TaxTMI 
TaxTMI 
2023 (12) TMI 36
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....fficer (AO) had failed, according to him, to enquire about the "unexplained cash deposit" found credited in the respondent's/assessee's bank account. 1.3 The Tribunal, though, has recorded a finding of fact that the AO had conducted an enquiry, and it was only thereafter that the original assessment order dated 30.12.2016 was passed, which was cancelled by the PCIT, as indicated above, via the order dated 11.10.2017. Backdrop: 2. Thus, to adjudicate the instant appeal, the following broad facts are required to be noticed. 2.1 The respondent/assessee was incorporated in 1992, and since then, it has been trading in metal, including gold. In the AY in issue, the respondent/assessee filed its Return of Income (RoI) on 28.09.2013. The income declared in the RoI by the respondent/assessee was Rs. 59,99,560/-. The income declared comprised earnings from business amounting to Rs. 12,88,981/-. The remaining amount, i.e., Rs. 47,10,582/-, was disclosed as income from other sources. 3. On 25.04.2014, a search and seizure action was conducted against the "Dua Group". The respondent/assessee, concededly, belongs to the Dua Group. The search and seizure action also brought the res....
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....esides this, reference was also made to the fact that a stock summary of all items, including gold items, had been appended to the reply. More significantly, the respondent/assessee alluded to the fact that it had regularly filed its sales tax return with the concerned department and paid requisite tax under the Delhi Value Added Tax Act, 2004. The details concerning the same were appended to the reply. 8.1 Regarding cash deposits, the respondent/assessee averred that they were cash sales proceeds made during the period in issue. It was also emphasised that the cash sales had been declared revenue from operations. In this context, reference was made to Note 18, incorporated in the profit and loss account. In support of this plea, a copy of the cashbook reflecting the cash sales transaction and cash deposited against the same was also enclosed with the reply. 9. It is against this backdrop that the AO passed the original assessment order dated 30.12.2016 under Section 153A read with 143(3) of the Act. It is important to note that the AO accepted the returned income, as disclosed by the respondent/assessee. 10. The record shows that on 05.09.2017, the PCIT issued a show caus....
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.... issued by the Court, the order sheets of the AO, the questionnaire dated 19.12.2016 and the reply dated 23.12.2016, were placed on the Court record by the appellant/revenue. These are the documents to which we had referred hereinabove. Submissions of Counsels: 17. Thus, we heard arguments in the matter against the backdrop of the facts and circumstances noted hereinabove. Submissions on behalf of the appellant/revenue were advanced by Mr Shlok Chandra, learned senior standing counsel, while the respondent's/assessee's stand was put forth by Mr Somil Agarwal. 18. The arguments advanced by Mr Chandra can broadly be paraphrased as follows: 18.1 The PCIT had set aside the order, as according to him, the original assessment order dated 30.12.2016 was both erroneous and prejudicial to the interest of the appellant/revenue. [See Malabar Industrial Company Ltd. v. CIT, (2000) 243 ITR 83 (SC)] In support of this submission, reliance was placed on the order dated 11.10.2017 passed by the PCIT. It was emphasised that the PCIT had exercised his powers under Section 263 of the Act as the respondent/ assessee had furnished "inadequate evidence to justify the nature and sourc....
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....the revenue. [See: CIT, Bangalore v. Shree Manjunatheaware Packing Products, (1998) 1 SCC 598] 20. In rebuttal, Mr Somil Agarwal broadly made the following submissions: (i) The total revenue the respondent/assessee registered in his books of accounts and offered to tax in the AY in issue was Rs. 35,06,28,560/-. This amount included cash sales against which cash deposits had been made in the subject bank accounts. (ii) In the original assessment proceedings, inter alia, a query had been raised by the AO about cash deposits. After duly verifying the books of accounts, stock summary statements invoices, VAT returns, and bank statements, the AO concluded that no additions were required to be made to the income declared by the respondent/assessee. In this context, inter alia, reliance was placed on the questionnaire dated 19.12.2016 and the reply dated 23.12.2016 filed by the respondent/assessee. (iii) The fact that an enquiry was made is also demonstrable from a perusal of the order sheets of the AO placed before the Court. Therefore, the observation made by the PCIT in paragraph 6 of the order dated 11.10.2017 that "no enquiry or investigation" was made b....
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....Del.) {affirmed in [2010] 320 ITR 561 (SC)} and Oracle Systems Corporation v. Assistant Director of Income Tax, Circle 2(1), International Taxation, New Delhi, [2016] 380 ITR 232 (Delhi)] (viii) Without prejudice to the aforesaid submissions, the AO took a possible view in the matter, and hence, the PCIT could not have exercised the powers conferred upon him under Section 263 of the Act, only for the reason that he had a different view or perspective in the matter. [See Malabar Industrial Co. Ltd. case and CIT v. Max India Ltd., (2007) 295 ITR 282 (SC)] Reasons and Analysis: 21. Having heard the learned counsel for the parties and perused the record, the issue at hand boils down to whether or not the AO, before passing the original assessment order dated 30.12.2016, had made inquiries concerning the cash deposits made by the respondent/assessee in the subject bank accounts maintained with Axis Bank and Kotak Mahindra Bank. The sum deposited in Axis Bank was Rs. 2.03 crores, while in Kotak Mahindra Bank Ltd., cash amounting to Rs. 1.30 crores was deposited. 21.1 The clue to this issue is contained in the order sheets, the questionnaire dated 19.12.2016, and the res....
