Tribunal overturns Commissioner's decision, upholds Assessment Officer's inquiry into investments and deposits.

The Tribunal found in favor of the assessee, holding that the Principal Commissioner's order under section 263 was incorrect. The assessment order passed by the Assessing Officer under section 143(3) read with section 147 was upheld, concluding that the AO had conducted adequate inquiries into the unexplained investments and deposits, and the Pr. CIT's direction for further investigation was unwarranted. The appeal of the assessee was allowed.

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Issues Involved:
1. Erroneous and prejudicial assessment order by AO.
2. Non-consideration of written submissions and secondary evidence.
3. Enquiry into already explained deposits.
4. Validity and timeliness of the order passed u/s 263.
5. Distinction between lack of enquiry and inadequate enquiry.
6. Denial of opportunity for hearing.

Issue-wise Detailed Analysis:

1. Erroneous and Prejudicial Assessment Order by AO:
The Principal Commissioner of Income-tax (Pr. CIT) Ajmer considered the assessment order passed by the AO as erroneous and prejudicial to the interest of Revenue. The Pr. CIT set aside the assessment order to the AO for fresh enquiry and assessment. The assessee argued that the assessment order was neither erroneous nor prejudicial to the interest of Revenue, as the AO had duly verified the facts and accepted the sources of cash deposits.

2. Non-consideration of Written Submissions and Secondary Evidence:
The assessee contended that the Pr. CIT failed to consider their written submissions and directed the AO to make enquiries based on secondary evidence of third parties. The Pr. CIT ignored the detailed order by DIG (Stamps) dated 22-6-16, which treated the complaints as fake and concluded that no agreement for consideration of Rs. 2,71,00,000/- was made.

3. Enquiry into Already Explained Deposits:
The Pr. CIT directed the AO to make a detailed enquiry into deposits that were already explained by the assessee. The payment received from Kailash was by cheque, which was accepted by the AO after verifying the source. The assessee argued that the AO had already conducted necessary enquiries and accepted the transactions based on affidavits and documentary evidence.

4. Validity and Timeliness of the Order Passed u/s 263:
The assessee argued that the order passed u/s 263 was bad in law and time-barred from the original due date of the return filed for Nil tax liability for 07-08-09. The Pr. CIT's order was challenged on the grounds of being outside the permissible time frame.

5. Distinction Between Lack of Enquiry and Inadequate Enquiry:
The assessee cited the Supreme Court's decision distinguishing between lack of enquiry and inadequate enquiry. The Supreme Court held that if there is an enquiry, even if inadequate, it would not give the Pr. CIT the occasion to pass an order u/s 263 merely because he has a different opinion. The assessee argued that the AO had conducted adequate enquiries and the assessment order was not erroneous.

6. Denial of Opportunity for Hearing:
The assessee claimed that the Pr. CIT did not consider their detailed arguments and denied them an opportunity for a hearing. The assessee requested an adjournment on 25/3/19, which was refused, and the order was passed without giving them a fair chance to present their case.

Tribunal's Findings:

Investment of Rs. 2.71 Crores:
The Tribunal found that the AO had reopened the case for the precise reason of unexplained investment of Rs. 2.71 crores. During the assessment proceedings, the AO examined the matter in detail, including the alleged agreement and the order by the Collector (Stamps) declaring the agreement as fake. The AO's findings were supported by the assessment of the seller company, which also concluded no extra sale consideration was received. The Tribunal held that the AO had conducted necessary enquiries and the order was not erroneous or prejudicial to the interest of Revenue.

Deposits in Bank Account:
The Tribunal noted that the AO had examined the sources of cash deposits in the assessee's bank account, including statements and affidavits from relevant persons. The AO brought to tax an amount of Rs. 2.99 lakhs as unexplained deposits. The Tribunal found that the AO had conducted adequate enquiries and the Pr. CIT's direction for further enquiries was not justified. The Tribunal emphasized that the Pr. CIT must provide a definite finding instead of remanding the matter for fresh adjudication.

Conclusion:
The Tribunal concluded that the Pr. CIT was not correct in exercising jurisdiction under section 263 of the Act. The order passed by the Pr. CIT was set aside, and the assessment order passed by the AO u/s 143(3) r/w 147 was sustained. The appeal of the assessee was allowed.

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