Tribunal overturns PCIT's Section 263 decision for Assessment Year 2017-18

The Tribunal ruled in favor of the appellant, finding the Principal Commissioner of Income Tax's invocation of Section 263 unjustified. The appellant's appeal against the order invoking Section 263 for the Assessment Year 2017-18 was allowed, setting aside the PCIT's order.

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Issues:
Appeal against order invoking Section 263 of the Income Tax Act for Assessment Year 2017-18.

Analysis:
The appellant, a trading firm, filed a return of income for Rs.22,83,450/-. The Principal Commissioner of Income Tax (PCIT) noted cash deposits of Rs.1,32,11,370/- in old currency without justification. PCIT issued a notice for revision under Section 263, directing proper inquiries. The appellant contended that as a petrol pump business, they were allowed to accept old currency during demonetization. The PCIT's order under Section 263 was challenged.

The appellant argued that the Assessing Officer did inquire about cash deposits during demonetization. The PCIT invoked Explanation-2 to Section 263, deeming the order prejudicial to revenue. The appellant failed to submit during Section 263 proceedings. The PCIT did not provide a fair opportunity for the appellant to respond. The appellant cited relevant case laws to support their position.

After hearing both parties, the Tribunal found that the Assessing Officer did consider demonetization cash deposits. The PCIT did not give a proper chance for the appellant to present their case. The Tribunal noted that the Assessing Officer's acceptance of the cash deposits explanation was justified. The PCIT's order under Section 263 was deemed improper. The appeal was allowed, setting aside the PCIT's order.

In conclusion, the Tribunal ruled in favor of the appellant, finding the PCIT's invocation of Section 263 unjustified. The appellant's appeal against the order invoking Section 263 for the Assessment Year 2017-18 was allowed.

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