2022 (10) TMI 150

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.... passing fresh order without giving any special finding of any error in the original order passed by the Assessing Officer. Such an order of Principal Commissioner of Income-tax is not in accordance with law. Hence the impugned order is liable to be quashed. 3. In any case, there being no error in the original assessment order passed which may cause prejudice to the interest of revenue, the very assumption of jurisdiction by Principal Commissioner of Income tax is bad in law and therefore also the impugned order is bad in law and liable to be quashed. 4. In any case the Principal Commissioner of Income-tax has passed the order on the issues which were duly considered by Assessing officer in the original assessment order and therefore the impugned order passed by the Principal Commissioner of Income-tax is an order on change of opinion which is not permissible u/s. 263 of the Act and therefore also the impugned order is bad in law and liable to be quashed. 5. In any case, the learned Principal Commissioner of Income-tax has erred in holing that Assessing Officer had not made proper enquires at the time of passing the original assessment order. The assessin....

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....the assessee has not given satisfactory explanation regarding source of cash deposits. To this extent, the PCIT considered the order of assessment to be erroneous and prejudicial to the interests of the revenue. PCIT issued a show cause notice on 9.2.2022 giving the assessee an opportunity for filing her submissions. The assessee made similar submission before the PCIT stating the deposit of cash is out of accumulated balance. The PCIT did not accept the explanation provided by the assessee and proceeded to set aside the order of the AO u/s. 263 by holding as under:- "5. In response to the show cause notice dated 09/02/2022, the assessee has filed submissions stating that the sum of Rs. 15,00,000/- was her own money carried forward from the previous year. In Para 2 of the reply, the assessee has claimed the said amount to have declared as loans and advances in the balance sheet of F.Y. 2015-16 relevant to A.Y. 2016-17 and also furnished an audited copy of Balance Sheet for the A.Y. 2016-17. Further, in Para 7 of the reply, the assessee has claimed the said amount as her own money carried forward from the A.Y. 2016-17. Thus, it is seen that the assessee has taken two differ....

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....d that the AO had called for the break-up of the cash deposits for three years from AYs 2016-17 to 2018-19. The ld. AR submitted that the observation of the PCIT that safe custody account is not mentioned anywhere in the books of account and balance sheet of the assessee is not correct and in this regard, our attention was drawn to the financials of the assessee [pg. 77 to 80 of PB], where under the details of "interest received and loan debtors", "safe custody account" is reflected in the balance sheet of the assessee. 7. The ld. DR relied on the order of the PCIT and also submitted that the, cash deposit of Rs.88.16 lakhs is much more than the income declared by the assessee in the return of income at Rs.9.35 lakhs and this fact has not been properly verified by the AO. The ld. DR also submitted that from the details of three years cash deposit it is noticed that there was no cash deposit during the earlier assessment years, whereas during the year under consideration there are huge cash deposits of Rs.88,16,000. This discrepancy in the cash deposits should have been verified by the AO, which the AO failed to do so and the order therefore is erroneous and prejudicial to the in....

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....nd that of the Supreme Court were not, however, based on that ground at all. On the contrary, the Supreme Court followed their previous decision in Rampyari Devi's case (supra), and upheld the decision of the High Court precisely on the same grounds. These two decisions show that it is not necessary for the Commissioner to make further inquiries before cancelling the assessment order of the Income-tax Officer. The Commissioner can regard the order as erroneous on the ground that in the circumstances of the case the Income-tax Officer should have made further inquiries before accepting the statements made by the assessee in his return. The reason is obvious. The position and function of the Income-tax Officer is very different from that of a civil court. The statements made in a pleading proved by the minimum amount of evidence may be accepted by a civil court in the absence of any rebuttal. The civil court is neutral. It simply gives decision on the basis of the pleading and evidence which comes before it. The Income-tax Officer is not only an adjudicator but also an investigator. He cannot remain passive in the face of a return which is apparently in order but calls f....