TaxTMI 
TaxTMI 
2023 (10) TMI 1008
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....red up during the year. The assumption of jurisdiction u/s 263 being contrary to the provisions of law and facts on record, hence, the proceedings initiated u/s 263 of the Act and the impugned order dated 15.02.2021 deserves to be quashed. 3. The Id. Pr. CIT, Udaipur erred in law as well as on the facts of the case in wrongly setting aside the assessment order dated 28.03.2019 despite there being complete application of mind by the AO on the subjected issues and it was nothing but a case of change of opinion, based on which, assumption of jurisdiction u/s 263 is not permissible. The impugned order dt. 15.02.2021 therefore, lacks valid jurisdiction u/s 263 of the Act and hence, the same kindly be quashed.'" 2.1 At the outset of hearing, the Bench observed that there is delay of 462 days in filing of the appeal by the assessee for which the ld. AR of the assessee filed an application for condonation of delay with following prayers and the assessee to this effect also filed an affidavit :- "1. That in the aforesaid matter, the ld. PCIT passed the impugned order u/s 263 on dated 15.03.2021, Accordingly, the appeal was to be filed on/before 15.05.2021 however, the same has been f....
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.... respect of all judicial or quasi-judicial proceedings. * In cases where the limitation would have expired during the period between 15-3-2020 till 28-02-2022, notwithstanding the actual balance period of limitation remaining, all persons shall have a limitation period of 90 days from 01-03-2022. In the event the actual balance period of limitation remaining, with effect from 01-03-2022 is greater than 90 days, that longer period shall apply. * The period from 15-3-2020 till 28-02-2022 shall also stand excluded in computing the periods prescribed under Sections 23 (4) and 29A of the Arbitration and Conciliation Act, 1996, Section 12A of the Commercial Courts Act, 2015 and provisos (b) and (c) of Section 138 of the Negotiable Instruments Act, 1881 and any other laws, which prescribe period(s) of limitation for instituting proceedings, outer limits (within which the court or tribunal can condone delay) and termination of proceedings." 3.2 Accordingly after giving effect to the said order/direction of the Apex Court by further excluding the time limit by reckoning a period of 90 days from 01.03.2022, the due date of filing of the appeal falls on 29.05.2022. Still however, since ....
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....h while considering a case for condonation of delay. The following observations of the Hon'ble Court are notable: "The legislature has conferred the power to condone delay by enacting section 5 of the Limitation Act 1963 in order to enable the Courts to do substantial justice to parties by disposing of matters on merits. The expression sufficient cause' employed by the legislature is adequately elastic to enable the Courts to apply the law in a meaningful manner which sub serves the ends of justice that being the life-purpose of the existence of the institution of Courts. It is common knowledge that this Court has been making a justifiably liberal approach in matters instituted in this Court. But, the message does not appear to have percolated down to all the other Courts in the hierarchy." Prayer: It is, therefore, humbly prayed that this application may kindly be allowed by condoning the minor delay of 53 days, taking a sympathetic view, in the interest of justice. Any other order, which this Hon'ble ITAT deems fit and proper, be also passed in favour of applicant assessee." To this effect, the assessee has filed an affidavit as to the condonation of delay in f....
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....o Rs. 71,70,120/- 3.2 On examination of the records, the ld. PCIT has found the order of the AO as erroneous and prejudicial to the interest of the revenue on the issues (supra), and the relevant findings of the ld. PCIT are reproduced as under:- " 3.1..........I have carefully examined the written submission of the assessee. The contentions of the assessee have been considered. It is pertinent to mention here that the various additional documentary evidences which have been furnished in compliance to notice u/s 263 of the I.T. Act were not produced before the A.O. This becomes all the more important in view of the fact that one of the key reason of scrutiny selection is 'Large squared up loan during the year'. Since the AO has not examined the documentary evidences in respect of this issue and has not conducted the requisite verification, due to which the assessment order u/s 143(3) of the I.T. Act is found to be erroneous in so far as it is prejudicial to the interest of revenue. However, in view of the facts and submission offered by the assessee, this issue requires thorough verification. Therefore, the AO is directed to conduct necessary examination and verification to ....
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....e P&L account and no assessee would like to pay interest by holding huge cash in hand. Hence, if the assessee was having cash in hand as shown in the cash book in reality then there can be no justification for additional cash withdrawals on various dates as mentioned above, especially in view of the fact that no major expenses have been incurred in cash during the above period as per the cash book. Hence the submissions of the assessee on this issue cannot be accepted as such. Therefore, the AO is directed to thoroughly verify and examine this issue and based on such verification, make necessary addition to the total income of the assessee as required as per the Income Tax Act., 1961. 4. The assessment order u/s 143(3) of the I.T. Act for the A.Y. 2017-18 dated 28-03-2019 was passed by the Assessing Officer in this case, without making proper enquiries or doing any verification of the issues as discussed in preceding para. Thus, these issues have remained unverified and requires detailed examination. Hence, assessment order u/s 143(3) of the I.T. Act for the A.Y. 2017-18 dated 28-03-2019 has thus been rendered erroneous and prejudicial to the interest of Revenue in these issues.....
