2023 (7) TMI 680 - AT - Income Tax

Tribunal Upholds Pr. CIT's Order on Cash Deposits, Emphasizes Verification

The Tribunal upheld the Pr. CIT's order under Section 263, emphasizing the importance of proper verifications in determining the source of cash deposits. ... Revision u/s 263 - cash deposits unexplained - as per CIT AO had failed to verify the authenticity of the assessee’s claim that the cash deposits in his bank account were sourced from his business of trading of agricultural and forest produce - HELD THAT:- As it is a matter of fact borne from record that the A.O while framing assessment had summarily accepted the explanation of the assessee and had not carried out any verification on the aforesaid issue, i.e. source of the cash deposits in his bank account, though the same had formed the very basis for reopening of the assessee’s case u/s. 147 of the Act, therefore, as per “Explanation 2” of Section 263 the order passed by the A.O u/s. 143(3)/147 as observed by the Pr. CIT and, rightly so, is to be deemed to be erroneous in so far it is prejudicial to the interest of the revenue u/s. 263 of the Act. Our aforesaid conviction that failure of the A.O to carry out necessary verification while framing assessment and summarily accepting the explanation of the assessee would render the order passed by him amenable for revision u/s. 263 of the Act is supported by the Judgment of Deniel Merchants (P) Ltd. [2017 (12) TMI 476 - SUPREME COURT] We thus uphold the order passed u/s. 263 - Decided against assessee. Issues Involved:The judgment involves the condonation of delay in filing the appeal and the sustainability of the order passed by the Pr. CIT u/s. 263 of the Income Tax Act, 1961, regarding the source of cash deposits in the bank account of the assessee.Condonation of Delay:The appeal filed by the assessee faced a delay of 409 days, with the reasons for the delay being elaborated upon by the Ld. AR. The delay was attributed to a combination of factors, including a period covered by a Supreme Court order and the health issues of the assessee's earlier counsel. The Ld. AR argued that the delay was due to genuine reasons and should be condoned, a stance not objected to by the Ld. DR. The Tribunal, after considering the circumstances, condoned the delay of 21 days, deeming it to be for bona fide reasons without any intentional lapse on the part of the assessee.Sustainability of the Pr. CIT's Order:The core issue in the appeal was the sustainability of the Pr. CIT's order u/s. 263, which set aside the A.O.'s order u/s. 143(3)/147 for lack of verifications regarding the source of cash deposits in the assessee's bank account. The Pr. CIT found the A.O.'s acceptance of the claim without proper verification prejudicial to the revenue's interest and directed a re-adjudication. The Tribunal observed that the A.O. had not sought details on the source of cash deposits during assessment, leading to a lack of substantiated explanation from the assessee. The A.O.'s failure to verify the source of cash deposits, which formed the basis for reopening the case, rendered the order erroneous under Section 263. Citing legal precedent, the Tribunal upheld the Pr. CIT's order, dismissing the appeal raised by the assessee.Conclusion:The Tribunal upheld the Pr. CIT's order u/s. 263, emphasizing the necessity for proper verifications in assessing the source of cash deposits. The appeal of the assessee was dismissed based on the Tribunal's findings and legal interpretation.This summary provides a detailed breakdown of the issues involved in the judgment, focusing on the condonation of delay and the sustainability of the Pr. CIT's order regarding the source of cash deposits in the assessee's bank account.