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Income Tax Appellate Tribunal, VISAKHAPATNAM BENCH, VISAKHAPATNAM
Before: SHRI DUVVURU RL REDDY, HON’BLE & SHRI S BALAKRISHNAN, HON’BLE
अपीलधथी की ओर से/ Appellant by : Shri C.Subrahmanyam,AR प्रत्यधथी की ओर से / Respondent by : Dr.Satyasai Rath, CIT(DR) सुनवधई की तधरीख / Date of Hearing 07.12.2023 : घोर्णध की तधरीख/Date of Pronouncement : 21.12.2023 आदेश /O R D E R
Per Shri Duvvuru RL Reddy, Judicial Member :
This appeal is filed by the assessee against the order of Principal Commissioner of Income Tax (PCIT), Visakhapatnam-1 vide DIN & Order No.ITBA/REV/F/REV5/2021-22/1041949381(1) dated 29.03.2022, arising out of order passed u/s 143(3) of the Income Tax Act, 1961 (in short “Act”) dated 26.12.2019 for the Assessment Year (A.Y.) 2017-18. 2 Mrs Sadhika Ganni, Rajahmundry
Brief facts of the case are that the assessee, an individual, filed her return of income for the A.Y.2017-18 on 23.11.2017, declaring an income of Rs.54,00,970/-. The case was selected for limited scrutiny under CASS for verification of the cash deposits made during the year. The assessment was completed u/s 143(3) of the Act on 26.12.2019, accepting the income returned. Subsequently, under the powers vested with the Ld.PCIT, assessment records were called for and examined u/s 263 of the Act. On perusal of the assessment record, the Ld.PCIT found that the assessee has made cash deposit of Rs.1,00,00,000/- in her bank A/c No.50100077065070, maintained with HDFC bank, Rajamahendravaram on 12.11.2016 and the same was transferred to another account held by one Sri Bhaskara Rao on 14.11.2016. The assessee has explained the sources for the above cash deposit as the cash gifts received on account of her marriage held on 06.06.2015 and also the cash gifts received on her first marriage anniversary which were deposited into her bank account. In support of her explanation, the assessee has filed a copy of her marriage certificate and two lists, one containing the statement of cash gifts. One list was hand written with 227 names with heading and date on the first page as marriage gifts on 06.06.2015 and the total receipts of this list aggregates to Rs.50,00,000/-.
The Ld.PCIT observed that none of the entries contain any details of addresses of the persons from whom the gifts were alleged to have been received, except the names. The other booklet contained the names of alleged gift lenders 410 in number aggregating to Rs.1,00,00,000/- with remarks against each entry as cash gift at the time of marriage. In this list also, none of the names contain complete addresses to cross verify the creditworthiness of the parties and the genuineness of the transactions. The assessee has not filed any list of gifts received on the date of her first wedding anniversary, as claimed by her. The assessee has also stated that she has filed the returns of income for the A.Y.2016-17 and 2017-18 admitting the above receipts as her income from other sources. On perusal of the same, the Ld.PCIT noticed that the assessee has filed returns of income for the A.Y.2016-17 and 2017-18 on 18.11.2017 and 23.11.2017 respectively, after deposing the cash of Rs.1,00,00,000/- on 12.11.2017 computing the tax at normal rates, which clearly shows the fact that the assessee has filed the returns only to show the unaccounted cash deposit as accounted income. The Ld.PCIT further observed that the AO has accepted the assessee’s explanation without making any enquiry with regard to her claims of cash gifts on the date of her marriage and on the occasion of her marriage anniversary. The AO has also not verified the reasons for holding such huge amounts from 06.6.2015 till 12.11.2017 for more than two years, if the receipts are genuine. The AO has also not verified the immediate transfer of the said cash deposit to another account by name Bhaskara Rao on the very alternate day itself i.e. on 14.11.2017 which gives rise to suspicion about the genuineness of the explanation given by the assessee towards the sources of cash deposits. The Ld.PCIT opined that the AO ought to have made enquiries about the genuineness of the cash gifts allegedly received by the assessee and ought to have rejected the assessee’s claim as not acceptable and assessed the entire cash deposit of Rs.1,00,00,000/- as assessee’s income for the A.Y.2017-18 and ought to have brought the same to tax under the provisions of 115BBE as the same falls under unexplained cash deposit in her account. However, contrary to the same, the AO without making any enquiries and also without considering the applicability of provisions of sec.115BBE has simply accepted the assessee’s explanation and completed the assessment by accepting the income returned and the tax computed by the assessee. In view of the above, the Ld.PCIT has set aside the assessment order to the AO for limited purpose of verification of the issue of cash deposits made during the demonetization period to find out the reasons for holding such cash deposits from 06.06.2015 to 5 Mrs Sadhika Ganni, Rajahmundry 12.11.2017, to gather the details of persons who have given the gifts viz., name, address, PAN, ITR records, amount of gift, relationship with assessee, availability of cash in hand on the specified dates etc. for establishing identity, capacity and genuineness of persons who gave fits and to analyse bank accounts and the subsequent utilization / withdrawals from these deposits. The Ld.PCIT has also directed the AO to verify the issue of cash deposits made during the demonetization period and to gather necessary evidences, appreciate the same and conduct such enquiry as deemed fit and after verification pass the consequential order.
