NAVNEET BHARDWAJ,MUZAFFARNAGAR vs. JCIT RANGE-1, MUZAFFARNAGAR

by the assessee are as under:- (1) The L'd Assessing Officer has duly applied his mind to the issue raised in the notice U/S 263 and after having been satisfied on the same, took a possible view based on the facts of the case and thereby passed the impugned assessment order. (2) That the assessment order U/S 143(3) dated 19-12-2018 as passed by the L'd Assessing Officer is neither erroneous nor prejudicial to the interests of the revenue. (3) Observations made, inferences drawn and findings recorded by the Worthy Principal Commissioner of Income Tax in her order passed U/S 263 are incorrect, unreasonable and are untenable in law.

Drawing our attention towards original limited scrutiny assessment order u/s. 143(3) of the Act, dated 19.12.2018 for AY 2016-17, the ld. counsel submitted that the case was selected for limited scrutiny for the sole reason of large cash deposit in the saving bank account as per AIR, total turnover and other income in part a of income tax return of assessee for which the Assessing Officer issue notices u/s. 142(1) of the Act along with questionnaire dated 10.10.2018 and 10.12.2018 through ITBA system to the assessee’s account in e-filing website. The assessee was required to explain source of cash of Rs. 66,87,000/- along with documentary evidences. He further submitted that in response to said notices assessee filed his reply along with necessary details/documents and other relevant information wherein the assessee stated that he was carrying on a school during the year under consideration and up to 27.07.2018 under the name and style Mount Litera School, Muzzafarnagar and the assessee was settler/president of the Shri Ram Educational Trust, under which said school was running the ld. counsel submitted that the Assessing Officer made sufficient and adequate enquiry in accepting the explanation of assessee regarding source of cash deposit in the assessment order para 3, which cannot be alleged as erroneous and prejudicial interest of revenue.

The assessee has placed reliance on various judgements to submit that the ld. PCIT was not correct in re-agitating the issue which was dealt and adjudicating by the Assessing Officer in detail by issuing notices along with questionnaire to the assessee and which were properly replied by the assessee and after taking on record reply and documentary evidences the Assessing Officer by way of detail discussion in para 3 of order allowed and accepted the claim of assessee towards source of cash deposit to his bank account. Therefore the ld. PCIT was not validly empowered to invoke provision of section 263 of the Act.

Replying to the above the ld. CIT(DR) supported the revisionary order u/s. 263 of the Act and submitted that as per explanation 2 to section 263 of the Act in a case of insufficient enquiry the assessment order has to be held as erroneous and prejudicial to the interest of revenue and the same can be revised u/s. 263 of the Act.

On careful consideration of above submission first of all, from pages 1 to 12 of assessee paper book we note that during limited scrutiny proceedings on the sole issue of source of cash deposit to the bank account of assessee, the Assessing Officer issued to notices along with questionnaire which were duly replied by the assessee along with relevant documentary evidences and thereafter the Assessing Officer considered and adjudicated the issue in para 3 of assessment order and concluded and allowed the claim of assessee regarding source of cash deposit that the deposits were made out of 2