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Income Tax Appellate Tribunal, RAIPUR BENCH, RAIPUR
Before: SHRI RAVISH SOOD & SHRI JAMLAPPA D. BATTULL
PER JAMLAPPA D.BATTULL, AM; The present appeal of anassesseeis against the order of Principal Commissioner of Income Tax, Raipur-1 [for short “PCIT”]passed u/s 263 vide order dt 27/03/2021, which in turn unfolded out of the regular assessment order dt 31/12/2017 [for short “Ao”] for assessment year [for short “AY”] 2015-2016 passed by the Assessing Officer [for short “AO”] u/s143(3) of the Income-tax Act, 1961 [for short “the Act”].
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ITA No. 59/RPR/2021 AY 2015-2016 2. The shortest issue under this litigation is that, the appellant has challenged the 263 revisionary actions of the Ld PCIT directing the Ld AO for fresh adjudication on account non-conduction of dueinquiry during the course of 143(3) assessment.
Before advancing the matter on facts for adjudication, it is essential to reproduce grounds assailedby the appellant as under; “1.The assessment order passed by AO is neither erroneous nor prejudicial to the interest of Revenue. Ld. Pr. CIT erred in invoking the provisions of sec. 263 and in setting aside the assessment order for fresh enquiry. Order passed u/s 263 is unsustainable and is passed without properly appreciating the facts & evidences” “2.Without prejudice to ground no. 1 the revision order passed by Ld. Pr. CIT u/s 263 is illegal inasmuch as the same has been passed without providing due & proper opportunity to appellant as to how the assessment order is erroneous or prejudicial to the interest of Revenue Consequent revision order is illegal & is liable to be quashed/annulled.” “3.Without prejudice to above grounds the revision order passed by Ld. Pr. CIT u/s 263 is barred by limitation and is liable to be quashed.” “4.The appellant reserves the right to add, amend or modify any of the ground/s of appeal.”
Let us now its sight the facts of the case succinctly as; 4.1 The assessee is an individual engaged in the profession as an architect beside being one of the partnersof the firm namely M/s Konark Buildersand for the AY 2015-2016 e-filed his return of income [for short “ITR/ROI”] on 05/04/2016 with returned income of ₹6,67,880/-.The case was picked out under CASS and the assessment was concluded with an addition of ₹3,17,414/- as unexplained cash credit u/s 68.
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ITA No. 59/RPR/2021 AY 2015-2016 4.2 Recording the findings from the regular assessment passed u/s 143(3) of the Act, the Ld PCIT assumed the revisionary jurisdiction u/s 263(1) by issue of show cause notice [for shot “SCN”] dt 12/03/2012 and considering the submission of the appellant, directed the Ld AO for de-nova adjudication on asserting the absence of enquiry.
4.3 Against this 263 revisionary order; the appellant assessee is before this Tribunal assailing the grounds as laid herein before at para3.
After hearing to the rival contention of both the parties; perused material placed on record and duly considered the facts of the case in the light of settled legal position and the case laws relied upon by the appellant assessee as well the respondent revenue.
Form the records and the rival contention vis-à-vis submission of both the parties it transpiredthat; 6.1 The primary issue in the present controversy is twofold, firstly as to whether the order passed by the assessing officer u/s 143(3) can be said to be erroneous and prejudicial to the interest of the revenue within the preview of section 263 of the Act, and secondly whether therewas violation of principle of “Audi Alteram Partem” in the course of revisionary proceedings.
6.2 We shall first deal with the ground number 2 of the appeal which assailed the violation of principal of natural justice during the 263 proceedings before the Ld PCIT;
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ITA No. 59/RPR/2021 AY 2015-2016 6.2.1 It is an undisputed fact that, the assumption of revisionary jurisdiction was instigated by issue of SCN dt 13/02/2021 and in response thereto the assessee attended the notice and reiterated his submission in reply to proposition sought to be contended.
6.2.2 Considering the submissions made and the explanation offeredby the appellant, the Ld PCIT concluded the revisionary proceedings without necessitating further submission in the evince of records.
6.2.3 The due service of show cause notice to the appellant, fair hearing against proposition and prima-facie unbiased approach while dealing with revisionary proceedings apparently stands established from the records, and
6.2.4 Moreover,during the course of hearing before the bench too, the Ld counsel for the assessee [for short “AR”] has neither assailed the ground nor made any reference of violation of principle of “Audi Alteram Partem”, in fortiori the ground number 2 stands dismissed.
