TaxTMI 
TaxTMI 
2017 (10) TMI 932
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....was filed by the assessee on 26.09.2011. The case of the assessee was taken into scrutiny as there were huge cash deposits to the tune of Rs. 57.39 lacs approximately appearing in the Saving Bank Accounts of the assessee. The A.O. during the assessment proceedings noted that the assessee is an agriculturist and also has some income from sale of milk and finally the order u/s. 143(3) was passed by the A.O. on 12th August, 2013 in which he accepted the returned income of Rs. 1,59,800/-. Thereafter, from the perusal of assessment records, it was noticed that out of Rs. 57.39 lacs (approximately) cash deposited in the saving bank account of the assessee maintained with Allahabad Bank (Rs. 22.40 lacs approx.), in PNB (Rs. 18.01 lacs approximately) and in Union Bank of India (Rs. 16.98 lacs approx.). The assessee submitted that he sold agricultural land on 29.4.2010 for Rs. 12.76 lacs approximately and thereafter on 19.10.2010 for Rs. 14.54 lacs approximately. Thus, the assessee submitted some explanation for the source of cash deposits to the tune of Rs. 27.25 lacs approximately. However, for the remaining amount i.e. Rs. 30.14 lacs (approximately) remained unexplained and unverified. F....
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.... "Undisputed facts Income returned at Rs. 159800/- from sources of income namely other sources (Bank Interest) House Property and petty sale of Milk of own cattles. Agriculture Income of Rs. 5.5 Lacs from agriculture holding of 20 Acres. Alike income from agriculture in the preceding years were as under and accepted by revenue. AY 2010-11 6.50 Lacs Agriculture income in AY 2011-12 (under appeal) AY 2009-10 6.0 Lacs Reduced on account of Sale of part of lands in April 2010 AY 2008-09 5.0 Lacs AO having completed Assessment u/s 143(3) taking into consideration bank accounts, cash flow statement, called u/s 143 (2) - pages 6 - 7 Appellants reply dated 27.07.2013 duly considered - pages 8-9, 10-21 and 21-22. CIT's notice u/s 263 The notice appears to be on account of alleged deficiency of examination of records and inadequacy of funds available for making deposits in Bank. The observations of CIT that cash withdrawals have been withdrawn and re-deposited is not understood as the appellant was having the Bank Accounts and certain transactions of gift to daughter in law acquisition of plots and purchase of car ....
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.... Taxman 136/10 taxmann.com 30 (AlL), (iii) Southern Herbals Ltd. v. DIT (lnv.)I1994J 207 ITR 55 (Kar.), (iv) CIT vs. Hastings Properties[2002] 253 ITR 124/[2001"] 119 Taxman 36 (Cal.), (v) CIT v. Usha International Ltd.f2012] 348 ITR 485/210 Taxman 188/25 taxmann.com 200 (Delhi), (vi) JK. Synthetics Ltd. v. CBD7T 1972-183 ITR 335 (SC), (vii) Sirpur Paper Mill Ltd. v. CWT[1970] 77 ITR 6 (SC), (viii) Gee Vee Enterprises v. Addl. CIT[1975] 99 ITR 375 (Delhi) (ix) ITO v. D.G. Housing Projects Ltd.[20 12] 343 TTR 329/20 taxmann.com 587/[2013] 212 Taxman 132 (Delhi) 2.2 The co-ordinate bench has stated as under, "28. We have considered the detailed submissions of both the parties and have perused the record of the case keeping in view the various authoritative pronouncements in this regard. There cannot be any quarrel with the legal propositions, as advanced by both the parties. It has consistently been held that if the AO's conclusion is arrived at after due application of mind on a particular issue, then the order cannot be said to be erroneous. 'Due application of mind' implies that if the assessee ....
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.... will he examined whether the AO had reached the level of satisfaction by carrying out necessary inquiries qua that issue or not. Ground is disposed of accordingly"( emphasis supplied). 2.3 The co-ordinate bench has further stated as under: "38.5 Thus, it is evident that Hon'ble Delhi High Court in D.G. Housing Projects Ltd. (supra) clearly pointed out that the facts in Gee Vee Enterprise (supra) were entirely different. Thus, the ratio laid down in the case of Gee Vee Enterprise (supra) as well as D.G. Housing Projects Ltd. (supra), have to be taken into consideration depending upon the facts obtaining in a particular case while deciding various issues. The broad principle that emerges from various decisions is that if AO has merely accepted the assessee's explanation on various issues without proper inquiry then the same would come within the ambit of 'lack of enquiry' and not 'inadequate inquiry'. If a particular issue comes within the ambit of complete lack of inquiry then the order is to be considered as erroneous as well as prejudicial to the interests of revenue but if the case is of inadequate inquiry, then ld. ClT has to demonstrate that....
