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<h1>Revision under section 263 concerning inadequate enquiry into source of cash deposits results in upholding Pr.CIT revision.</h1> Revision under section 263 was considered on the adequacy of the AOs inquiry into large cash deposits purportedly explained by a sale; the AO accepted ... Revision u/s 263 - as per CIT AO has not done enquiry properly regarding source of cash deposits - HELD THAT:- On going through the sale deed dated 08.01.2015 it is noticed that property was sold for Rs. 1,60,0000/- and assessee’s share is only Rs. 18 lakhs but for other cash received as claimed by the assessee only on the basis of affidavit without supporting documents filed by the assessee and accordingly he has not examined to the extent of the examination of source of cash deposits and no further questions were asked and merely accepted the documents filed by the assessee. Here the cash on hand the cash deposits are more than the sales consideration of the land and assessee’s share is only Rs. 18,00,000/- He could have asked for source of rest amount of cash deposits Accordingly Order passed by the AO is erroneous and prejudicial to the interest of Revenue. We uphold the Order of the learned Pr.CIT passed under section 263 of the Act. Issues: Whether the Principal Commissioner of Income Tax was justified in invoking revisionary powers under section 263 of the Income-tax Act, 1961 to set aside the assessment completed under section 147 read with section 144B for failure of the Assessing Officer to adequately enquire into and verify the source of substantial unexplained cash deposits in the assessee's bank account.Analysis: The material shows large cash deposits in the assessee's bank account exceeding the sale consideration and the assessee's stated share; the Assessing Officer accepted the assessee's affidavit and documents without further enquiry into the source of cash deposits. The Principal CIT examined the sequence and amounts of deposits and withdrawals and found that the AO had not conducted adequate verification or sought corroborative evidence to support the assessee's claim that the deposits originated from sale proceeds and past savings. The Principal CIT concluded that the AO's acceptance of the return without proper inquiry rendered the assessment erroneous and prejudicial to the interests of revenue.Conclusion: Revision under section 263 was correctly exercised in favour of the revenue; the assessment order was set aside as erroneous and prejudicial and the assessee's appeal against that revision was dismissed.Ratio Decidendi: Where an assessing officer accepts an assessee's explanation for substantial unexplained cash deposits solely on the basis of an affidavit and documents without adequate inquiry or corroboration, the Principal Commissioner may validly invoke section 263 to revise and set aside the assessment as erroneous and prejudicial to the interests of revenue.
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