6.3 We shall now turn to adjudicate the primary &legal,the ground number 1 of the appeal which challenges the evince of both the preconditions triggering 263 revisionary proceedings;
6.3.1 During the course of limited scrutiny assessment, the Ld AO through the issue of notices placed on paper book page 5-6, sought details & source of cash deposits, which were evidently replied bysubmission of bank account statements, capital account statements, loan account statementswithfollowing details of yearly cash depositsinto bank accounts maintained by the assessee;
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ITA No. 59/RPR/2021 AY 2015-2016
Amount Deposited Sr Bank A/c Number Relating AY 2015-16 1 SBI Saving 31082210172 9,30,000 2 IDBI Bank 0700104000124041 20,40,000 3 Bank of Baroda 13360100010981 1,50,000 4 Renuka Sahkari Bank LC-1-000080 33,54,700 Total 64,74,700
6.3.2 On a specific query, the assessee submitted that, the cash depositsinto his bank accounts were arisen out three deadlock sources namely; a. Receipt from profession (self-employed as architect) b. Withdrawals from partnership firm – M/s Konark Builder c. Withdrawals from Bank loan
6.3.3 While scrutinising the entries of these bank statements, loan account statements and capital account statements, the Ld AO observed the negative cash difference of ₹3,17,414/-in Renuka Sahkari Bank account and when the appellant failed to substantiate with evidential material explaining the shortfall,the same was brought to tax as unexplained cash credit u/s 68 of the Act and with this solitary addition, proceedings were concluded determining the total income of the appellant at ₹9,85,294 for the AY 2015-2016.
6.4 The Ld PCIT perusing the order of his lower authority, contending one as erroneous and prejudicial to the interest of revenues owning to absence of enquiries into source of such cash receipts,assumed the revisionary jurisdiction and thereby called upon the assessee to showcase the genuineness of sources of cash receipt with an evidential and corroborative material in support of his claim.The appellant reiteratedhis submission as regards to cash receipts,as were arisen to him out of three deadlock sources such as;
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ITA No. 59/RPR/2021 AY 2015-2016 a. Receipt from profession (self-employed as architect) b. Withdrawals from partnership firm – M/s Konark Builder and c. Withdrawals from bank loan
6.5 The submission before revisionary proceedings endorsed erstwhile submission made during the course of assessment proceedings and without contrasting therebetween, Ld PCIT rejected the appellants claim on the premise of celebrated judgement of Hon’ble Lordship of Supreme Court in the case of Malabar Industrial Co Ltd Vs CIT reported at 240 ITR 83and remonstrated the assessment as erroneous and prejudicial to the interest of the revenue pointing out that the relevant para from the aforesaid judgement; “he(AO) accepted the entry in the statement of the account filed by the appellant in the absence of any supporting material and without making any inquiry”. Consequently, the matter was remanded back to the file of Ld AO for fresh adjudication on the issues, by conducting necessary inquiries and framing the fresh assessment after affording an adequate opportunities to the assessee.
The vexed questionin the instant case, whether the order of assessment is erroneous and prejudicial to the interest of revenue shall rest on answering twofold question such as; a. whether or not there was corroborative and supporting materialwas laid before the assessing officer?and b. Whether or not proper inquiriesinto claim was conducted?
7.1 In the backdropof aforementioned facts and circumstances and in law, we in the light of ration laid down by Hon’ble Supreme Court of Indiain the case of Malabar Industries Co Ltd (Supra) on the subject matter, have the
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ITA No. 59/RPR/2021 AY 2015-2016 audacity to summarise the inferential but harmonious analysis of revisionary provision laid in section 263 of the Act, into a five steps “Queen Principle”, falling the case into it shalldebark the tax authorities from assuming revisionary jurisdiction u/s 263, and these steps are; a. There must be an explicit query from the adjudicating tax authority as regards to any claim made including information supplied in the return of income filed or to be filed, and b. There must be direct, clear and an unreserved submission from the assessee in reply to aforesaid query, and c. The submission mustbe followed by detailed inquiry(and not enquiry) by the tax authorities into assessee’s eligibility of claim, basis of claim, genuineness of claim and compliance of pre as well post conditions as may be attached to the claim under scrutiny, and d. There should be even-handed application of mind by the adjudicating authority in reaching out the allowability or dis-allowability of claim under consideration, e. And finally, the adjudication must ensure the correct application of law as regards to aforesaid following principle of natural justice.
7.2 Before we proceed to adjudicate further, we make a note that, the Hon’ble Lordship in their higher wisdom (to which we always bow down respectfully) in Malabar Industrial Co Ltd (Supra) has used the word “inquiry” and not “enquiry” in tune with that of the legislature intent who has also used the word “inquiry” and not “enquiry” while laying down the provisions of section 263 which is of prime concern here.
