TaxTMI 
TaxTMI 
2020 (11) TMI 822
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....It was proved before the Ld. PCI'T that the assessment was framed after due scrutiny of facts and after verification of the details. The assessment was reopened on the ground of AIR information that the assessee had deposited in bank the amounts in cash of more than Rs. 10,00,000/-. The papers about the agreement to sale along with the family settlement(partition) memorandum were filed. After verification and detailed scrutiny the Ld. A.O framed the assessment and as such the same cannot be treated as erroneous and prejudicial and as such action u/s 263 is bad in law. 4. The order passed by the Ld. PCIT be quashed. Shriram Vaishnav ITA No.636/Ind/2019 Assessment Year 2009-10 1. The order passed by the Ld. PCIT is illegal and bad in law and hence be set aside. 2.The Ld. PCIT has erred in passing the order u/s 263 on the ground that the order passed by the Ld. A.O. is erroneous and prejudicial to the interest of the revenue. 3.It was proved before the Ld. PCI'T that the assessment was framed after due scrutiny of facts and after verification of the details. The assessment was reopened on the ground of AIR informat....
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....was issued. In response to notice u/s 148 the return was filed declaring income of Rs. 66,650/- being interest from bank. Assessment was completed u/s 143(3)/148 of the Act at Rs. 66,650/-. Subsequently Ld. Pr.CIT, Ujjain assuming his jurisdiction u/s 263 of the Act initiated the proceedings u/s 263 of the Act are issued following show cause notice dated 25.02.2019, to the assessee :- In this case, notice U/S 148 was issued on 23.03.2016. In compliance, the assessee filed return of income on 27.09.2016 declaring total income of Rs. 66,650/-. The assessment was completed u/s 143(3)1147 on 12.12.2016 by the AO (ITO-I, Dewas) at the returned income, which is considered erroneous and prejudicial to the interest of revenue for the following reasons :- On perusal and examination of records, it is noticed that the assessee has deposited cash of Rs. 19,05,600/- in the saving banks account. However, on going through the record, it is further noticed that _ (1) In respect of cash deposited in the savings bank account, the assessee stated before the Aa that the said amount was received as per family partition deed dated 21.05.2008 prepared by his father Shri Ramchar....
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....artition) memorandum along with copy of agreement to sale of agricultural land before the Ld. Assessing Officer which has been seen by him. The Ld. Assessing Officer has accepted after scrutinized the documents. As such the date of receipts by assessee from deceased father duly mentioned in the memorandum of family settlement. In view of the above submissions, the assessee has proper sources of cash deposits into bank account the same may please be accepted. 4. As regards, examine of assessee on oath, it is humbly submitted that the explanation of the assessee regarding cash receipts from father is duly supported by the documentary evidence i.e. family settlement memorandum and receipts of father is also supported by the agreement sale ancestral land. The assessee has filed both the documents before the Ld. Assessing Officer. The Ld. Assessing Officer. The Ld. Assessing Officer after seeing the documents has accepted after scrutinized the documents. Mere non examine of assessee on oath doesn't automatically lead to order of the Ld. Assessing Officer as erroneous. The father of the assessee is no more alive and as such the documents of agreement to sal....
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....be deemed to be erroneous in so far as it is prejudicial to the interests of the revenue, .if in the opinion of the Principal Commissioner or Commissioner- . ( a) The order, is: passed without making inquiries or verification which should have been made; (b) The order is passed allowing any relief without. inquiring into the claim:" As such the provisions of section 263 are applicable on the issue of the case. 5. Thus, the order is erroneous and prejudicial to the interest of revenue in respect to the above issue. 6. The order of the AO is, therefore, set aside to the file of the AO with direction to examine the issue, as discussed above, and after affording proper opportunity to the assessee. The order dated 12.12.2016 passed u/s 143(3)/147 is, accordingly, set aside. 8. Now the assessee is in appeal before the Tribunal challenging the jurisdiction of Ld. PCIT assumed u/s 263 of the Act. 9. Ld. Counsel for the assessee on referring to the written submissions filed before Ld. PCIT and also before us submitted that the alleged amount of Rs. 19,05,000/- deposited by the assessee in the bank account was received from his father. The a....
