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Order PER VIKRAM SINGH YADAV, A.M. : This is an appeal filed by the Assessee against the order of the Ld. PCIT, Chandigarh -1 dt. 27/03/2021 pertaining to Assessment Year 2011-12. 2. In the present appeal Assessee has raised the following grounds:
That the Pr. Commissioner of Income Tax has wrongly passed order under section 263 of Income Tax Act without making any enquiry during course of revisionary proceeding and set aside the assessment to make requisite enquiry and proper verification and without determining how the order of is erroneous and prejudicial to interest of revenue.
That the assessment order having been passed after making due enquiry & due application of mind and taking into consideration the various replies, material on record for year under consideration and the action restored to by the Pr. CIT for imposing his opinion is unwarranted and uncalled.
Briefly the facts of the case are that the assessment was completed under section 143(3) r.w.s 147 dt. 20/09/2018 at an assessed income of Rs. 2,75,270/-.
Thereafter the assessment records were called for by the ld PCIT and a show cause u/s 263 dt. 26/02/2021 was issued to the assessee and thereafter in absence of any response to the show cause, the assessment order so passed by the AO was held to be erroneous in so far as prejudicial to the interest of the Revenue and matter was set aside to the file of the AO to pass a fresh order after making necessary inquiries / verification in the light of discussions made in the impugned order after providing due opportunity to the assessee.
Against the said findings and directions of the Ld. PCIT, the assessee is in appeal before us.
During the course of hearing, the ld AR drawn our reference to the contents of the show cause dt. 26/02/2021 and it was submitted that the show cause was issued in respect of cash deposit of Rs. 10.50 Lacs in the saving bank account maintained by the assessee and it has been alleged by the Ld. PCIT that the same has remained unexplained and unverified by the AO and therefore the order so passed by the AO under section 143(3) was held to be erroneous and prejudicial to the interest of the Revenue. 5.1 In this regard, it was submitted that the case of the assessee was reopened under section 148 for precisely the same reasons and in this regard, our reference was drawn to the assessment order passed under section 143(3) r.w.s 147 dt. 20/09/2018 and it was submitted that from the perusal of the assessment order, it is ample clear that the case of the assessee was reopened to verify the cash transaction in the bank account maintained by the assessee wherein an amount of Rs. 10,50,000/- was deposited during the F.Y. relevant to the impugned assessment year. It was submitted that in response to the notice u/s 148, the assessee filed his return of income declaring total income of Rs. 2,66,040/- under section 44AD of the Act, and regarding cash deposit of Rs. 10,50,000/-, it was submitted that the same has been given to him by his mother who has sold a plot of land and relevant documents in support of land transaction were duly submitted during the course of assessment proceedings.
5.2 Further, our reference drawn to the findings of the AO at para 2 of the assessment order passed u/s 147 r/w 143(3) and the contents thereof read as under:
“2. The information furnished by the assessee has duly been examined and verified that the assessee was deposited only cash of Rs. 10,50,000/- on in his bank account maintained with ICICI Bank, Ropar. The said amount was given his mother Smt. Sarla Devi after sold her plot an amounting to Rs. 10,34,000/- dt. 08/12/2010 for further purchase of plot & had also purchased plot on 11.04.2011 in the name of Smt. Sarla Devi, relevant documents placed on record.” 5.3 It was submitted that the matter relating to cash deposit of Rs. 10,50,000/- was therefore duly inquired into and examined by the AO during the course of assessment proceedings. It was accordingly submitted that where the very basis for reopening was to examine the cash deposit so made by the assessee in his bank account and wherein the AO has duly verified and applied his mind and accepted the explanation and the documentation so submitted in support thereof, on the same facts, the Ld. PCIT cannot invoke the jurisdiction under Section 263 of the Act.
5.4 In this regard, reliance was placed on the decision of Hon’ble Telangana and Andhra Pradesh High Court in case of Pr. CIT-5 Vs. Shri P. Narasimha Reddy (in I.T.T.A No. 97 of 2019 dt. 15/03/2019) and the contents thereof read as under:
“3. The respondent/assessee purchased an immovable property along with another person on 17.11.2007. Thereafter, he sold the same to a realtor under a sale deed, dated 18.11.2008, for a sale consideration of Rs. 1.5 crores. According to the Revenue, the market value of the property was ₹. 3,27,70,000/- 4. Since the assessee did not offer capital gains arising out of the sale of the property, in the return of income for the assessment year 2009-10, the case was re-opened by the Assessing Officer under Section 148 of the Act, after issuing notice under Section 147 of the Act.
5. The assessment proceedings were completed under Section 143(3) read with Section 147 of the Act
6. However, the jurisdictional Commissioner of Income Tax issued a show cause notice under Section 263 of the Act, dated 06.02.2017, claiming that the assessment order was erroneous and prejudicial to the interest of revenue and that it had resulted in an under-assessment of short term capital gains.
