2022 (8) TMI 1456 - AT - Income Tax

Revision order under Section 263 quashed for superficial enquiry on specified bank note deposits

Saroj Kumar Mishra Versus Pr. CIT, Bhubaneswar-1

ITAT Cuttack quashed Pr. CIT's revision order u/s 263 regarding deposit of specified bank notes. The tribunal held that Pr. CIT conducted only superficial ... Revision u/s 263 - deposit of specified bank notes - As per CIT perusal of the order of the AO passed u/s. 143(3) shows that in the assessment order there is no discussion of the deposit of the specified bank accounts in two bank accounts - HELD THAT:- As applying the principle of law laid down in the case of Deepak Kumar Garg [2007 (5) TMI 186 - MADHYA PRADESH HIGH COURT] would show that the ld. Pr. CIT has only done a semblance of enquiry by examining the assessment records and has rejected the explanation of the assessee without any proper enquiry. With this in mind, applying the principle of law laid down in the case of Orissa State Police Housing & Welfare Corporation Ltd. (2022 (4) TMI 1395 - ORISSA HIGH COURT), one comes to the clear conclusion that Pr. CIT did not have any basis on which he could have come to a view that the specified bank notes deposited by the assessee in the bank accounts had not been examined by the AO to its logical conclusion. A perusal of the order of the ld. Pr. CIT would clearly show that no enquiry has been done nor caused to be done as required u/s. 263(1) of the Act by the ld. Pr. CIT before setting aside the assessment order passed u/s. 143(3) of the Act and directing the AO to examine the issue. In fact, the direction of the ld. Pr.CIT, directing the AO to examine the issue of the deposit of the specified bank notes, is nothing but a direction for re-examination of an already examined issue. This is not permissible under the provisions of Section 263 of the Act. In the instant case, the assessee has categorically shown and proved that the specified bank notes have been deposited and is out of its cash book. This has not been refuted by the ld. Pr. CIT but only an allegation has been made that the cash balance as on 08.11.2016 has not been verified. This being so, order passed u/s. 263 of the Act by the ld. Pr. CIT stands quashed. Decided in favour of assessee. Issues:Appeal against order of ld. Pr.CIT for assessment year 2017-2018 regarding deposit of specified bank notes during demonetization period.Analysis:The appeal was filed by the assessee against the order of the ld. Pr.CIT, Bhubaneswar-1, pertaining to the assessment year 2017-2018. The issue revolved around the deposit of specified bank notes during the demonetization period between 09.11.2016 & 31.12.2016. The AO had completed the assessment under section 143(3) of the Act without making any additions based on the evidence produced by the assessee. However, the ld. Pr. CIT initiated proceedings under section 263 of the Act to revise the assessment order due to discrepancies in the deposited amounts as per information obtained under section 133(6) of the Act. The assessee contended that the deposits were part of business transactions recorded in the books of accounts and had provided explanations supported by the cash book. The ld. Pr. CIT, without adequately considering the assessee's explanation, directed the AO to reexamine the issue, leading to the appeal.The CIT-DR argued that there was a lack of proper enquiry by the AO, specifically regarding the cash book maintained by the assessee and the closing cash balance. The CIT-DR relied on legal precedents to support the contention that insufficient enquiry by the AO rendered the assessment order erroneous and prejudicial to the revenue's interest, justifying the invocation of section 263 of the Act. The assessee, on the other hand, cited a decision of the Hon'ble Jurisdictional High Court emphasizing the necessity of a subjective view based on a proper enquiry by the CIT before revising an assessment order under section 263 of the Act.The Tribunal analyzed the submissions of both parties and the legal principles cited. It noted that the ld. Pr. CIT had not conducted any independent enquiry before setting aside the assessment order and directing a reexamination of the issue already examined by the AO. The Tribunal emphasized that the ld. Pr. CIT's order lacked a proper basis for concluding that the specified bank notes' deposits had not been adequately examined by the AO. Drawing parallels with the legal precedent, the Tribunal held that the ld. Pr. CIT's order did not meet the requirements of section 263 of the Act, as it essentially directed a reexamination of an already scrutinized issue, which was impermissible. Consequently, the Tribunal allowed the appeal of the assessee, quashing the order passed under section 263 of the Act.In conclusion, the Tribunal's decision highlighted the importance of a thorough and independent enquiry by the CIT before revising an assessment order under section 263 of the Act. It underscored the necessity of a valid basis for concluding that the original assessment was erroneous and prejudicial to the revenue's interest, as mandated by the legal provisions and judicial precedents.