TaxTMI 
TaxTMI 
2024 (6) TMI 932
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....on 44AB of the Act. 4. Be that as it may, for the assessment year under dispute, the assessee filed his return of income on 20.06.2017 declaring income of Rs. 7,98,864/-. Assessee's case was selected for scrutiny to verify "large turnover shown in Income Tax Return, but Audit Report not filed". The Assessing Officer issued notices under sections 142(1) and 143(2) of the Act from time to time calling upon the assessee to furnish various details. As observed by the Assessing Officer, in response to such notices, the assessee furnished replies, documents, books of account, bills and vouchers etc., which were verified on test check basis. While verifying the books of account and documents filed by the assessee, the Assessing Officer made the following disallowances: (i) Disallowance of car running and repair & maintenance expenses Rs. 8,839/- (ii) Disallowance of Depreciation Rs. 83,923/- 5. After making addition of disallowances noted above, the total income was determined at Rs. 8,91,626/-. Accordingly, the assessment was completed under section 143(3) of the Act. After completion of assessment, as aforesaid, learned PCIT called for and examined the assessment records. While ....
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....ed counsel for the assessee submitted, in course of assessment proceedings, the Assessing Officer has specifically inquired into the cash deposits made by the assessee in his bank accounts during the financial year relevant to the assessment year in dispute. In this context, he drew our attention to the notices issued under section 142(1) of the Act along with the questionnaire attached to such notices. He submitted, in response to the queries raised in the notices and questionnaire, the assessee furnished reply along with documentary evidences from time to time starting from 27.02.2019 and thereafter. In this context, he took us through all the notices issued under sections 142(1)/143(2) of the Act and the replies given in response thereof. He submitted, the Assessing Officer, in fact, has conducted thorough inquiry not only with regard to the cash deposits made during demonetization period, but all other issues raised by the revisionary authority in the notice issued under section 263 of the Act. He submitted, insofar as the allegation of learned PCIT that the assessee has not furnished the Audit Report in Form 3CA during the assessment proceedings and non-disclosure of scrap sal....
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....nducted inquiry, which he should have made. He submitted, before applying Explanation 2 to section 263 of the Act, the revisionary authority must prove on record that the Assessing Officer has not conducted necessary inquiry. He submitted, since, in the facts of assessee's case the Assessing Officer has conducted detailed inquiry on all the issues, including the issue on which the proceeding under section 263 of the Act was initiated, the assessment order cannot be held as erroneous and prejudicial to the interest of Revenue, so as to empower the revisionary authority to revise it. 10. Per contra, learned Departmental Representative strongly relied upon the observations of learned PCIT. 11. We have considered rival submissions and perused the materials on record. We have also applied our mind to the judicial precedents relied upon by the parties. However, in our view, the issue is purely factual. This is so because, learned PCIT has invoked his jurisdiction under section 263 of the Act to revise the assessment order, alleging that the Assessing Officer has not made inquiry with regard to the cash deposits made during demonetization and further he has not examined non-disclosure o....
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....ale statements along with VAT returns. The assessee also explained the substantially high purchase turnover and reasons for low profit. Even, the assessee furnished its audited financial statement as required under 44AB of the Act. Subsequently, the Assessing Officer issued more notices under section 142(1) of the Act from time to time calling for various other details and the assessee furnished its reply with supporting documents. 14. As could be seen from the materials placed on record, beginning from 11.08.2018 to 07.06.2019, a period of almost one year, the Assessing Officer has conducted thorough inquiry by issuing a notice under section 143(2) as well as notices under section 142(1) of the Act with questionnaire calling upon the assessee not only to furnish the details of cash deposits in the bank account, but also explain the source thereof. The Assessing Officer has also called upon the assessee to explain the reason for low profit compared to the turnover. It is a matter of record that the assessee has responded to each of the queries raised by the Assessing Officer in the questionnaire by explaining the source of cash deposits as well as various other details called for.....
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....tal using the link: incometaxindiaefiling.gov.in Please refer to the above, 2. The case record for the A.Y. 2017-18 was called for and examined by the undersigned. The undersigned considers that the assessment for the A.Y. 2017-18, which was completed u/s 143(3) of the Income Tax Act 1961 on 21.06.2019 at total income of Rs. 8,91,630/- is erroneous in so far as it is prejudicial to the interest of the revenue on the following grounds :- On perusal of assessment record, it has been observed that during the year under consideration, the assessee is engaged in the business of "Agro-based industries" and deposited cash during demonetization period (from 09.11.2016 to 31.12.2016) amounting Rs. 91,00,000. Assessee had also availed C.C. Limit of Rs. 1.75 Cr from the bank. On perusal of assessment record, it is observed that cash book and bank account statements from the assessee were not been obtained and copy of bank accounts for the relevant period not placed on file. It means that huge cash deposits made by the assessee were not been examined. Assessee had not filed his audit report along with his ITR, but trading results declared by the assessee in his ITR were accepted. As pe....
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....that the Assessing Officer has not conducted any inquiry with regard to cash deposits during demonetization period, is not based on materials on record, or rather, contrary to materials on record. The materials on record certainly make it clear that learned PCIT has initiated proceedings under section 263 of the Act mechanically without properly examining the assessment records. Even, with regard to the alleged non-disclosure of scrap sales, the materials on record clearly reveal that there, in fact, is no such nondisclosure of scrap sales. The Audited financial statement furnished in course of assessment proceedings clearly indicate that the scrap sales, indeed, were shown by the assessee. 17. The primary conditions for invoking section 263 of the Act are, the order sought to be revised must be erroneous and at the same time prejudicial to the interest of Revenue. Unless, these twin conditions are satisfied, section 263 of the Act cannot be invoked. In the facts of the present case, learned PCIT has put much emphasis on Explanation 2 to section 263 of the Act. In our view, Explanation 2 to section 263 of the Act does not invest unbridled power with the revisionary authority so as....