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.... Principal Commissioner or Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Assessing Officer is erroneous in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment. Explanation 1.-For the removal of doubts, it is hereby declared that, for the purposes of this sub-section,- (a) an order passed on or before or after the 1st day of June, 1988 by the Assessing Officer shall include- (i) an order of assessment made by the Assistant Commissioner or Deputy Commissioner or the Income-tax Officer on the basis of the directions issued by the Joint Commissioner under section 144A; (ii) an order made by the Joint Commissioner in exercise of the powers or in the performance of the functions of an Assessing Officer conferred on, or assigned to, ....
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....sessee to be reheard under the proviso to section 129 and any period during which any proceeding under this section is stayed by an order or injunction of any court shall be excluded. 13. On a bare perusal of the sub-section (1) would reveal that the powers of revision granted by section 263 to the learned Commissioner have four compartments. In the first place, the learned Commissioner may call for and examine the records of any proceedings under this Act. For calling of the record and examination, the learned Commissioner was not required to show any reason. It is a part of his administrative control to call for the records and examine them. The second feature would come when he will judge an order passed by an Assessing Officer on culmination of any proceedings or during the pendency of those proceedings. On an analysis of the record and of the order passed by the Assessing Officer, he formed an opinion that such an order is erroneous in so far as it is prejudicial to the interests of the Revenue. By this stage the learned Commissioner was not required the assistance of the assessee. Thereafter the third stage would come. The learned Commissioner would issue a show-cause noti....
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.... be argued that there is some possibility of the assessment order being challenged or revised in appeal and, therefore, on account of this contingency, the order becomes prejudicial to the interests of the revenue." [emphasis supplied] 16. Hon'ble Apex Court in the case of Malabar Industrial Co. Ltd. - [2000] 243 ITR 83 - order pronounced on 10.02.2000 - HEAD NOTE - "Section 263 of the Income-tax Act, 1961 - Revision - Of orders prejudicial to interests of revenue - Assessment year 1983-84 - Whether in order to invoke section 263 Assessing Officer's order must be erroneous and also prejudicial to revenue and if one of them is absent, i.e., if order of Income-tax Officer is erroneous but is not prejudicial to revenue or if it is not erroneous but is prejudicial to revenue, recourse cannot be had to section 263(1) - Held, yes - Whether if due to an erroneous order of ITO, revenue is losing tax lawfully payable by a person, it will certainly be prejudicial to interests of revenue - Held, yes - Assessee-company entered into agreement for sale of estate of rubber plantation - As purchaser could not pay installments as scheduled in agreement, extension of time for payment of insta....
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.... in accordance with law and further what tax has in fact been realised under the alleged assessment orders.[emphasis supplied] 18. Hon'ble Karnataka High Court in the case of V. G. Krishnamurthy - [1985] 20 Taxman 65 - order pronounced on 19.03.1984 - Para 10 - "Section 263 can be invoked by the Commissioner only when he prima facie finds that the order made by the ITO was erroneous and was prejudicial to the interests of the revenue. Both these factors must simultaneously exist. An order that is erroneous must also have resulted in loss of revenue or prejudicial to the interests of the revenue. Unless both these factors co-exist or exist simultaneously, the Commissioner cannot invoke or resort to section 263. It cannot be exercised to correct every conceivable error committed by an ITO. Before the suomoto power of revision can be exercised, the Commissioner must at least prima facie find both the requirements of section 263, namely, that the order sought to be revised is prima facie erroneous and prejudicial to the interests of the revenue. If one of the other factor was absent, the Commissioner cannot exercise the suomoto power of revision under section 263." [emphasis supplie....
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....annot be termed to be erroneous simply because the Commissioner of Income-tax does not feel satisfied with the conclusion. (viii) The Commissioner of Income-tax, before exercising his jurisdiction under section 263 must have material on record to arrive at a satisfaction. (ix) If the Assessing Officer has made enquiries during the course assessment proceedings on the relevant issues and the assessee has detailed explanation by a letter in writing and the Assessing allows the claim on being satisfied with the explanation of the assessee, the decision of the Assessing Officer cannot be held to be simply because in his order he does not make an elaborate discussion in that regard. 20. In the light of the above decision and the ratios laid down therein and examining the facts of the case we find that the Ld. A.O vide his notice dated 3.10.2016 issued u/s 143(2) of the Act enclosed a Annexure and through point No.13, the assessee was required to explain the source of cash deposit in his saving bank account. In reply filed on 5.12.2016 the assessee has given complete details of the transaction in Para 13 & 14 in his reply and the same is reproduced below:- 1....