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....red to become inquisitor in the given situations. 3.5 The CIT has specifically mentioned that out of 22 creditors, notices u/s 133(6) was issued to 6 creditors only(ref. first para at page# 1 of the AO). The CIT has also analysed the act of making enquiry by the AO in respect of the creditors and returned a findings the in spite of being new creditors, in 7 cases, no enquiry was made. 3.6 The CIT has also examined the ledger accounts of the sundry creditors( e.g. Prayan Enterprise and Aggarwal Brothers) which show cash payments of below the prescribed limit on consecutive days. A person of ordinary prudence, much less income tax officer, can clearly see a pattern in such payments which is unnatural. 3.6 During the course of proceedings u/s 263, the CrT examined the ledger 'accounts of the sundry creditors and (through application of mind) found specific instances of violation of provisions of section 40A(3) which were not seen by AO. It shows non-application of mind by the AO. 4.1 After considering the relevant material on record and giving due opportunity of being heard to the assessee, the CIT came to a logical and judicious conclusion that....
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....h lesser degree of material/evidence as compared to 'satisfaction' which in turn requires much lesser degree of material/evidence as compared to 'reason to believe'. It has been laid down by Hon'ble SC in case of Raymond Woollen Mills Ltd. 236 ITR 34(SC) that sufficiency of material cannot be challenged in case of 'reason to believe'. Therefore, the same cannot be done in case of ' opinion', also. 5.3 The assessee has failed to submit cogent material to show that this opinion is perverse." 8. In this case the AO has passed the following order u/s. 143(3) of the I.T. Act, 1961 vide order dated 12.8.2013: "The assessee has filed his income tax return on 26.9.2011 for the AY 2011-12 declaring income at Rs. 1,59,800/- which was processed on 17.1.2013. Later on, the case was selected for scrutiny through CASS. Accordingly, notice u/s. 143(2) dated 14.8.2012 was issued and served upon the assessee fixing the case for 29.8.2012. On the fixed date of hearing, Sh. Kehar Singh himself attended the hearing. Notice u/s. 142(1) dated 17.5.2013 alongwith detailed questionnaire was issued and served upon the assessee fixing the case for 05.....
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....plained/unverified. After carefully perusing the assessment order, we find that that A.O. did practically no verification of assessee's claim about the source of cash deposits appearing in the bank accounts. Thus, the assessment order passed by the A.O. has become erroneous so far as it is pre-judicial to the interest of the Revenue and accordingly, the same needed revision u/s. 263 of the I.T. Act, hence, Ld. Pr. CIT rightly issued notice u/s. 263 of the I.T. Act to the assessee on 28th December, 2015 on the issues discussed above. In response, the assessee/his Advocate attended the proceedings on 13th January, 20th January and 3rd February, 2016 and also filed the written submissions to support their case that the action u/s. 263 of the Act is not warranted in this case. The assessment records and the submissions filed by the assessee during assessment proceedings as well as during the proceedings u/s. 263 have been perused carefully and assessee submissions/explanation cannot be accepted on account of the following reasons :- i) The assessee mainly submitted that he had already filed the cash flow statement and about the source of cash deposits, he mainly submitted ....
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.... hand, if we look at the date and amount of his agricultural land, on the other hand, if we look at the date and amount of cash deposited in Assessee's bank account then we find that the nearest deposit is on 10th May, 2010 of Rs. 10.90 lacs in Allahabad Bank. In the sale deed submitted, it is clearly mentioned that the sellers had already received the sale amount, so it can be safely presumed that the assessee had already received the sale amount on 29th April, 2010 or even before that. So, practically, there is no possibility of depositing Rs. 1O.90 lacs from this amount of Rs. 12.76 lacs. Similarly, the assessee submitted that he sold the agricultural land for Rs. 14.54 lacs on 19th October, 2010, however, if we look at the nearest cash deposit in the three Bank accounts of the assessee, then we find that on 23rd September, the assessee had deposited Rs. 9 lacs in PNB so there is gap of 26 days and then the next nearest date is on 11th November, 2010 where Rs. 5 lacs is deposited by the assessee in Union Bank account. Here also there is gap of 23 days after the date of Registry. Thus, considering the substantial gaps of time, no matching amounts, no credit can be allowed to the ....