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2017 (3) TMI 97
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.... and prejudicial to the interest of revenue. Ld. CIT failed to appreciate that the order sought to be revised invoking provisions of section 263 of the Act was passed after detailed inquiry and verification of the documentary evidences submitted by the appellant. The order of CIT is bad in law and against the principles of Natural Justice that deserves to be quashed. It be so held now. 2. Ld. CIT erred in law and on facts in setting aside scrutiny assessment order and directing AO to reframe the assessment by making comprehensive inquiries and reconciliation of cash deposited in bank from cash on hand and withdrawals from bank without considering factual matrix already on record placed by the appellant in original as well revisional proceedings. This action of Id. CIT is harsh, uncalled for and completely against the principles of Natural Justice. Grounds in ITA No.1903/Ahd/2015 are - 1. Ld. CIT (A) erred in law and on facts in confirming action of AO in making addition of cash deposit of Rs. 39, 48, 493/- u/s 68 of the Act ignoring submission of the appellant that cash deposited in bank accounts of Oriental Bank of Commerce are from earlier withdrawal and from cash on han....
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....h is reproduced below :- Off ice of the Commissioner of Income-tax-I, Aayakar Bhavan, 2nd floor, Annexe Building, Race Course, Baroda. No. BRD/CIT-I/HQ/263/ADP/2012-13 Dated; 23.01.2013 To, Smt. Apurva Dinesh Patel, D/49, Pratapbaug Society, Munjmahuda, Baroda. Sir, Sub: Proceedings u/s 263 of the I.T. Act, 1961- A.Y.2008-09- Noticc u/s 263(1) of the Act.- regarding- PAN: AJJPP6843N . . It was found that the assessment order passed u/s 143(3) of the Act dated 23.12.2010. by the Assessing Officer, Assistant Commissioner of Income Tax, Circle-2(l), Baroda for A.Y. 2008-09 was erroneous in so far as it was prejudicial to the interest of the revenue on account of the following: "It is noticed that during the year substantial amount of cash was deposited in your bank account. For the month of April, 2007 alone this amount was Rs. 3,39,420/-. As you have not shown any income/loan in cash, these deposits were required to be treated as unexplained cash credit and treated as your income. Also during the year you have claimed expenditure on payment of interest of Rs. 1,97,5747- to ICICI bank on the loan amount of Rs. 90,00,0007- for purchase of....
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....t and cash book (forming part of the paper book) submitted that the source of cash deposit was out of cash in hand in the beginning of the year and regular cash withdrawals from the bank account held with Oriental Bank of Commerce (OBC). The total cash deposit during the year in the bank account with OBC is Rs. 39,48,493.58 and total withdrawal is Rs. 41,73,163/-. 6. Ld. Authorised Representative also referred to the letter dated 9.12.2010 submitted before ld. Assessing Officer wherein details of deposits of cash were attached and explanation for the source of cash deposit was provided for. Reference was also made to letter dated 7th July,2011 submitted to the DCIT, Circle-2(1), Baroda in reference to audit objection is placed at page 9 of the paper book with regard to explanation for treatment of cash deposit in bank account and other details. Ld. Authorised Representative also referred to the letter issued by Assessing Officer dated 10th March, 2010 issued by DCIT Cir-2(1) and another letter dated 16.8.2010 issued by ACIT, Cir.2(1) for finalizing of assessment for Asst. Year 2008-09 calling for the remaining information including furnishing of bank statement and furnishing of ....
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....013) 32 taxmann.com. 356 (Gujarat) 8. We have heard the rival contentions and perused the material placed on record and gone through the judgments/decisions relied on by the ld. representatives. Solitary grievance of the assessee in this appeal is challenging the correctness of the order of ld. Commissioner of Income Tax u/s 263 of the Act. We observe that assessment u/s 143(3) of the Act was completed on 23.12.2010 after calling necessary information and accepting the returned income as assessed income. Thereafter ld. Commissioner of Income Tax examined the assessment record and observed that assessee had deposited cash into bank account oftenly during the year which totaled to Rs. 39,48,493/- and ld. Assessing Officer had failed to examine the issue as to why assessee kept withdrawing cash from bank and then deposited it again throughout the year. Ld. Commissioner of Income Tax in view of this fact set aside the order of Assessing Officer u/s 143(3) of the Act and ordered for reframing assessment after making comprehensive inquiries and reconciliation. 9. The issue before us is to examine as to whether the assessment order u/s 143(3) of the Act was framed without verificati....
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....es and PAN of all the parties with which transactions (purchase, sales and expenditure! exceeding Rs. 1,00,000/- have been made during the period under consideration. 11. The sources m respect of capital introduced during the year with supporting evidence. 12. Name of all the bankers with complete addresses and nature of account in your name as well as in the name of family member. 13. Please furnish the details of various types of bank loans obtained with nature of security pledged and hypothecation of stock offered. 14. Supporting documents in respect of claim under Chapter VI-A. 15. Original tax deducted at source certificates in respect of tax deducted at source claim. 16. Please furnish monthwise break up of household expenses along with copy of ledger account showing their withdrawals. This letter may be treated as notice u/s 142(1) of the 'Income Tax Act, 1961. You are requested to attend the office of the understigned either personally or through Authorised Representative along with the pointwise details/clarification/evidence as called for above on 22.03.2010 at 10.30 AM. Yours faithfully Sd/- DCIT, Cir-2(1), Baroda. 10. We further notice ....