7.3 To our limited knowledge the word enquiry and inquiry are dissimilar, the word enquiry means to know aboutsomething from someone in an informal way, whereas the word inquiry denotes finding out about something
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ITA No. 59/RPR/2021 AY 2015-2016 from someone in a formal way, especially by an authority such as a government agency, a public body that has the power to find out something.We clarify that, we have not confused ourself inquiry as investigation, the investigation is the executive procedure of systematically collecting the facts and evidence, and determining the circumstances of the case, whereas inquiry is a legal process, which is initiated with an aim of clearance of doubt, finding out the truth or furtherance of knowledge regarding the case or claim under consideration.Thus, inquiry travels ahead of enquiry to find out or reach the truth, whereas the enquiry seeks mere information.
Having said so, now in the instant adjudication; 8.1 it is an undoubted fact that, a specific query as regards to source of cash deposits were raised during the course of limited scrutiny assessment and in reply thereof, the appellant disclosed“three sources”of cash receipts namely; out of professional receipts and withdrawal from the capital balances of partnership firm and withdrawal from bank loan,and further it was brought to the notice that, during the year under consideration the appellant has purchased a new house property out of the advance sale proceeds received by him against sale of other house property.The records of the assessment undoubtedly revealsthat, all the transactions and entries were inquired into from the aforementioned statements with respect to sources thereofand upon finding the discrepancies on such inquiries,same was brought to tax as unexplained cash credit u/s 68 for sum of ₹3,17,414/-.
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ITA No. 59/RPR/2021 AY 2015-2016 8.2 During the course of revisionary proceedings, it is evident that, the appellant indifferently disclosed“three sources” of cash receipts namely; out of professional receipts, withdrawal from the capital balances of partnership firm and withdrawal from bank loan,and established that there remained no un- disclosure before the lower tax authority.
8.3 The Ld AR during the course of hearing has taken us through all the statements showcasing that, those were duly verified and inquired into by the Ld AO and he also notified that,the discrepancies noted in the balances were ultimately brought to tax and hence, the due inquires of deposits were carried out by the assessing officer.In this respect we concur with the contention of Ld AR that, the statements were duly verified and discrepancies were taxed after due inquiries as embedded in the statutory provisions of law and the law laid down by Hon’ble Apex Court in Malabar Industries Co Ltd (Supra)which can be summarised as observation made in the instant case as; a. Sources of cash receipts,disclosed before the revisionary authority were indifferent with that of disclosed during the course of assessment proceedings and b. Entries as appearing in bank account statementswere accepted in the evince of supporting material substantiating the source and c. Inquiries into sourcesas declared by the assessee were verified and the discrepancies were brought to tax.
In the light of above, we observed that, the Ld PCIT sitting on the same fence overlooked the inquiries conducted by the lower tax authority like leaving the dead
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ITA No. 59/RPR/2021 AY 2015-2016 unattended and hence we do not concur with the views of Ld PCIT that, assessment lacks proper inquiry into sources of cash receipt / deposits for the reasons set in the preceding paragraphs.
This Considering the entire conspectus of case, we find that the assessment proceeding suffers from no-infirmity so far as the conduction of inquiry is concern;consequently,wedo not hesitate in upholding the order of Ld PCITwith infirmity andquashed the revisionary order passed u/s 263, accordinglythe legal ground number 1 standsallowed.
Resultantly, the appeal of the assessee is allowed, with no order as to cost.
Order pronounced on this Friday, 25thday of February, 2022.
Sd/- Sd/- (RAVISH SOOD) (JAMLAPPA D. BATTULL) JUDICIAL MEMBER ACCOUNTANT MEMBER रायपुर/ RAIPUR ; िदनांक / Dated :25th February, 2022 आदेशकी�ितिलिपअ�ेिषत / Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant. 2. ��थ� / The Respondent. 3. The Pr. CIT-1, Raipur(C.G) 4. The Pr. CIT, Raipur (C.G) 5. िवभागीय �ितिनिध,आयकरअपीलीय �ायािधकरण,रायपुर ब�च, रायपुर / DR, ITAT, Raipur Bench, Raipur. 6. गाड�फ़ाइल / Guard File. आदेशानुसार / BY ORDER, िनजीसिचव / Private Secretary
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ITA No. 59/RPR/2021 AY 2015-2016 आयकरअपीलीयअिधकरण, रायपुर / ITAT, Raipur.
Occurrence Sr Event Attributes Date 1 Draft dictated on 09/02/2022 PS 2 Draft placed before author 15/02/2022 PS 3 Draft proposed and placed before the second Member Ld JM 4 Draft discussed/approved by second Member Ld JM 5 Approved draft comes to the Sr. PS/PS PS 6 Kept for pronouncement on PS 7 Date of uploading of order PS 8 File sent to Bench Clerk PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the Asstt Registrar 11 Date of dispatch of order
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