TaxTMI 
TaxTMI 
2023 (9) TMI 103
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....ct, the learned Pr. CIT has erred in setting aside the assessment with the direction to frame the assessment after making inquires in regard to cash deposits of Rs. 14,97,750/- and other credit entries of Rs. 1,20,44,870/- made in the bank account of the assessee. 3. It is therefore prayed that above order passed by Pr. CIT u/s. 263 may please be quashed or modified as your honors deem it proper. 4. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal." 2. The facts necessary for disposal of the appeal are stated in brief. The assessee before us is an Individual and has filed return of income for assessment year (AY.) 2018-19 on 28.11.2018, declaring total income of Rs. 4,92,920/-. Subsequently, scrutiny assessment was completed under section 143(3) of the Income-Tax Act, 1961 (here in after 'the Act') on 28.12.2019, by the Assessing Officer accepting the returned income. 3. Later on, Learned Principal Commissioner of Income-Tax (in short "Ld PCIT") has exercised his jurisdiction under section 263 of the Income-Tax Act, 1961. On perusal of the assessment records, it was noticed by ld PCI....
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....s.2 to 6. 5. In response to the above show cause notice, a reply vide letter dated 10/03/2022 was furnished by the assessee before the ld PCIT, which is reproduced as under: "1. Please refer to the notice u/s. 263 of the Act on 21.02.2022 requiring compliance on 01.03.2022. Thereafter, we sought for adjournment and the hearing is fixed for today. We have honour to submit as under on behalf of assessee client. 2. Your honour has raised the issue that the investment in purchase of the agricultural land was not properly explained by the assessee in the course of assessment proceedings. In this connection, it is submitted that assessing officer has required the assessee to furnish the details of the immovable property purchased during the year along with the registered sale deed and source of investment with supporting evidences vide point no. 6 of the notice issued u/s. 142(1) on 14.11.2019. Further, the assessing officer also required assessee to furnish the bank statements. Accordingly, assessee filed all these details vide letter dated 20.11.2019 submitting registered purchase deed in respect of the agricultural land and bank statements. The details of the paym....
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.... It is to be noted that Hanuman Purohit was assessed in the same charge. It is clarified that the assessee didn't maintain the books of accounts and he is not liable to maintain the books of accounts being covered u/s. 44AD of the Act. 5. Even otherwise, the assessment order passed u/s. 143(3) on 28.12.2019 is invalid as no notice u/s. 143(2) was issued with reference to the proceedings u/s. 143(3). It is to be noted that notice u/s. 143(2) dated 30.09.2019 was issued on 11.10.2019 and served on 14.10.2019. This notice was issued with reference to proceedings u/s. 153C which was dropped. No notice u/s. 143(2) for the purpose of framing assessment u/s. 143(3) was issued. Further, it is submitted that notice dated 30.09.2019 issued on 11.10.2019 which was served on 14.10.2019 was after limitation period laid down in the proviso to Section 143(2), so assessment is invalid and therefore action u/s. 263 cannot be taken for reopening the invalid proceedings. The copy of the letter dated 20.11.2019 filed before assessing officer in this regard is enclosed herewith. 6. From the above discussion, it is clear that assessment u/s. 143(3) is neither erroneous nor prejudic....
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....so argued that notice u/s 143(2) dated 30.09.2019, issued on 11.10.2019, which was served on 14.10.2019, was after limitation period laid down in the proviso to section 143(2) and therefore assessment is invalid and therefore action u/s 263 cannot be taken for reopening the invalid proceedings. The ld Counsel further stated that whatever query raised by assessing officer by way of issuing notice u/s 142(1) has been replied to the assessing officer, hence assessing officer has examined the issue under consideration, therefore, order passed by the assessing officer is neither erroneous nor prejudicial to the interest of Revenue, therefore, order passed by ld PCIT under section 263 of the Act may be quashed. 9. On the other hand, Learned Departmental Representative (Ld. DR) for the Revenue submitted that notice under section 143(2) was issued on 30.09.2019, within the time period available under the Act and after issuing notice under section 143(2) of the Act, the Assessing Officer further issued notice under section 153C of the Act to frame the assessment under section 143(3) r.w.s. 153C of the Act. Just because the Assessing Officer did not mention section 153C, on the fact of it....
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.... note that that bank account No.34977252514 was not disclosed by the assessee in his return of income, however, the said bank account number was disclosed by the assessee during the scrutiny assessment proceedings before the assessing officer. The assessee has explained each entry of said bank account number before the assessing officer. Therefore, during the assessment stage, the assessing officer has examined the said bank account. Besides, the majority of credit entries of substantial amounts appearing in this account which were received from Shri Hanuman S. Purohit, M/s. Pushpak Electronics, M/s. Rajgharana Developers and Shree Arihant developers, were explained to the assessing officer, during the assessment stage. Hence in these circumstances, it can be said that assessing officer conducted adequate enquiry. The ld PCIT has himself note in para 7 of his order that the assessing officer had issued notice u/s. 142(1) of the Act on 01.11.2019 and not on 14.11.2019, as has been submitted by the assessee. At point number 6 of the said notice the Assessing Officer had sought following details: "6. the details of the immovable properties purchased during the year under refe....
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.... Malabar Industrial Co. Ltd. vs. CIT [(2000) 243 ITR 83 (SC)] wherein it was held that if the A.O. adopts one of the possible courses available in the scheme of the I.T. Act which results in any loss of revenue or when two views are possible and the A.O. adopts one of them with which the P.C.I.T. does not agree, then it would not be an order prejudicial to the interest of revenue for invoking the jurisdiction u/s 263 of the Act. In other words, the Ld. Pr. C.I.T. on the same set of facts and evidences on record was of the opinion that the A.O. should have rejected the regrouping of debit and credit entries as explained above and he should have taken the stand which the Ld. Pr. C.I.T. hinted in the impugned order u/s 263 of the Act. This is not permissible under law. For better appreciation, the relevant portion of the judgment in the case of Malabar Industrial Co. Ltd. vs. CIT (supra) is quoted below: "The phrase "prejudicial to the interests of the Revenue" has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of revenue as a consequence of an order of the Assessing Officer, cannot be treated as prejudicial to the interests of t....