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....m charged on authorized share capital of Rs. 1.36 crores and Hon. Court held in favour of Revenue being justified finding the order u/s 263 of the Act to be justified but these facts will not be a fit case relating to assessee's case because in this case the issue relates to deposits of cash in the bank account which have corresponding source of withdrawals from bank account and all details were there for examination by the Assessing Officer. 12.2 We further observe that Revenue has relied on the judgment of Hon. Gujarat High Court in the case of Commissioner of Income Tax vs. Sarwankumar Sharma (supra) and in the case of Bhagwandas D. Vachhani vs. ACIT (supra) but these two cases also cannot favour the Revenue because they are on issues on merits and not in relation to the order u/s 263 of the Act. Similarly Hon. Gujarat High Court in the case of Adani Agro (P) Ltd. held that no substantial question of law arises out of the order of the Tribunal, dismissing the appeal of assessee that order of Commissioner of Income Tax u/s 263 was not erroneous. We find that the facts in this case of assessee related to claiming set off of gain from sale of shares against unabsorbed speculatio....
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....ccounts filed it is seen that they are repayments of opening balances and not fresh credits. Even otherwise, considering the facts on record, we are not in agreement with the C.I.T. that no inquiries were conducted by the A.O. The decisions of jurisdictional High Court cited before us support the ground of appeal. Hence, considering the same along side the material on record and the language of the assessment order, the assessment order cannot be said to be erroneous on grounds stated by the C.I.T. In view of above, we hold that only for the purpose of making re-enquiries, more so when inquiry report was also obtained by the CIT, the assessment cannot be set aside in the scheme of Section 263 of the Act." 5. We are of the opinion that the Tribunal committed no error. When, during the course of framing of the assessment, the Assessing Officer had access to all the records of the assessee, after pursuing such record the Assessing Officer framed the assessment, such assessment could not have been reopened in exercise of revision power under Section 263 of the Act for making further inquiries. In the facts of the case, in our opinion, Tribunal rightly interfered with such order. No ....
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....should have been verified by the Assessing Officer and having failed to do so, the order passed by the Assessing Officer becomes erroneous and prejudicial to the interest of the Revenue. The Principal CIT concluded by holding as under:- "The assessment order dated 26/03/2013 is therefore cancelled and the Assessing Officer is directed to again complete the assessment after making appropriate enquiry regarding the source of unsecured loan of Rs. 3.4 crores, as mentioned above. The Assessing Officer is directed to verify complete trail of funds and make suitable addition in the case of the beneficiaries of the transaction. Regarding profit made on transaction in shares, the Assessing Officer is directed to examine the claim of the assessee regarding the same being capital gain or business income. While doing so, the principle of natural justice should be followed by him." 9. A perusal of these factual matrix shows that in the year 2006 the assessee was holding 11,000 shares of Radhe Developers India Ltd. The shares were of Rs. 10/- each. On 24.10.2007, the assessee applied for 21 lacs convertible warrants at Rs. 18/- each and on 04.01.2008, the assessee was allotted the warrant....
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....gned within 03 days time from the receipt of this letter failure to which it will presumed that you have nothing to submit in this regard and the assessment shall be finalized on the merits of the details available on record." 11. On 21.03.2013, the assessee filed all the details sought by the DCIT, Circle-11, Ahmedabad. At this stage, it would be pertinent to refer to the submissions of the DR who stated that though the first notice was issued by the DCIT, Circle-11, Ahmedabad, but thereafter the records were transmitted to DCIT, Central Circle-1(3). Therefore, the present Assessing Officer had no opportunity to examine the details/documents. This contention of the ld. DR does not hold any water, because on 23.03.2013 the assessee had filed affidavit explaining the nature, source, identity and genuineness of the entire transactions of allotment of share warrant and conversion of the same to shares and subsequently selling them at profit. This affidavit alongwith the necessary details were filed with the present Assessing Officer. 12. The Hon'ble Bombay High Court in the case of CIT vs. Gabriel India Ltd., reported in (1993) 203 ITR 108 (Bom), has held that "the decision of t....
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.... with the following substantial question of law:- "Whether the Tribunal is right in law and on facts in upholding the order passed by the CIT under section 263 of the Act on merits and still storing the issue of allowability of deduction under section 54 of the Act to the file of Assessing Officer even though the working of allowability of deduction under section 54F is available in the order under section 263 which is not disputed by the assessee before ITAT." And the Hon'ble High Court, after considering the facts, held as under:- "6. It can thus be seen that though final order of assessment was silent on this aspect, the Assessing Officer had carried out inquiries about the nature of sale of land and about the validity of the assessee's claim of deduction under section 54F of the Act. Learned counsel for the Revenue however submitted that these inquiries were confined to the claim of deduction under section 54F of the Act in the context of fulfilling conditions contained therein and may possibly have no relevance to the question whether the sale of land gave rise to a long term capital gain. Looking to the tenor of queries by the Assessing Office and details supplie....
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....r perusal. Here we also like to mention about the finding of ld. Commissioner of Income Tax u/s 263 in para 3.1 wherein he has mentioned that "the assessee has explained that the deposits made in the banks are out of the cash withdrawals during the year. However, the assessee has not explained as to why he has kept withdrawing the cash from the bank and then depositing it again throughout during the year. The Assessing Officer had failed to examine these deposits during the course of assessment proceedings. The withdrawals of cash and depositing of the same is to be examined with reference to various expenditure and investments of the assessee during the year." The above phrase connotes that ld. Commissioner of Income Tax has accepted that assessee had explained about the source of deposits but Assessing Officer had failed to examine these aspects which seems to us very contradictory. Once when ld. Commissioner of Income Tax has accepted that proper explanation has been given by the assessee to the Assessing Officer then he cannot take the basis of inadequate inquiry and can direct the Assessing Officer to perform. As observed above, in the judgment and decision relied on by the as....