TaxTMI 
TaxTMI 
2022 (11) TMI 583
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....der the Act. It is submitted that the order passed u/s. 263 is bad in law as A.O. has neither committed any error nor it is prejudicial to the interest of revenue. It be held now. 2. The Ld. Principal Commissioner of Income Tax has erred in holding that the Ld. A.O. has not verified the cash deposited during the demonetization period as also has not verified the difference of cash deposit of Rs. 51,22,500/- by agents in the bank account of the appellant. It is submitted that the Income Tax Officer has made full inquiries and the assessee has offered complete details of cash deposits which fully tallies with the cash book and Ld. A.O. had verified the same to his complete satisfaction. The Ld. Principal Commissioner of Income Tax is not at all correct in mentioning that Ld. A.O. did not carry out required inquiry of cash deposited in bank which according to him has resulted in under assessment of income to the tune of Rs. 51,22,500/-. It is submitted that such observation and finding and mentioning that the order of Ld. A.O. is erroneous and prejudicial to the interest of revenue is totally incorrect as no error has been committed by the A.O. He had verified the cash deposi....
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....e same be so held now. 5. The Ld. Principal Commissioner of Income Tax has erred in mentioning that Ld. A.O. has not examined and verified the sundry creditors and holding that they are in the nature of the unsecured loan and A.O. did not call for any details is absolutely incorrect and uncalled for. Sundry creditors are nothing but the amount received in the normal course of travel business which were received in earlier years and from time to time and the same has been verified by the A.O. while issuing a separate notice and verification of books. In view of this, to set aside the order on the direction that Ld. A.O. ought to have examined the provision of Section 269SS and Section 269T and to that extent, the order is prejudicial and erroneous is absolutely incorrect finding. It is submitted that the same be held now. 6. Without prejudice to the above, the Ld. Principal Commissioner of Income Tax has erred in passing the order u/s 263 of the Act, both on facts and on law, without appreciating the detailed submission filed before the Ld. A.O. as well as filed before him. It is submitted that none of the points stated by the Ld. Principal Commissioner of Income T....
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.... for reconciliation for the difference of Rs. 51,22,500/- between cash deposited as per Bank Statement of the assessee and the cash deposited as per Cash book. The details were submitted to the Principal CIT and the Ld. Counsel for the assessee further submitted that this aspect was examined in detail during the course of assessment proceedings, however, according to the Principal Ld. CIT(Appeals), though the assessee has provided explanation for the difference of Rs. 51,22,500/-which is the aggregate amount of cash not routed through the cash book, however, the assessee has not produced further evidences like appointment letters issued to agents, details of commission paid to them, assessee has not given names of passengers with their travel details etc. (II) low gross profit and net profit inspite of increased receipts compared to previous years: In this respect, the assessee submitted that this aspect was examined in detail during the assessment proceedings and duly checked and verified by the AO. Before the principal CIT, the assessee submitted that the main reason for falling GP and NP and increasing expenditure is that during the earlier years, the assessee was doing....
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....opportunity of being heard to the assessee. 5. The assessee is in appeal before us against the aforesaid order passed under section 263 of the Act. The primary contention of the assessee is that the AO during the course of assessment issued as many as seven notices to the assessee, and detailed inquiries were made during the course of assessment proceedings itself, in which all aspects/ issues in respect of which 263 proceedings were issued had been examined. 6. Regarding the issue of cash deposits during demonetisation period, the counsel for the assessee invited our attention to notice under section 142(1) of the Act issued by the AO dated 08-07-2019 (query 7 of the said notice) at page 2 of the paper book. Further, the counsel for the assessee invited our attention to pages 107-111 of the paper book (specifically from page 109 onwards), where the assessee had given complete details of cash deposited during the demonetisation. Further, the counsel for the assessee also submitted that from 112 onwards of the paper book, the supporting documents were also furnished by the assessee before the AO for his consideration. Further, the counsel for the assessee invited our attention....
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....aspect of sundry creditors, to which the assessee had filed reply dated 17-12-2019 at pages 340-341 of the paper book, giving details of sundry creditors as requisitioned by the assessing officer. 10. Accordingly, the counsel for the assessee submitted that that it cannot be said in the instant facts that no "proper enquiry" was conducted by the AO, and whether the enquiries are proper is a purely subjective matter looking into facts of the case. In the instant set of facts, the AO issued as many as seven notices to the assessee, and all the issues which were raised by the PCIT in the 263 proceedings, were already enquired into by the AO during the course of assessment proceedings and assessee had also replied to the same. Therefore, it cannot be said in the instant facts that there was no enquiry or lack of enquiry as stated in the 263 proceedings. 11. In response, the DR submitted that on perusal of page 6 of the paper book, queries 11 to 15, wherein the AO had called for certain details, and the reply filed by the assessee at pages 340-341 of the paper book, it is seen that the assessee has given only incomplete replies, which have been accepted by the AO during the course....
