TaxTMI 
TaxTMI 
2024 (7) TMI 1433
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.... 3. Subsequently, the Pr.CIT examined the records and noted that the AO prima-facie completed the assessment without making due verification and inquiries which were warranted in the facts and circumstances of the case. He observed from the verification of the record that the assessee during the demonetization period has deposited cash to the extent of Rs. 19,11,20,840/- which is inclusive of Specified Bank Notes (SBN) amounting to Rs. 18,84,20,100/-. He observed that during the period of 09.11.2015 to 31.12.2015 of the earlier year, meagre cash of Rs. 35,86,050/- only was deposited in the bank account which is very less as compared to the cash deposited during the demonetization period. He noted that the AO during the assessment proceedings has failed to verify the source of substantial cash deposited into the bank account during the demonetization period with documentary evidence. He, therefore, was of the view that the assessment order passed u/s. 143(3) of the Act on 26.12.2019 by the ACIT, Central Circle-1, Nashik is erroneous in so far as it is prejudicial to the interest of the Revenue because the assessment was made without making inquiries or verification which should ha....
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....of the PCIT was not justified in law and on facts of the case. 2. The learned PCIT ought to have appreciated that in the course of the asst, proceedings u/s 143(3), the A.O. had made detailed enquiries vide notice dated 06.12.2019 in respect of the entire cash deposits during demonetization period and the explanation furnished by the assessee was accepted by the A.O. after application of mind thereto and hence, there was no reason to resort to the provisions of section 263 in the present case. 3. The learned PCIT failed to appreciate that the view taken by the A.O. after carrying out detailed verification and after application of mind to the submissions made by the assessee, was certainly a possible view and therefore, the revision order passed u/s 263 on the above facts was not justified in law. 4. The appellant craves, leave to add, alter, amend and delete any of the above grounds of appeal." 7. The assessee has also taken the following additional ground : "The assessee submits that in this case, the revision proceedings u/s 263 were initiated on the basis of recommendation proposal for revision forwarded by A.O. through Addl. CIT and thus, ....
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....7. 14. Copy of Cash book for the period 01/04/2016 to 31/03/2017. 15. Details of currency deposited in the bank of account with copies of pay in slips used for the purpose." 11. Referring to the notice issued u/s. 142(1) dated 19.10.2019 along with the annexure, copy of which is placed at pages 26 to 29 of the paper book, he submitted that the AO in the said questionnaire has again asked to specify the nature of cash deposit in the bank account in the given proforma such as total cash deposited during financial year 2015-16, total cash deposited during the period from 01-04-2015 to 08.11.2015 and 09.11.2015 to 31.12.2015 and for the same period for the financial year 2016-17. He has also asked the month wise cash held and deposits for financial years 2015-16 and 2016-17 (i.e. April to December of said years). Referring to page 30 of the paper book, the ld. Counsel for the assessee submitted that the assessee vide letter dated 19.11.2019 has submitted the details. Referring to page 34 to 40 of the paper book, the ld. Counsel for the assessee submitted that the AO vide another notice issued u/s. 142(1) dated 06.12.2019 has also asked to submit the monthly VAT ret....
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....hakari Kendriya Bank Maryadit v. PCIT [(2022) 142 taxmann.com 110 (Jabalpur)]. 5. Manui Jain HUF v. PCIT [ITA No. 392/ Chd/ 20221 dated 19.02.2024 14. Referring to the following decisions, the ld. Counsel for the assessee submitted that where the AO had conducted enquiries regarding the source of cash deposits made during demonetization period and taken a view, the Pr.CIT was not justified in invoking the revision power u/s. 263 by merely directing the AO to carry out enquiries afresh without himself conducting further enquiries to show that the view taken by the AO on merits was erroneous : 1. V. L. Jewellers v. PCIT [ITA No. 836/ Delhi/ 20221 dated 24.03.2023. 2. Premii Valji & Sons v. PCIT [ITANo. 125/Rajkot/20221 dated 09.09.2022. 3. CIT v. Gabrial India Ltd. [203 ITR 108 (Bom)(HC) 15. Referring to the following decisions, he submitted that where the revision proceedings u/s. 263 were initiated at the instance of proposal for 263 action forwarded by the successor AO and not suo moto initiated by the Pr.CIT, then the revision order u/s. 263 is not sustainable in law: 1. Premraj Bhanraj Bafna v. PCIT [ITA No. 317/PUNE/ 2020 dated....
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....Court of Calcutta in case of Success Tours & Travels (P) Ltd Vs ITO, Ward 9(4), Kolkata [2017] 80 Taxmann.com 263 (Calcutta) / [2017] 247 Taxman 109 (Calcutta) / [2017] 394 ITR 37 (Calcutta) / [2017] 295 CTR 430 (Calcutta) [23-03-2017] 10. Hon'ble ITAT Pune in the case of Mrs. Minakshi Shivkumar Bansal Vs. PCIT, Pune [2022] 139 Taxmann.com 407 (Pune -Trib.)[07-03-2022] 11. Hon'ble ITAT Pune in the case of Jalgaon People's Co-op Bank Ltd. Vs. PCIT-2, Nashik [2021] 127 Taxmann.com 243 (Pune - Trib.)/(2021) 188 ITD 608 (Pune - Trib.)[22-02-2021]." 19. We have considered the rival arguments made by both the sides, perused the orders of the Assessing Officer and the CIT(A) and the Paper Book filed on behalf of the assessee. We have also considered the various decisions cited by both the sides. We find the ld. Pr.CIT in the instant case invoking the power conferred u/s. 263 of the I.T. Act, 1961 held that the order passed by the AO is erroneous in so far as it is prejudicial to the interest of the Revenue since the AO passed the order without verifying the source of substantial cash deposited into the bank account during the demonetization period with doc....
