2022 (1) TMI 892 - AT - Income Tax

Tax Tribunal Overturns Revision Order, Deems Cash Deposit Taxation Error

Shergil Harjit Versus Pr. CIT-1, Pune

Shergil Harjit Versus Pr. CIT-1, Pune - TMI Issues:1. Revision order passed under section 263 by PCIT for assessment year 2015-16.2. Validity of addition made by Assessing Officer on unexplained cash deposit.3. Application of section 115BBE(1) for taxing unexplained cash deposits.4. Justification of revisionary jurisdiction exercised by PCIT.Issue 1: Revision order under section 263The appeal arose from the PCIT's order dated 17.03.2021 for the assessment year 2015-16. The grounds of appeal challenged the PCIT's revision order under section 263. The appellant contended that the original assessment order under section 143(3) was passed after full satisfaction of the Assessing Officer, and the PCIT erred in passing the revision order exparte without considering the submissions made by the assessee.Issue 2: Addition on unexplained cash depositDuring the assessment proceedings, it was found that the assessee had deposited cash in the bank exceeding the gross turnover of the business. The Assessing Officer made an addition to the total income of the assessee for unexplained cash deposits. However, the PCIT observed that the assessment was erroneous as the addition should have been taxed under section 115BBE(1) at a flat rate of 30%, instead of the normal rate applied by the Assessing Officer.Issue 3: Application of section 115BBE(1)The PCIT held that the unexplained cash deposit should have been taxed under section 115BBE(1) at a flat rate of 30%. The assessee argued that all details were provided during the scrutiny assessment, and the cash deposits were explained as past savings for meeting medical contingencies due to old age. The Tribunal emphasized that the chargeability of cash deposits and the applicability of section 115BBE(1) should be separately examined by the Department.Issue 4: Revisionary jurisdiction of PCITThe Tribunal found that the PCIT initiated revisionary proceedings without bringing any material or evidence demonstrating a reasonable basis for his actions. Considering the circumstances of super senior citizens with well-settled children supporting them financially, the Tribunal held the PCIT's order under section 263 as unjustified, invalid, and ordered it to be quashed. The Tribunal highlighted the importance of considering practicalities and moral responsibilities before resorting to provisions of the Act.In conclusion, the Tribunal allowed the appeal of the assessee, emphasizing the need for a reasonable basis for revisionary actions and the consideration of practical and moral aspects in tax assessments.