Aggrieved by the order of the Ld.PCIT, the assessee preferred an appeal before the Tribunal by raising the following grounds of appeal :
1. That under the facts and circumstances of the case the orders passed under the provisions of section 263 of the I.T. Act is contrary to the provisions of law.
2. The Ld. Principal Commissioner of Income Tax (in short “Pr.CIT”), while passing the subject order u/s 263 of the IT Act Dt 29-03-2022, failed to give sufficient opportunity to the Assessee to file her objections to the revision proposed u/s 263 of the IT Act vide notice Dt.20-03-2022. 3. The Ld. Pr.CIT erred in stating that Assessing officer failed to make proper enquiries with regards to the cash deposit and instead accepted the explanations of the assessee, which observation of the Ld Pr. CIT is contrary to the facts of the case.
The Ld. Pr.CIT failed to take cognizance of the fact that in the assessment proceedings AO has applied his mind on the issue, examined the facts of the case, and consciously completed the assessment accepting the returned income, under these circumstances and considering the provisions of law AO order cannot be termed as erroneous for invoking revisionary powers u/s. 263 of the IT Act.
5. The Ld. Pr.CIT failed to appreciate that for the purpose of invoking section 263 of the IT Act, the twin condition, i.e., Assessment order being ‘Erroneous’ and ‘Prejudicial to the Interest of Revenue’ has to be satisfied, whereas in the present case, The assessment order not being erroneous for the reason stated in above ground, Hence, The subject order passed u/s 263 of the IT Act is bad in law. 6. The contention of Ld. Pr.CIT in para 2.1 in page 2 of his order that the Ld. AO ought to have brought the case deposit of Rs. 1 Crore to Tax u/s 115BBE of the Act amounts to questioning the legitimate action of the AO when the same amount has been subjected to tax under the normal provisions. 7. Even assuming for a moment but without conceding that the Ld. Pr.CIT is right in directing the AO to invoke provisions of section 115BBE of the IT Act, But the amended provisions of section have been introduced into the statute books on Dt. 15-15-2016 and came into operation w.e.f. dt. 01-04-2017, Hence, The same cannot be made applicable. 8. For these and other grounds that are to be urged at the time of hearing of the appeal the appellant prays that the order passed by the learned Pr. CIT is erroneous both on fact and as wall as in law, therefore, the same needs to be set aside in the interest of justice.
4. The assessee has also filed a petition for admission of additional ground being a legal ground, which reads as follows :
In the absence of notice issued u/s 143(2) of the IT Act, the order passed u/s 143(3) of the IT Act is invalid / void ab-initio order, therefore, the same cannot be subject to revision u/s 263 of the IT Act and the Ld.PCIT cannot exercise revisionary jurisdiction.
The Ld.AR contended that the ground being a legal ground does not require investigation into the facts. He further contended that the assessment order passed u/s 143(3) is not valid under the eyes of law, since the assessee has not received notice u/s 143(2) of the Act. The assessment order passed in the absence of notice issued u/s 143(2) cannot be subject to revision u/s 263 of the Act and the Ld.PCIT cannot exercise revisionary jurisdiction and pass order. The Ld.AR, therefore, pleaded the Tribunal to provide an opportunity of being heard before the Ld.PCIT to meet the ends of justice.
Per contra, the Ld.DR relied on the order of the Ld.PCIT. He pleaded to uphold the same and dismiss the appeal of the assessee.
We have heard both the parties and perused the material available on record. After considering the facts and circumstances of the case, we are inclined to remit the matter back to the file of the Ld.PCIT to afford one more opportunity of being heard before the Ld.PCIT. The Ld.PCIT is directed to dispose of this appeal within sixty days from the date of receipt of this order, after giving an opportunity of being heard to the assessee. The assessee is also directed to raise all the grounds before the Ld.PCIT and cooperate with the proceedings of the Ld.PCIT without seeking adjournments except for just cause.
In the result, appeal of the assessee is allowed for statistical purpose.
Order pronounced in the open court on 21st December, 2023. (एस बालाकृष्णन) (दुव्वूरु आर.एल रेड्डी) (S.BALAKRISHNAN) (DUVVURU RL REDDY) लेखा सदस्य/ACCOUNTANT MEMBER न्याधयक सदस्य/JUDICIAL MEMBER Dated : 21.12.2023 L.Rama, SPS