2021 (12) TMI 1456

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....ction without satisfying the condition precedent as laid down u/s 263 of the Act i.e. without validly holding that the AO's order is erroneous as well as prejudicial to the interest of the revenue. Since the jurisdictional issue has been raised, we will first of all adjudicate the legal issue. The Ld. Counsel drew our attention to the impugned order of the Ld. PCIT and brought to our notice that the Ld. PCIT has interfered by taking note that AO while passing the assessment order dated 29.08.2016 u/s 143(3) of the Act did not enquire about "discrepancy in turnover shown in ITR and cash deposit in bank A/c". Thereafter, the Ld. PCIT cite from the order sheet noting dated 30.06.2016, that though the assessee had submitted a bank statement, th....

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....s, ledger of all major expenses with supporting documents to be produced on 30.05.2016 and since none appeared, he issued penalty notice for non-appearance. Thereafter, the A.O noted that the AR of the assessee appeared and furnished the audit report. Shri Ajay Kumar Rastogi pointed out that in the assessment order, the AO noticed that pursuant to his direction, the assessee furnished bank statement and reconciled the difference between cash deposit and turnover. He drew our attention to the finding of the A.O that the discrepancy in turnover shown in ITR and cash deposit in bank A/c was explained. Thus according to the Ld. counsel, the A.O has examined the bank account statement in the light of the turnover reported in P&L A/c and on the b....

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....r in the first place the order of the Assessing Officer found fault by the Principal CIT is erroneous as well as prejudicial to the interest of the Revenue. For that, let us take the guidance of judicial precedence laid down by the Hon'ble Apex Court in Malabar Industries Ltd. vs. CIT [2000] 243 ITR 83(SC) wherein their Lordship have held that twin conditions needs to be satisfied before exercising revisional jurisdiction u/s 263 of the Act by the CIT. The twin conditions are that the order of the Assessing Officer must be erroneous and so far as prejudicial to the interest of the Revenue. In the following circumstances, the order of the AO can be held to be erroneous order, that is (i) if the Assessing Officer's order was passed on incorre....

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....aken by the Assessing Officer is unsustainable in law". 5. Keeping the aforesaid settled position of law in mind, in the present case we note that the Ld. PCIT has alleged lack of enquiry on the part of the AO in respect of scrutiny of the CASS item "discrepancy in turnover shown in ITR and cash deposit in bank A/c". We note that the assessee is running petrol pump business. From the perusal of the assessment order, we note that the AO had called for the documents/records from the assessee and has made the specific finding of fact that pursuant to his notices, the assessee had furnished the same as well as the reconciliation in respect of the discrepancy in turnover shown in ITR and cash deposit in bank account. The AO has made a finding a....