPATNAM
Before: SHRI DUVVURU RL REDDY, HON’BLE & SHRI S BALAKRISHNAN, HON’BLE
Per Shri S.Balakrishnan, Accountant Member :
1. This appeal is filed by the assessee against the order of the Principal Commissioner of Income Tax [in short, [PCIT], Visakhapatnam-1 in DIN & Order No.ITBA/REV/F/REV5/2021-22/1042092663(1) dated 30.03.2022 for the Assessment Year (A.Y.) 2017-18.
2. Brief facts of the case are that the assessee, an individual, engaged in the business as a dealer for shrimp feed of Avanti Feeds for Bhimavaram area filed his return of income for the A.Y.2017-18 on 23.10.2017, submitting total income of Rs.33,96,500/-. Subsequently, the case was Manthena Kanaka Durga Prasada Raju, Bhimavaram selected for complete scrutiny under CASS and statutory notices u/s 143(2) and 142(1) of the Income Tax Act, 1961 (in short ‘Act’) were issued to the assessee. In response, the assessee e-filed his submissions to the Ld.Assessing Officer (AO). Considering the submissions of the assessee, the Ld.AO observed that the assessee has claimed car expenses from depreciation and interest on car loan and disallowed 50% of the same, considering the same being used towards personal use of the assessee. The Ld.PCIT, exercising his powers under section 263 of the Act considered the order of the Ld.AO as erroneous, in so far as prejudicial to the interest of the revenue and observed that the AO has not caused enquiries and has not disallowed the vehicle maintenance expenses amounting to Rs.3,93,999/-.
Hence, first show cause notice was issued to the assessee on 19.01.2022 and another show cause notice was issued through ITBA on 14.03.2022 and served on the assessee on 14.03.2022. In response to the same, the assessee submitted his reply on 25.03.2022 to the Ld.PCIT. Considering the submissions made by the assessee, the Ld.PCIT concluded that the Ld.AO has not caused proper enquiries and set aside the order of the AO to verify the claim of sources for the cash deposit and allowability of claim of expenditure of Rs.3,93,999/- under the vehicle maintenance after affording sufficient opportunity of being heard to the assessee.
Manthena Kanaka Durga Prasada Raju, Bhimavaram
3. Aggrieved by the order of the Ld.PCIT, the assessee carried the matter to the Tribunal and raised the following grounds of appeal :
The order of the learned Principal Commissioner of Income Tax is contrary to the facts and also the law applicable to the facts of the case.
The learned Principal Commissioner of Income Tax is not justified in assuming jurisdiction u/s 263 of the Act in as much as the assessment order dated 27.11.2019 u/s 143(3) of the Act is neither erroneous nor prejudicial to the interests of revenue.
The learned Principal Commissioner of Income Tax is not justified in directing the assessing officer to re-examine the issue of : i) Source for the cash deposits ii) Claim for vehicle maintenance of Rs.3,93,999
4. The learned Principal Commissioner of Income Tax ought to have appreciated that the assessing officer initiated enquiries in respect of the above issue and as such it is not a case of ‘lack of inquiry’ to enable the learned Principal Commissioner of Income Tax to invoke the provisions of S.263.
5. Any other ground that may be urged at the time of appeal hearing.
Ground No.1 and 5 are general in nature and need not be adjudicated.
Ground No.2 and 4 relates to assuming of jurisdiction u/s 263 of the Act by the Ld.PCIT. The Ld.AR submitted that the Ld.PCIT has erroneously assumed jurisdiction u/s 263 of the Act with respect to the matter that has already been verified by the AO. The Ld.AR referred to the order of the AO, where it has been clearly mentioned that the cash deposits in the bank
Manthena Kanaka Durga Prasada Raju, Bhimavaram account of the assessee during the demonetisation period are the cash receipts of the assessee received from farmers. The Ld.AR further also submitted that annexure to notice u/s 142(1) of the Act dated 18.12.2018 required the reasons and sources for cash deposits during the demonetization period. The Ld.AR further submitted that the details of cash book, bank book and VAT returns have been provided before the AO and after proper verification, the Ld.AO has framed the assessment order.
The Ld.AR, therefore, pleaded that the order of the AO be upheld.
Per contra, the Ld.DR submitted that the sales are made to unidentified persons and hence, not actual sales. The Ld.DR pleaded that the order of the Ld.PCIT be upheld.
We have heard the rival submissions, perused the material available on record and orders of the authorities below. Admittedly, in response to notice u/s 142(1) of the Act, the assessee has submitted the details before the Ld.AO with specific reference to cash deposits arising out of cash sales.
The Ld.AR in Paper Book-I, page No.26 has submitted the comparative monthly sales for the financial years 2015-16 and 2016-17. The pleading of the Ld.AR is that there is no abnormality in the cash deposits during the demonetisation. It was further demonstrated by the Ld.AR by providing
Manthena Kanaka Durga Prasada Raju, Bhimavaram comparative cash deposit in the bank account during the A.Y.2016-17 and 2017-18. The statement furnished by the Ld.AR is extracted below :
A.Y. Sales Cash Deposits 2017-18 22,49,84,583 10,45,10,570 2016-17 11,90,63,480 10,00,66,800
From the above table it was demonstrated by Ld.AR, that the assessee is regular in depositing cash in to the bank account, arising out of the cash sales made by assessee to farmers. Additionally, from the comparative monthly sales, (Paper Book Page No 26), we observe that there is no abnormality in the sales during the demonetisation period.
Considering the above, facts, we find that the order of the Ld.AO is neither erroneous nor prejudicial to the interest of the revenue and hence, assuming jurisdiction u/s 263 by the Ld.PCIT is not valid in law and deserves to be quashed.
Ground No.3 is with regard to disallowance of vehicle maintenance expenses. We find that the Ld.AO has already disallowed an amount of Rs.4,56,450/- while framing the assessment order and hence, no additional disallowance is warranted under these circumstances. We therefore, restore the order of the Ld.AO and allow the grounds raised by the assessee.
Manthena Kanaka Durga Prasada Raju, Bhimavaram
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 15th December, 2022. Sd/- Sd/- (दु�ू� आर.एल रे�ी) (एस बालाकृ�न) (DUVVURU RL REDDY) (S.BALAKRISHNAN) �ाियकसद�/JUDICIAL MEMBER लेखा सद�/ACCOUNTANT MEMBER Dated : 15.12.2022 L.Rama, SPS आदेश क� �ितिलिप अ�ेिषत/Copy of the order forwarded to:- 1. िनधा�रती/ The Assessee– Shri Manthena Kanaka Durga Prasada Raju, Flat No.5, Raghavendra Towers, Srirampuram, Bhimavaram 2. राज�/The Revenue – The Asst.Commissioner of Income Tax, Circle-I, Aayakar Bhavan, Veerabhadra Puram, Rajamundry 3. �धान आयकर आयु� /The Principal Commissioner of Income Tax, Visakhapatnam-1 4. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, िवशाखापटणम/ DR,ITAT, Visakhapatnam 5.गाड� फ़ाईल / Guard file