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.... not required to give detailed reason in respect of each and every item of deduction, etc. Therefore, one has to see from the record as to whether there was application of mind before allowing the expenditure in question as revenue expenditure. Learned counsel for the assessee is right in his submission that one has to keep in mind the distinction between "lack of inquiry" and "inadequate inquiry". If there was any inquiry, even inadequate, that would not by itself, give occasion to the Commissioner to pass orders under section 263 of the Act, merely because he has different opinion in the matter. It is only in cases of "lack of inquiry", that such a course of action would be open. --- From the aforesaid definitions it is clear that an order cannot be termed as erroneous unless it is not in accordance with law. If an Income-tax Officer acting in accordance with law makes a certain assessment, the same cannot be branded as erroneous by the Commissioner simply because, according to him, the order should have been written more elaborately. This section does not visualise a case of substitution of the judgment of the Commissioner for that of the Income-tax Officer, who passed ....
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....ill be against the well accepted policy of law that there must be a point of finality in all legal proceedings, that stale issues should not be reactivated beyond a particular stage and that lapse of time must induce repose in and set at rest judicial and quasi-judicial controversies as it must in other spheres of human activity. 12.4 The Mumbai ITAT in the case of Sh. Narayan Tatu Rane Vs. ITO, I.T.A. No. 2690/2691/Mum/2016, dt. 06.05.2016 examined the scope of enquiry under Explanation 2(a) to section 263 in the following words: "20. Further clause (a) of Explanation states that an order shall be deemed to be erroneous, if it has been passed without making enquiries or verification, which should have been made. In our considered view, this provision shall apply, if the order has been passed without making enquiries or verification which a reasonable and prudent officer shall have carried out in such cases, which means that the opinion formed by Ld Pr. CIT cannot be taken as final one, without scrutinising the nature of enquiry or verification carried out by the AO vis-à-vis its reasonableness in the facts and circumstances of the case. Hence, in our considered ....
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....sed an order under section 263 of the Act directing the Assessing Officer to pass fresh assessment order under section 143(3) of the Act, 1961 on the aspect of unsecured loans shown by the respondent assessee. The Hon'ble Supreme Court made the following observation while deciding in favour of the assessee: "Thus, the Tribunal has considered in detail the aspect of revisional power to be exercised by the PCIT in the facts of the case and has given a finding of facts that the Assessing Officer has made inquiries in detail and after applying mind, accepted the genuineness of loans received by the respondent assessee from the aforesaid two companies and such view of the Assessing Officer is a plausible view, and therefore, the same cannot be said to be erroneous or prejudicial to the interest of the Revenue." 12.7 The Supreme Court in another recent case of Principal Commissioner of Income-tax 2 v. Shree Gayatri Associates*[2019] 106 taxmann.com 31 (SC), held that where Pr. CIT passed a revisional order making addition to assessee's income under section 69A in respect of on-money receipts, however, said order was set aside by Tribunal holding that AO had made detailed ....
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....essity to remand the proceedings to the Assessing Officer when no further inquiries were called for or directed" 12.9 The Supreme Court in the case of Principal Commissioner of Income-tax--8 Mumbai v. Sumatichand Tolamal Gouti [2019] 111 taxmann.com 287 (SC) held that where High Court upheld Tribunal's order holding that AO had made detailed enquiries while allowing assessee's claim for deduction of business expenditure and, thus, revisional order passed by Commissioner was not sustainable, SLP filed against High Court's order was liable to be dismissed. The facts of this case were that in course of assessment, Assessing Officer allowed assessee's claim for deduction of certain expenditure on purchase of CDs on Jain Religion by expending an amount of Rs. 10.4 crores, after due examination. The Commissioner passed revisional order holding that Assessing Officer had not carried out any enquiries as to nature of expenditure being capital or not. The Tribunal, however, allowed assessee's appeal holding that Assessing Officer had carried out detailed enquiries and taken a view which was a plausible view. Accordingly, Tribunal set aside revisional order passed by C....