7. The assessee submitted a reply to the show cause notice. Thereafter, the Commissioner passed an order, dated 27.03.2017, holding that the order of assessment, dated 27.03.2015, passed under Section 143(3) of the Act was erroneous and that since the same was prejudicial to the interest of the Revenue, the Assessing Officer would consider the applicability of the provisions of Section 50C of the Act while computing the capital gains. 8. As against the said order, the assessee filed an appeal to the Income Tax Appellate Tribunal. The Tribunal, by an order, dated 20.07.2018, allowed the appeal. It is against the said Order that the Revenue has come up with the above appeal. 9. It is seen from paragraph No.10 of the impugned Order of the Tribunal that the Tribunal recorded findings of fact to the effect that the Assessing Officer actually carried out an enquiry after the reopening of the proceedings and that once there was an application of mind, on the part of the Assessing Officer, it was not open to the Commissioner to invoke the jurisdiction under Section 263 of the Act. The said finding of fact does not give rise to any substantial question of law before us. 10. It is seen from the Order of the Commissioner under Section 263 of the Act that the Assessment was actually reopened on the ground that the assessee did not offer capital gains. The reopening was under Section 148 of the Act after issuing notice under Section 147 of the Act. Thereafter, the assessment was completed under Section 143(3) of the Act. In such circumstances, what the Commissioner attempted to do by invoking Section 263 of the Act was only to re- appreciate the facts. Since it is not permissible, the appeal does not give rise to any substantial question of law. Hence, it is dismissed.”
Per contra. the Ld. CIT/DR has relied on the order of the Ld. PCIT and our reference was drawn to the findings of the Ld. PCIT which are contained at para 4.1 of the impugned order which read as under:
4.1 The facts of the case are that the assessee has made cash deposit of Rs. 10.50 Lakh in his SB account. During the assessment proceeding, in response to a query in this regard by the Assessing Officer, the assessee claimed that the cash was given to him by his mother, Smt. Sarla Devi, who had sold 1/3rd share in a plot owned by her for a consideration of Rs. 10.34 lakh. This amount was the source of cash deposited by him in his bank account. This amount was utilized for purchase of another plot for a consideration of Rs. 7.35 lakh in the name of his mother and Rs.51,450/- was spent on stamp duty, thus a total expenditure of Rs.7,86,450/- was incurred in the purchase of the plot. Smt. Sarla Devi has submitted an affidavit regarding the same wherein she has stated that she gave the assessee a sum of Rs. 9.50 lakh, and Sh. Ram Lai has purchased a plot on 11.04.2011 in her name for Rs.7,86,450/-. However, in the affidavit, the figure of Rs. 8.50 Lakh has been manually changed to Rs. 9.50 lakh. Further, even if the submission is accepted, the sources of remaining Rs. 1 lakh (Rs. 10.50 lakh-Rs. 9.50 lakh) remains unexplained. Besides, the copy of bank statement does not show withdrawal of Rs. 7,86,450/- on or before 11.04.2011. Thus, the perusal of the affidavit only claims that the plot has been sold for Rs. 10,34,000/- out of which 8.5/9.5 lakhs has been given to the son, Sh. Ram Lai, for the purchase of a plot for Rs.7,86,450/-. Thus the affidavit in no way explains the source of cash deposited in the bank account. The source of deposit in the bank account amounting to Rs.10.5 lakhs is thus unexplained. The assessment made by the assessing officer is therefore erroneous in so far as it is prejudicial to the interest of revenue.
We have heard the rival contentions and purused the material available on record. It is an admitted and undisputed position that the case of the assessee was reopened u/s 147 to verify the cash deposit of Rs 10.50 lacs in the bank account maintained by the assessee. In the proceedings so followed, the AO has enquired about the cash so found deposited in the bank account and the assessee in turn has filed his explanation and necessary documentation in support thereof. Thereafter, the AO in the reassessment order so passed u/s 147 r/w 143(3) has recorded a clear finding of having verified the explanation so submitted by the assessee and the fact that the necessary documentation have been submitted and duly verified by him and consequentially, the explanation of the assessee regarding the nature and source of cash so deposited was found in order and no adverse finding has been recorded by the AO. The ld PCIT basis the same documentation and material available on record has however pointed out that the AO has not applied his mind and the order so passed has been held to be erroneous in so far as prejudicial to the interest of the Revenue for the reason that out of Rs 10.50 lacs, an amount of Rs 1 lacs has remained unexplained and unverified. In our view, once the AO has carried out the necessary enquiry and recorded a specific finding that the source of cash so deposited of Rs 10.50 lacs has been found to be in order, it is clearly a case where the AO has applied his mind and has arrived at a reasonable finding which cannot be disturbed by invocation of jurisdiction u/s 263 of the Act. The decision of the Hon’ble Telangana and Andhra Pradesh High Court (supra)
under identical set of facts of the case has held that where the AO has actually carried out the enquiry after the reopening of the proceedings and there was due application of mind, invocation of jurisdiction u/s 263 to re-appreciate the facts are not permissible. In view of the same, we find that there was no legal and justifiable basis to invoke the jurisdiction u/s 263 of the Act and the action of the ld PCIT by way of passing the impugned order is thus set-aside and the order of the AO is sustained.