TaxTMI 
TaxTMI 
2023 (10) TMI 1008
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....the cash deposits made during the year and the loan squared 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 ap....
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....28-2-2022 shall stand excluded for the purposes of limitation as may be prescribed under any general or special laws in 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 ....
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....mitted that the Hon'ble Supreme Court in the case of Collector, Land & Acquisition v. Mst. Katiji & Others (1987) 167 ITR 471 (SC) has advocated for a very liberal approach 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 othe....
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....bsp; Disallowances on account of unverifiable Rs. 82,533/- Expenses Disallowance on account of unverifiable Rs. 5,00,000/- Material expenses Total income Rs. 71,70,123/- Total income R/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 ....
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....ubstantial opening cash in hand on those dates. There seems to be no justification for such cash withdrawals, if any assessee is already having substantial cash in hand on a particular date. This becomes all the more important in view of the fact that the assessee has shown substantial interest expenses in the 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 ver....
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....f the order of the AO cannot be treated as prejudicial to the interest of the Revenue. For example, if the AO has adopted one of the two or more courses permissible in law and it has resulted in loss of revenue, or where two views are possible and AO has taken one view with which the CIT does not agree, it cannot be treated as an erroneous order prejudicial 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 C....
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....te of interest Amount of TDS Date of deposit of TDS 19. Please furnish the details of cash deposits during demonetization period with source of cash along with supporting documentary evidences. Please furnish the details of demonetized currency and legal currency also. x---------------------------------------x--------------------------------x--------------------- 21. Photocopies of bank accounts /statements narrating debit 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....
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.... 134 CTR 145 (Raj). held that: "Once Assessing Officer has made enquiries during the course of assessment proceedings on the relevant issues and the assessee has given detailed explanation by a letter in writing and the Assessing Offer allowed the claim being satisfied with the explanation of assessee, the decision of the Assessing Officer cannot be held to be erroneous simply because in his order not make an elaborate discussion in that regard." 2.5 In CIT v/s Ganpat Ram Bishnoi (2005) 198 CTR (Raj) 546 held that from the record of the proceedings, in 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 ....
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....e creditors is proved and such persons own the credits which are found in the books of the appellant, the appellant's onus stand discharged and the latter is not further required to prove the sources from which the creditors could have acquired the money deposited with him and, therefore the addition u/s 68 cannot be sustained in the absence of anything to establish that the sources of the creditors deposits flew from the appellant itself." 3.4 Accordingly, the AO raised very specific and directly relevant queries/called for explanation and evidences w.r.t. source of amount received and the creditworthiness of the person who lends 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 r....
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....eration of the Commissioner as to whether an order is erroneous in so far as it is prejudicial to the interests of the Revenue, must be based on materials on the record of the proceedings called for by him. If there are no materials on record on the basis of which it can be said that the Commissioner acting in a reasonable manner could have come to such a conclusion, the very initiation of proceedings by him will be illegal and without jurisdiction. The Commissioner cannot initiate proceedings with a view to starting fishing and roving enquiries in matters or orders which are already concluded. Such action will 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. 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 th....
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....icient cash in hand lying immediately before 12.11.2016. Thus, it was fully established beyond all reasonable doubts that there was sufficiency of cash available and in absence of any evidence of utilization thereof elsewhere by the Ld. CIT, the same could be deposited in the bank a/c. 4.3 Further, the Ld. CIT in para 3.2 has made a sweeping and vague remark that the AO did not act upon as per SOP however, he himself did not point out in what manner there has been such violation. Interestingly, the assessee is a real estate developer. During the year also he completed a multi-story building. Admittedly, the assessee was in receipt of Rs. 8,34,46,000/- as shown in the P&L A/c (PB 21) substantial amount 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 ....
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....essing Officer that deposits stood reconciled was preceded by a proper inquiry - It was also found that assessee had produced statement of bank account, copies of bills issued to purchasers of tractors as also books of account showing entries of deposits made in bank - Moreover, Assessing Officer had recorded a categorical finding that entries in bank account were verifiable from cash book and also bills produced by assessee - Whether in view of aforesaid, Tribunal was justified in setting aside revisional order passed by Commissioner - Held, yes. 6.2 In the case of Rameshwar Prasad Shringi Vs. PCIT (2021)214 TTJ 257 (Jp) held as under: (DPB 9-14) " Assessee having explained the cash deposits in his bank accounts on the basis of recovery 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." ....
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....cash withdrawals must have been spent by the assessee, Tribunal was justified in holding that the addition was not sustainable-Order of the Tribunal does not give rise to a substantial question of law" In this case, cash was found on search carried out on 04.02.2001 and was explained to be out of the cash withdrawal in Dec-2000. 7.3 Also refer Anand Prakash soni v/s DCIT (2006) 101 TTJ 97 (Jd) para 5-6 "Search and seizure-Block assessment-Computation of undisclosed income-Cash found during search-Assessee is entitled to furnish cash flow statement to explain the transactions when no books of account are maintained-In such circumstances it becomes the duty of the AO to verify the balance sheet and cash flow statement with the necessary material including the details already filed along with the returns 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 a....
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....nquiry conducted by the AO was inadequate and has assumed the revisional jurisdiction-Assessee has filed all the details before the AO and AO has accepted the contention of the assessee that no expenditure was attributable to the exempt income during the relevant assessment year-Thus, while recording the said finding, the AO has taken one of the plausible views in allowing the claim of the assessee- Therefore, CIT could not have set aside the order of assessment merely on the ground of inadequacy of enquiry-Order passed by the CIT was not sustainable in law hence, the Tribunal rightly set aside the impugned order of the CIT. The Ld. CIT is completed silent on this aspect. 9. Moreover, discretion conferred upon the AO u/s 69/69A has been exercised judiciously w.r.t. both the issues as held and in accordance with CIT vs. Smt. P.K. Noorjahan (1999) 237 ITR 0570 (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 "m....
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....orted by self prepared vouchers and such expenses were made mostly in cash. The above expenses claimed by the assessee are not subject to verification for want of proper vouchers and also due to cash payment of these expenses. Thus the AO out of total expenses of Rs. 8,25,333/- disallowed 10% expenses which comes to Rs. 82,533/- and added the same to the total income of the assessee. The AO further during the course of assessment proceedings noticed that the assessee had debited following manufacturing expenses. i. Material purchase Rs. 4,81,83,817/- Ii Labour expenses 1,64,10,234 Total Rs. 6,45,94,051 The ld. AR of the assessee submitted a written submission that the assessee has done construction work during the year. In the construction, Gitti and Sand are the main consumable items. The bills of sand is not available as it is purchased from the truck wala on cash basis and Gitti is also taken from small workers 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 an....