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.... to the interest of the Revenue, unless the view taken by the AO is totally unsustainable in law. Kindly refer Malabar Industrial Co. Ltd. v/s CIT (2000) 243 ITR 83 (SC). 1.2 Also kindly refer CIT v/s Max India Ltd. (2007) 295 ITR 282 (SC) wherein it is held that: "The phrase "prejudicial to the interests of the Revenue" in S. 263 of the Income Tax Act, 1961, has to be read in conjunction with the expression "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 the Revenue. For example, when the Assessing Officer adopts one of two courses permissible in law and it has resulted in loss of revenue, or where two views are possible and the Assessing Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the Revenue, unless the view taken by the Assessing Officer is unsustainable in law." Ratio of these cases fully apply on the facts of the present case in principle. 2. Due application of mind - Verification as required made: 2.1 It is submitted that the AO had raised very specif....
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....it and credit entries above Rs. 50,000/- in each case may be furnished. Please also file the bank reconciliation statements as well. Further details of any new account opened as on date of issue of notice may also be given. x---------------------------------------x--------------------------------x------------------------ -----x 26.Please produce all the books of accounts and other relevant registers etc. Along with supporting documents and vouchers for verification as prescribed." 2.2.2. Replies dated 14.03.2019 and 22.03.2019 were filed in response to the above notice/s (PB 12-24) wherein all the required information and documents were submitted by the assessee. The extracts from the reply dated 14.03.2019 are reproduced as under: 7. There are only two unsecured loan obtain by the assessee during the year and we are enclosing with this letter copy of confirmation of account of unsecured loan as ''Annexure-E''. x---------------------------------------x--------------------------------x 19. Details will be submitted later. x---------------------------------------x--------------------------------x 21. Assessee has two bank account in State Bank of Patiala during....
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.... the present case, no presumption can be drawn that the AO had not applied its mind to the various aspects of the matter. In such circumstances, without even prima facie laying foundation for holding that assessment order is erroneous and prejudicial to interest in any matter merely on spacious ground that the AO was required to make an enquiry, cannot be held to satisfy the test of existing necessary condition for invoking jurisdiction u/s 263. Jurisdiction u/s 263 cannot be invoked for making short enquiries or to go into the process of assessment again and again merely on the basis that more enquiry ought to have been conducted to find something. 3. Beyond the scope of enquiry contemplated u/s 263: 3.1 Requisite Details already available - Cash Credit - allegation is Factually Incorrect: The allegation by the Ld. CIT that the AO did not properly verify is not factually correct. The admitted and undisputed facts are that the assessee did file the confirmation (PB-24) which was bearing the complete address of the creditor Sh. Shambhu Kumar with his complete PAN No. Needless to say that with reference to PAN, the present assessing officer could have and rather had made enquiry ....
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....nds money, means to the extent he was supposed to act in law and in accordance with the above decisions. 3.5 The Ld. CIT merely alleged but completely failed to establish that the three ingredients which are requisite for examining the case u/s 68, were not fulfilled. Identity was established by the very fact that he was a regular income tax assessee with PAN no and he was also a customer of the bank which was not possible otherwise if the identity was not fully established. The Capacity stands proved when the AO has seen in the assessment records of the creditor with the help of the PAN No. Thirdly the genuineness already stands proved by the fact that the amount was received and repaid through cheque. Moreover, TDS was deducted on the interest payment. Thus, in absence of anything adverse arising suspicion of the AO on the record with respect to the said creditor Sh. Shambhu Kumar, the AO was not supposed to have made addition further inquiry or addition which the Learned CIT wanted him to make simply because the quantum of the amount was huge. In view of the binding judicial guideline, the AO was not obliged still to ask the assessee to provide source of source under the prete....
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....t 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. 3.6.3 In the case of Abdul Hamid v. Income-tax Officer [2020] 117 taxmann.com 986 (Gauhati - Trib.) it was held that only probability and likelihood to find error in assessment order is not permitted u/s 263. 3.6.4 Interestingly, in the re-assessment order passed u/s 143(3)/263 dated 29.03.2022, no addition has been made by the AO u/s 68 in relation to the same unsecured loan received from Sh. Shambu Kumar of Rs. 1 crore and it can be found from Para 2 of Pg.2 of the re-assessment order that all those details were again discussed by the AO. Hence, no action u/s 263 was warranted on this issue. 4. Cash Deposits in Bank A/c: 4.1.1 The allegation by the Ld. CIT that the AO did not verify cash deposits of Rs. 35,00,000 in the form of old currency notes in the bank account on a single day as per the SOP of CBDT during demonetization period and also the genuineness of the transactions of loan taken from....