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....016 and 23.12.2016, respectively are extracted hereafter: Extract from the questionnaire dated 19.12.2016 "In connection with the above mentioned assessment proceedings you are required to furnish the following details in addition to the details/information already called for :- On perusal of the bank statement for the financial year 2012-13 relevant to the above mentioned assessment year, it is noticed that heavy cash deposits amounting to Rs 3.24 crore have been made in the bank accounts maintained with Axis Bank and Kotak Mahindra Bank as mentioned below:- Bank Name Bank Account No. Amount of Cash Deposit (Rs.) AXIS BANK 910020034501397 1.94 crore Kotak Mahindra Bank 1922010000134 1.30 crore In this regard, you are required to explain the source of these cash deposits with corroborative evidence and justify as to why the same should not be treated as unexplained specifically in view of the fact that neither any books of account were found at the registered address of the company during search nor the same were produced thereafter during the course of post search proceedings. You are requested to attend the a....
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....AY 2013-14) would show that the respondent/assessee deals in several metals, such as aluminium scrap, brass scrap, copper scrap, nickel cathodes, zinc and tin ingots and gold. The total turnover of the respondent/assessee in the period in issue was more than Rs. 35 crores; a fact which was not disputed by the appellant/revenue. On the other hand, the cash deposits against gold amount to less than 10% of the total revenue. The AO enquired into the cash deposits, as is evident both from the order sheets and the questionnaire issued to the respondent/assessee under Section 142(1) of the Act. The respondent/assessee filed a response giving its explanation concerning the cash deposits made in the subject bank accounts. The response dated 23.12.2016, as noticed above, carried with it the relevant material and evidence which, according to the respondent/assessee, would establish that the source of the money was the cash sale transactions entered into between the respondent/assessee and its customers. In the reply, the respondent/assessee had categorically stated that if further information /documents were required, it should be given an opportunity in that behalf. Given this position, the....
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.... Section 263 of the Act invests upon the concerned officer the power to call for and examine the record of any proceeding under the Act, and if, after such an examination, he concludes that the order passed by the AO is erroneous, insofar as it is prejudicial to the interest of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing such an enquiry as he deems necessary, pass such order as the circumstances of the case justify, including an order enhancing or modifying the assessment or cancelling and directing a fresh assessment. 25. The PCIT, in the instant case, while concluding that the cash sale transactions, according to him, had not been duly verified, chose not to carry out any enquiry on his own before cancelling the original assessment order dated 30.12.2016 and directing a fresh assessment to be made in the matter. The PCIT, in our view, wrongly equated a case of "no enquiry" with what he construed as "inadequate enquiry". The respondent/assessee had offered an explanation with regard to cash deposits. In the course of the assessment proceedings, the AO had accepted the explanation given by the respondent/assessee that ....
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....hat the Assessing Officer in the assessment order is not required to give detailed reason in respect of each and every item of deduction, etc. Therefore, one has to see from the record as to whether there was application of mind before allowing the expenditure in question as revenue expenditure. Learned counsel for the assessee is right in his submission that one has to keep in mind the distinction between "lack of inquiry" and "inadequate inquiry". If there was any inquiry, even inadequate that would not by itself give occasion to the Commissioner to pass orders under section 263 of the Act, merely because he has a different opinion in the matter. It is only in cases of "lack of inquiry" that such a course of action would be open. In Gabriel India Ltd. [1993] 203 ITR 108 (Bom), law on this aspect was discussed in the following manner (page 113): ". . . From a rending of sub-section (1) of section 263, it is clear that the power of suo motu revision can be exercised by the Commissioner only if, on examination of the records of any proceedings under this Act, he considers that any order passed therein by the Income-tax Officer is "erroneous in so far as it is prejudicial to....
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....ncome himself at a higher figure. It is because the Income-tax Officer has exercised the quasi-judicial power vested in him in accordance with law and arrived at a conclusion and such a conclusion cannot be formed to be erroneous simply because the Commissioner does not feel satisfied with the conclusion . . . There must be some prima facie material on record to show that tax which was lawfully exigible has not been imposed or that by the application of the relevant statute on an incorrect or incomplete interpretation a lesser tax than what was just has been imposed . . . We may now examine the facts of the present case in the light of the powers of the Commissioner set out above. The Income-tax Officer in this case had made enquiries in regard to the nature of the expenditure incurred by the assessee. The assessee had given detailed explanation in that regard by a letter in writing. All these are part of the record of the case. Evidently, the claim was allowed by the Income-tax Officer on being satisfied with the explanation of the assessee. Such decision of the Income-tax Officer cannot be held to be "erroneous? simply because in his order he did not make an elaborate discussion ....
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....ies raised, responses received, and the material/evidence placed on record by the assessee. In a nutshell, the record should disclose whether the AO had applied his mind to various facets that cropped up during the assessment proceedings. In other words, furnishing reasons in the assessment order is not the sine qua non of a sustainable assessment order. Courts have repeatedly stated that the AO is not required to give detailed reasons for accepting or not accepting a particular transaction. As observed above, the record should reflect whether the AO applied his mind to the transaction in issue [See CIT v. Ashish Rajpal (2009) 1 AT taxmann. 623 Delhi and CIT v. Sunbeam Auto Ltd. (2011) 332 ITR 167]. 27. This brings us to the judgments cited by Mr Chandra on behalf of the appellant/revenue in the course of the hearing. 27.1 The principle of law enunciated by the Supreme Court in Malabar Industrial Co. Ltd. has set up a standard concerning the width and amplitude of power vested for exercising revisionary jurisdiction under Section 263 of the Act. While exercising power under the said provision, the concerned officer has to be satisfied that the twin conditions provided therein....