AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2017 (2) TMI 443
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....hi, during the period relevant to assessment year under consideration, was treated as unexplained as assessee did not attend the proceedings. Assessee preferred appeal before the ld. CIT(A), who, vide his order dated 14.11.2011, contained at pages 40 to 52 of the PB, dismissed the assessee's appeal. The assessee preferred appeal before the ITAT, which vide its order dated 15.10.2012, contained at pages 53 to 59 of the PB, restored the matter to the file of the AO with the direction to allow one final opportunity to the assessee to establish the nexus of his business receipts with cash deposited in the bank as also to explain the nature of transaction in the said account and, thereafter, pass appropriate orders in accordance with law. Consequent to these directions, the AO, inter alia, issued notice dated 2.9.2013 contained at pages 73 to 75 of PB, wherein the AO, inter alia, observed as under: "The Ld. ITAT has too issued directions for the assessee to place best evidence before the A.O, so that matter could be disposed or expeditiously . It has also specifically been ordered that " In (the event the assessee does not avail the opportunity provided by the A.O, or does not establis....
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....ce with name and address of the parties for cash deposits mentioned by the Lei. ITAT in para-6 of page- 11, and for any other similar type of cash deposits in your bank, outside Delhi to verify that these represent your retail sale receipts only & as well as whether the entire sale amount having been deposited. 6. Random view of cash deposit & withdrawal in the beginning of the year reveal the position as under - Date Amt (deposited (Rs.) Amt. Withdrawn (Rs.) 04.04.2006 18800 15000 10-04-2006 20000 20000 10-04-2006 11800 10000 28.04.2006 19000 28/04(i) 7000 28/04 (ii) 10000 29/04 (iii) 2000 As per the above transactions, it can be seen that a normal prudent business-man & more-so having small retail business receipts, as being alleged by you, will have repeated visits more than once a day to deposit and then withdraw almost the same amount for business purposes from a bank situated at a distance and will also incur, travelling expenses for no gain from banking transaction, Hence the deposits in this bank a/c cannot be known to you only". 3. Ld. counsel pointed out that in response to this notice assessee filed it....
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....of the order for AY 2009-10 was also filed in course of hearing. 6. Ld. counsel pointed out that assessee had filed return u/s 44AF. In this regard he referred to page 2 of PB, wherein computation of total income is contained, wherein assessee had disclosed income u/s 44AF at Rs. 1,25,250/- at a gross turnover of Rs. 9,56,760/-. 7. Ld. counsel further referred to pages 80 to 101, wherein the bank statement is contained. Further, he referred to pages 102-108 wherein the narration of the cash deposits in Centurion Bank of Punjab Ltd. is given. 8. Ld. counsel further referred to page 109 of the PB, wherein the cash flow statement is contained to demonstrate that primarily the sale receipts were from business. In support of these submissions ld. counsel also referred to pages 116- 117 of the Paper Book, wherein month-wise details of cash deposits and withdrawals in Centurion Bank and reconciliation of cash deposited at bank branch outside Delhi at Police Branch at Ludhiana, is contained. 9. Ld. counsel referred to pages 118 to 126 of the PB wherein the ledger account of sales is contained. Further from pages 127 to 227 the copies of cash memos are contained. He pointed out that all....
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....tions: "An assessment order can be erroneous either in law or in fact. An assessment order can be an erroneous one when prima facie a claim is allowed which according to the learned CIT was against the provisions of law. An assessment order can be held as prejudicial to the interest of the revenue if in the opinion of the learned CIT the inquiry was not adequate or no inquiry at all has been made. We may like to mention that the AO is not only an adjudicator but also an investigator. The AO cannot remain a passive spectator while dealing with a return of income filed by the tax payer. If, on the face of the return it is apparent that an inquiry is required: then it is expected from the AO to conduct an investigation so as to ascertain correctness of the return filed as also the income declared therein. It is his duty to ascertain the truth of the facts stated in the return. Where the circumstances indicate to provoke an inquiry, then the same should not be withhold. In a landmark decision in the case of G. V. Enterprises, 99 ITR 375, the Hon'ble Delhi High Court has held that "inadequacy of inquiry is a good reason for invoking the proceedings u/s 263 of the Act." In any cas....
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....e Act. Therefore, we reach to a conclusion that the assessment order is not sustainable and in accordance with the provisions of the Act which is not only erroneous but also prejudicial to the interest of the Revenue." 13. Ld. DR pointed out that in the present case ld. Commissioner pointed out as to what the AO was required to do. He submitted that AO has not mentioned his view on the directions of ITAT. He submitted that AO was required to establish nexus between the cash deposits with the business receipts on which there is no finding. 14. Ld. DR further referred to the decision of Hon'ble Gauhati High Court in the case of CIT Vs. Shri Jawahar Bhattacharjee rendered in ITA no. 2 of 2008 dated 7.2.2012. Para 22 of the decision reads as under: "22. We have already referred to judgments of this Court in Rajendra Singh and two Single Bench judgments following the said judgment in Bongaigaon Refinery and Petrochemicals Ltd. and Shyam Sundar Agarwal as also the second Division Bench judgment in Daga Entrade P. Ltd. No doubt, in Rajendra Singh, an observation was made that erroneous assessment referred to the defect which is jurisdictional in nature, as against substitution of one v....
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....tions in the said account. In order to find out whether the assessment order is erroneous or not, we have to examine whether these directions were carried out by AO in true spirit or not. In this regard if we refer to the assessment order, we find that AO in para 1 and 2 has observed as under: "Return of income for the AY 2007-08 in the case was filed vide Ack. No.3131005896 dated 04-01-2008 declaring an income of Rs. 1,11,998/- after claiming deduction under chapter VI A amounting to Rs. 13,252/-. The original assessment was completed u/s 144 on 18/12/2009, which has been set-aside by the Ld. ITAT. Vide order dated 15/10/2012 in ITA No.526/Del/2012 directing the AO verify the nexus of bank deposits with reference to receipts declared. Pursuant to this, notice u/s 143(2) issued. The AR of the assessee Sh. Bishan Gupta Advocate attended and furnished the details called for. During the course of assessment proceedings, the AR was required to show cause that as to why the entire cash deposited in bank amounting to Rs. 12,99,873/- may not be treated as your gross receipts and profit be calculated accordingly on the basis of percentage i.e. 13.09% declared originally by the assessee ....
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....see with Centurian Bank of Punjab, East Patel "Nagar, New Delhi, (iii) Details of deposits and withdrawals (narration of each entry) of the said Savings Bank ale. (iv) Summary of Cash Flow Statement showing opening balance of cash, total- deposits in the bank a/c, total withdrawals of cash from the bank a/c, total expenses including purchases and closing balance of cash in hand, . - (v) Affidavit of the assessee relating to payments I withdrawals through Mr. Boby Kumar and Mr. Kirpal Singh, who were - working as 'Salesmen and for doing the banking work etc. with the assessee. In this affidavit, the details of - withdrawals made by these employees have been given which tally with the bank statement. (vi) Affidavit of the assessee containing complete explanation about cash deposit in the bank a/c from branches outside Delhi, including modus operandi of the business transaction. (vii) A photocopy of the assessment order for the assessment year 2009-10 passed U/s 143(3) of the I. T. Act in the case of the assessee where business income declared U/S 44AF has been accepted and no addition I disallowances have been made". 22. Thus, it appears that this reply is in continuat....