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....mount was received in cash. The ld. CIT did not doubt the genuineness of the cash receipts entries made in the cash book nor the accounts was rejected. Moreover, he was bound by his own admission that on 11.11.2016 there was a cash balance of Rs. 36,56,466/- (PB 58-59). 4.4 Ld. CIT could not successfully rebut the above facts, availability of cash in the cash book but merely proceeded on suspicion by saying that there were cash withdrawal on various dates even though they were not required. Law is well settled that business man is the best judge to take care of its interest and the revenue cannot put itself into the shoe of the business man as stated in J.K. Woollen Manufacturers Vs. Commissioner of Income Tax(1969) 72 ITR 612 (SC). It is for the assessee business man, to take a decision who may be required to keep sufficient cash keeping in mind the possible/forthcoming opportunities. 5.1 Fairly speaking, from the point of a quasi-judicial authority (the AO), the past history of the case the documents submitted in the response to notices before the Ld. AO, the books of accounts are not rejected and therefore, having a binding value, which included cash book of the current year....
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....ry of old outstanding advances from debtors, and the AO having accepted the said explanation after thoroughly examining the relevant financial statements and tax records of the assessee pertaining to the preceding years, the order passed under s. 143(3) cannot be held to be erroneous insofar as prejudicial to the interests of the Revenue and, therefore, the impugned order passed by the Principal CIT under s. 263 is not sustainable." 6.3 In the case of Bharat Tirtha Rice Mills Vs. PCIT, Kolkata (2022) 220 TTJ 1057(Kol) held as under:(DPB 15-37) " AO having raise a specific query about the cash deposit made by the assessee in its bank account during the demonetization period and the assessee having submitted complete details and explained that the large deposit in the bank was made out of the unutilized withdrawals made out of its CC facility before the declaration of demonetization, it is clear that the AO made due enquiry on this issue and, therefore, the impugned order passed by the CIT under s. 263 on the ground that the AO did not verify the said issue property is not sustainable." 6.4 Also refer Paramjit Singh Vs. Principal Commissioner of Income Tax (2016) 48 CCH 0199 ....
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....s in the past-Assessee explained that the cash found at the time of search was withdrawn from the bank some time back which was partly used for purchasing gold and part of the amount was given by the assessee to his wife-There is nothing to suggest the utilization of the withdrawal amount elsewhere-Said withdrawal is duly reflected in the cash flow statement and closing cash balance is more than the amount found at the time of search-Thus, addition cannot be sustained" 7.4 in CIT v. G.M. Mittal Stainless Steel (p) Ltd. (2003) 263 ITR 255 (SC) "Precedent-Binding nature of judgment-Decision of the jurisdictional High Court-Where the decision of the jurisdictional High Court has not been set aside or at least has not been appended from it would be binding-In view of this CIT proceeding on the basis of the High Court other than jurisdictional High Court on the basis that jurisdictional High Court was erroneous and that the AO who had acted in terms of the High Court's decision had acted erroneously, was not justified" 8.1 It is not the case of CIT that there was a complete/total lack of inquiry. Law is well settled that the assessment order cannot be held to be erroneous simpl....
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....70 (SC); as under: "As pointed out by the Tribunal, in the corresponding clause in the Bill which was introduced in Parliament, the word "shall" had been used but during the course of consideration of the Bill and on the recommendation of the Select Committee, the said word was substituted by the word "may". This clearly indicates that the intention of Parliament in enacting s. 69 was to confer a discretion on the ITO in the matter of treating the source of investment which has not been satisfactorily explained by the assessee as the income of the assessee and the ITO is not obliged to treat such source of investment as income in every case where the explanation offered by the assessee is found to be not satisfactory. The question whether the source of the investment should be treated as income or not under s. 69 has to be considered in the light of the facts of each case. In other words, a discretion has been conferred on the ITO under s. 69 to treat the source of investment as the income of the assessee if the explanation offered by the assessee is not found satisfactory and the said discretion has to be exercised keeping in view the facts and circumstances of the particular c....
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....rkers on cash payment basis. The payment made for Gitti and Sand is to genuine person and they are small suppliers. The submissions of the ld.AR was found unsatisfactory by the AO and the AO noted that expenditure made on account of Gitti and Sand Bajri were not properly vouched or self vouched and also these expenses were incurred in cash. The AO also observed during assessment proceedings that the ld AR of the assessee has not submitted anything specific in this regard and various expenses claimed by the assessee are not subject to verification for want of proper vouchers and also due to cash payment of these expenses and thus the AO made a lumpsum disallowance of Rs. 5.00 lacs and added to the total income of the assessee. The ld. PCIT during the proceeding of Section 263 of the Act did not find merit in the assessment order of the AO and held that the order of the AO is erroneous and prejudicial to the interest of the Revenue as the AO has not made proper verification and enquires in the case of the assessee. The ld. PCIT has also observed that the assessee had deposited cash of Rs. 35.00 lacs in the form of old currency notes in bank account on a single day i.e. 12-11-2016 dur....