TaxTMI 
TaxTMI 
2024 (5) TMI 26
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.....2023 Assessment order dated 17.03.2022 Assessment Order under section 143(3) r.w. Section 153A of the Income Tax Act, 1961. 2. The assessee has assailed revisional order passed by the Pr.CIT under Section 263 of the Act on the ground that the assessment order under revision is neither erroneous nor prejudicial to the interest of the Revenue and therefore, the Pr.CIT lacks jurisdiction to invoke powers conferred under Section 263 of the Act in respect of captioned appeals. 3. To begin with, we shall take up the appeal in ITA No.1075/Del/2023 relevant to Assessment Year 2019-20 for adjudication. 4. Briefly stated, the assessee is an individual engaged in the practice of Chartered Accountancy since 1992. A search and seizure operation was conducted in the case of the assessee on 18.09.2018. In the course of the search, cash of Rs. 10,12,780/- was found at the premises of the assessee. However, after considering the explanation of the assessee with respect to the cash found in the course of search, the cash was eventually not seized by the search team. 4.1 Pursuant to search proceedings under Section 132 of the Act, assessment proceedings under Section 153A of the Act were ini....
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....18.09.2018. During the search, cash amounting to Rs. 10,12,780/- was found at the premise of the assessee. The assessee filed original return of income at Rs. 11,14,140/- on 28.11.2020. Assessment u/s. 143(3) of the Act was completed on 18.03.2021 accepting returned income of the assessee. 2. It is noted from the assessment records that in the return filed by the assessee for A.Y. s 2017-18 to 2019-20 following discrepancies are noted: A.Y Total Income Cash in Hand In original ITR In ITR filed after search In original ITR In ITR filed after search 2017-18 6,65,950/- 6,65,950/- 0 27,79,067/- 2018-19 3,95,750/- 3,95,750/- 1,20,000/- 23,06,667/- 2019-20 NA 11,14,140/- NA 19,95,667/- 3. During the assessment proceedings the explanation for the cash found amounting to Rs 10,12,780/- was provided by the assessee stating that he had cash balance of Rs. 19,95,667/- and Rs 23,06,667/- for A.Y. 2019-20 and A.Y. 2018-19 respectively. However, upon further examination, it is noted that opening cash balance for the year A.Y. 2019-20 was only Rs. 1,20,000/- as per the original ITR filed by the assessee for A.Y. 201819(closing balance of cash in hand for A....
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....f cash held from earlier years without requisite inquiry as alleged in the show cause notice. The PCIT accordingly directed the AO to include and assess Rs. 10,12,780/- on account of unexplained cash under Section 69A r.w.s 115BBE of the Act in the assessment pursuant to the revisional action; (ii) the AO failed to verify the source of investment in jewellery worth Rs. 58,53,606/- found at the residence and in locker at the time of search. The issue was set aside to the AO for appropriate orders after enquiry. 7. The assessment order was accordingly set aside with a direction to the AO to make a fresh assessment de novo in terms of revisional order and in accordance with law. 8. Aggrieved, the assessee is in appeal before the Tribunal agitating supervisory jurisdiction usurped by the Pr.CIT under Section 263 of the Act. 9. The ld. counsel for the assessee broadly reiterated its submissions placed before the AO and also in the course of revisionary proceedings and submitted in furtherance that (i) the show cause notice issued under section 263 is inexplicably dated 25.03.2023 (Saturday) and the assessee was expected to respond to the show cause notice by 28.03.2023 morning i.e.....
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....as declared by the assessee at Rs. 24,19,867/- in the return filed under Section 153A of the Act. The cash balance so declared was not disturbed either by the AO or by the revisional Commissioner under Section 263 of the Act. Hence, when seen in perspective, the opening balance at the beginning of F.Y. 2016-17 spilled over to subsequent years including F.Y. 2018-19 relevant to A.Y. 2019-20 acquires a degree of acceptability for the purposes of explanation offered towards source of cash found. When seen conjointly with existing cash at the beginning of respective assessment years , the source of cash found in the course of search thus clearly stands explained. The cash balances as statedly reported in the ROI is as tabulated hereunder: Assessment Year Original Return Return filed u/s. 153A Opening Balance Closing Balance Opening Balance Closing Balance 2016-17 - - - 24,19,867.00 2017-18 - - 24,19,867.00 27,79,067.00 2018-19 - 1,20,000.00 27,79,067.00 23,06,667.00 2019-20 1,20,000.00 - 23,06,667.00 19,95,667.00 10. The ld. counsel next adverted to copy of notices issued by the AO under Section 142(1) of the Act and submitted that specific and pointed ....
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....tly been set aside under s. 263 of the Act. In the absence of any satisfactory explanation offered, the Pr.CIT has rightly given a conclusive directions to the AO to make additions on account of cash found in the course of search with the aid of Section 69A r.w. Section 115BBE of the Act. As regards nonchalant inquiry allegedly carried out by the AO towards source of investment in jewellery. the ld. CIT-DR submitted that the issue has been merely set aside to the file of the AO and it will be open to the assessee to offer explanations towards source of jewellery. 12. We have carefully considered the rival submissions on the maintainability of revisional action in the factual matrix and in the light of jurisprudence available in this regard. The assessee has questioned the rationale for invoking powers under section 263 of the Act and alleged absence of prerequisites for doing so. 13. Section 263 of the Act confers power upon the Pr.CIT / CIT to call for and examine the records of a proceeding under the Act and revise any order, if he considers the same to be erroneous and prejudicial to the interest of the Revenue. The Pr.CIT can however take recourse to revision under Section 26....
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....uiry regarding source of investment in jewellery by the AO. 15. At this juncture, it may be pertinent to observe that the breach of principles of natural justice can typically happen in two ways; (i) the competent authority passes an order without giving reasonable opportunity to deal with the points raised and facts in issue or; (ii) passes order without revealing the facts itself in the course of the proceedings and comes out with an order adverse to the assessee without any prior notice. The case of the assessee insofar as source of jewellery is concerned, falls in the second category of breach which is far more incomprehensible. The Pr. CIT has outrightly deprived the assessee of his statutory right to make any effective representation to defend his case as contemplated in the provisions of Section 263 of the Act. Noticeably, the requirement of opportunity is not merely implied but expressly enacted in section 263 of the Act. The power to give appropriate directions on the counters of section 263 is squarely contingent upon proper opportunity to the assessee. The Pr. CIT can exercise powers only after giving the assessee an opportunity of being heard to the assessee. The expre....
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....fense raised on behalf of the assessee on both counts. The assessee has demonstrated the existence of cash in hand. The relevant facts were placed before the AO which suggests the view taken by the Assessing Officer in its quasi judicial capacity to be plausible while framing the assessment. As stated, the assessee has not declared any cash in hand in its return of income filed prior to search since it was not compulsory for the assessee to do so owing to presumptive taxation scheme availed by the assessee. The cash in hand was however declared for different assessment years in the return filed under Section 153A. Pursuant to search, the opening cash in hand for F.Y. 2016-17 declared at Rs. 24.19 lakh has been accepted by the Revenue and has attained finality in the absence of any pending proceedings. This itself gives rise to a somewhat plausible explanation towards cash found. This apart, the assumption of Pr.CIT towards NIL cash in hand and treating the entire cash found in the course of search as unexplained defies logic and common sense approach. Besides, the revisional action has been taken at a ferocious speed and in unprecedented hurry apparently to meet the limitation peri....