TaxTMI 
TaxTMI 
2023 (3) TMI 259
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....opportunity hearing to the Appellant and thereby violating the principles of natural justice; 2. erred in exercising jurisdiction under section 263 on the basis of issues/reasons which was not referred in the show cause notice issued by the PCIT to the Appellant and without giving the Appellant the opportunity to controvert the same, therefore the order passed by the PCIT u/s. 263 shall be held as bad in law; No evidence brought on record to show how the assessment order passed is erroneous in law as well as prejudicial to the interests of the revenue 3. erred in holding that the order passed by the AO is erroneous and prejudicial to the interest of the revenue and therefore such order should be quashed; 4. erred in initiating the revision proceedings u/s. 263 of the Act without appreciating that section 263 can be invoked only if the conjunctive conditions that assessment order passed is erroneous in law as well as prejudicial to the interests of the revenue, are satisfied, therefore the initiation of revisionary assessment proceedings, without satisfaction of such conditions is bad in law; 5. failed to appreciate that the assessment or....
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....tified in invoking the provisions of section 263. 2. The assessee also raised additional ground of the appeal, which is reproduced as under: 1. The Ld. PCIT has erred in law and in facts in assuming jurisdiction u/s. 263 of the Act on the basis of proposal sent by the Ld. AO and without independent application of mind and which is invalid and bad in law. 3. The additional ground raised by the assessee being purely of the legal nature and not requiring any investigation of fresh facts, therefore same was admitted for adjudication in view of the settled principles laid down by the Hon'ble Supreme Court in the case of National Thermal Power Corporation Vs CIT 229 ITR 383 (SC) and CIT Vs Pruthvi brokers and shareholders 349 ITR 336 (Bom). 4. Briefly stated facts of the case are that the assessee was engaged in retail sales of jewelry items. For the year under consideration, the assessee filed return of income on 07/11/2017 declaring total loss at Rs. 12,28,630/-. In view of the cash deposits of Rs. 2,65,44,000/- in post-demonetizing period, the return of income of the assessee was selected for scrutiny and the Assessing Officer after issuing questionna....
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....ported in the preceding or succeeding year of F.Y. 2016-17. The Assessing Officer has ignored this aspect while accepting the explanation of the assessee that cash deposited during the demonetization period was out of the cash sales made during the month of October 2016. 4.7 It is seen that the Assessing Officer instead of verifying the claim of the assessee with regard to cash sales claimed to have been made during the month of October 2016, has examined the purchases made by the assessee. Whereas to examine the nature and source of the cash deposited during the demonetization period, the AO should have examined the genuineness of the cash sales claimed to have been made by the assessee. Even in respect of purchases claimed to have been made by the assessee in the month of October 2016, it is seen that the purchases were made in credit and the payments to the parties from whom the purchases were claimed to have been made, was shown to have been made only in the month of February 2017 i.e., out of the cash deposited during the demonetization period, which was not the trend in the books of the assessee in the period prior to October 2016. The purchases were also claimed to ....
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....ove. 6. Before us the Ld. counsel of the assessee filed a paper book in four volumes containing pages 1 to 548 including case law paper books. 6.1. Regarding the grounds raised, the Ld. counsel of the assessee submitted that during assessment proceeding on the issue of the cash deposits during the monetization period, total five notices have been issued by the Assessing Officer and in response, the assessee filed nine submissions including three detailed submissions against shows notices. He submitted the assessee had filed audited financials, tax audit report, sale bills complete details of sales and purchases, quantitative stock register as confirmed by the auditor, cash book showing sufficient cash balance, corresponding purchase bills, labour bills for preparing jewelry, VAT returns, marketing and exhibition expenses etc. It was the contention of the assessee that it had sufficient opening stock as on 01/04/2016 to cover most of the cash sales made in October 2016 and those sales have already been offered to tax and hence again cannot be subjected to tax under section 69A of the Act. He submitted that cash sales were cross verified by the Ld. Assessing Officer by issuing ....
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....ure of the unexplained, the Assessing Officer has admitted the claim of the assessee without carrying out the enquiry which he ought to have carried out and therefore Ld. PCIT is correct in invoking Explanation-2 to section 263 of the Act. 9. We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. In the grounds raised the main dispute is whether the Assessing Officer has carried out the inquiries or verification in regard to cash deposits under reference which ought to have been carried out in the circumstances of the case. 9.1. Before us, the Ld. Counsel of the assessee has filed a chart showing queries raised by the assessee for making enquiry or verification and submission by the assessee along with evidence filed during the proceeding under section 143(3) of the Act on the issue of cash deposit. For ready reference said chart is reproduced as under: "Chart showing queries raised by ld. AO and submissions and evidences fled by appellant in assessment proceedings concluded u/s. 143(3) of the Act. Sr. No. Details of various notices issues and relevant queries raised....
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.... 19.11.2019. [Pg. 42 of PB]. Evidences filed at Pg 96 of PB. 8. Pt. 22 - Details of top parties to whom sales are made including cash sales. • Pt. 3 of submission dated 04.12.2019. [Pg. 43 of PB]. Evidences filed at Pg 117- 118 of PB. 9. Pt. 23 - Details of top parties from whom purchases are made • Pt. 2 of submission dated 04.12.2019. [Pg. 43 of PB]. Evidences filed at Pg 115- 116 of PB. 10.Pt. 24 - Monthwise stock details along with stock register/stock statement • Pt. 4 of submission dated 04.12.2019. [Pg. 43 of PB]. Evidences filed at Pg 127- 152 of PB. 11.Pt. 25 - VAT returns • Pt. 25 of submission dated 19.11.2019. [Pg. 42 of PB]. Evidences filed at Pg 274- 280 of PB. 3. Notice dated 22.11.2019. [Pg 44-45 of PB] 1. Pt. 1 - Bifurcation of purchase and sales along with GP/NP ratio for A.Y. 2015-16 to A.Y. 2017-18 • Submission dated 28.11.2019 and 6) 04.12.2019 and (ii) 04.12.2019 Wherein the various details as called for are filed before the Ld. AO. [Pg. 43, 46 and 47 of PB] Pt. 1 of submission dated 28.11.20 0. [P....
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....the present case. [Pg. 54-57 of PB] Evidences in the nature of purchase and sale bills of A.Y.2017-18 filed [Pg. 163- 205 of PB] Evidences in the nature of purchase bills, bank statements for earlier year and subsequent year filed Pg. 206-258 of PB] 6. Show cause notice dated 23.12.2019 asking to explain why large number of sale transactions are shown in October'2016 and why the same may be treated as genuine. [Pg 58 of PB] 2. submissions filed by the appellant, each dated 24.12.2019 justifying the nature and source of cash deposits made during demonetization period and why no addition shall be made in the present case. [Pg. 59-66 and 67-72 of PB] 7. Notice us 133(6) of he Act issued by Ld. AO to Sale parties. [Pg. 73-87 of PB] Reply filed by various customers directly to the Ld. AO confirming sales made by the appellant to them along with evidences [Pg. 73-87 of PB] 8. Notice us 133(6) of the Act issued to purchase party. [Pg. 88 of PB] Reply filed by purchase party directly to the Ld. AO confirming purchases made by the appellant from them. [Pg. 89-94 of PB] 9.2. Further, the assessee has also....