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.... (b) Percentage increase between 2(b) & 1(b) vi. Analysis of month wise cash sales and cash deposits from 01.04.2015 to 08.11.2015 Monthwise Opening cash in hand Cash sales Cash deposited in Bank Cash withdrawal from the bank Closing cash on hand April-15 May-15 June-15 July-15 Aug-15 Sep-15 Oct-15 November till 08.11.2015 vii. Analysis of month wise cash sales and cash deposits from 01.04.2016 to 08.11.2016 Monthwise Opening cash in hand Cash sales Cash deposited in Bank Cash withdrawal from the bank Closing cash on hand April-16 May-16 June-16 &nbs....
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....h Total Purchase Cash Purchase Credit Purchase 1. Provide the monthwise sales in the following format Month Total Sales Cash Sales Credit Sales 1. Please provide the details of cash deposited during 08/11/2016 to 31/12/2016 in the following format: Date of deposits Denomination of Rs. 500 & Rs. 1000 note Number of notes Total Amount 1. Please give details regarding cash balance at the end of every month till the month of December-16 in the following format. Cash available on the opening day of the month Cash received during the month from the various sources excluding bank account Cash withdrawn from bank Actual utilization of cash for the business activity Cash balance at the end of the month i. Cash deposit made between 9th Nov to 31st Dec 2016 ii. Please specify the nature of cash deposit (i.e. out of loan received, repayment of loan, gift, sale or advance for sale of land or any other capital asset, cash received for se....
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....nbsp; July-16 Aug-16 Sep-16 Oct-16 November till 08.11.2016 viii. Please explain the reason for mounting cash in hand in F.Y. 2016-17 till 08.11.2016. viii. Please provide your Quarterly VAT Returns and Year VAT Return. ix. Whether the quarterly VAT Return is revised in the post-demonetisation period. If yes, please provide the copy of the VAT Return along with reason for revision of VAT Return. Your reply in this regard should be reached in this office on or before 12.12.2019 positively VISHNU PRASAD H ACIT CIRCLE-1, NASHIK" 21. We find the assessee vide reply dated 12.12.2019 has submitted the details as per pages 41 and 42 of the paper book. 22. Similarly, we find the assessee vide letter dated 12.12.2019 has furnished the following details before the AO as per pages 43 and 44 of the paper book : "12.12.2019 To Assi....
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....the bank account after 08.11.2016. In view of the above facts, there is huge increase in the amount of cash deposited during the period - 08.11.2016 to 30.12.2016 as compared to 08.11.2015 to 30.12.2015. Particulars Amount (Rs.) Opening Cash balance as on 01.04.2016 26,10,872.62 Add: Cash Sales 16,98,49,367/- Add : Cash withdrawn from bank accounts 32,12,470/- Add : Receipt from Debtors 72,28,409/- Less : Cash Expenses 14,37,623/- Less : Cash Sales Return 8,20,929.04 Less : Cash deposited in the bank account 1,73,11,700/- Cash Balance as on 08.11.2016 16,33,30,867/- I wish to further state that cash deposited in the bank accounts during the period 09.11.2016 to 30.12.2016 is sourced out of Cash Sales. The profit earned out of Sales have already been offered for tax in the IT Return filed. I also wish to inform that Ganga Electricals has declared an amount of income of Rs. 2.50 crore under PMGKY scheme. Kindly take above on your record and obliged. For GANGA ELECTRICALS." 23. Similarly, we find in response to notice dated 20.12.2019, the assessee has given date-wise, invoice-wise sales etc. in the gi....
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....thority. Our aforesaid conclusion gets full support from a decision of Sabyasachi Mukharji J. (as his Lordship then was) in Russell Properties Pvt. Ltd. v. A. Chowdhury, Addl. CIT . In our opinion, any other view in the matter will amount to giving unbridled and arbitrary power to the revising authority to initiate proceedings for revision in every case and start re-examination and fresh enquiries in matters which have already been concluded under the law. As already stated it is a quasi judicial power hedged in with limitation and has to be exercised subject to the same and within its scope and ambit. So far as calling for the records and examining the same is concerned, undoubtedly, it is an administrative act, but on examination "to consider" or in other words, to form an opinion that the particular order is erroneous in so tar as it is prejudicial to the interests of the Revenue, is a quasi-judicial act because on this consideration or opinion the whole machinery of re-examination and reconsideration of an order of assessment, which has already been concluded and controversy which has been set at rest, is set again in motion. It is an important decision and the same cannot be b....
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....quiry, again the CIT must give and record a finding that the order/inquiry made is erroneous. This can happen if an enquiry and verification is conducted by the CIT and he is able to establish and show the error or mistake made by the Assessing Officer, making the order unsustainable in Law/ In some cases possibly though rarely, the CIT can also show and establish that the facts on record or inferences drawn from facts on record per se justified and mandated further enquiry or investigation but the Assessing Officer had erroneously not undertaken the same. However, the said finding must be clear, unambiguous and not debatable. The matter cannot be remitted for a fresh decision to the Assessing Officer to conduct further enquiries without a finding that the order is erroneous. Finding that the order is erroneous is a condition or requirement which must be satisfied for exercise of jurisdiction under section 263 of the Act. In such matters, to remand the matter/issue to the Assessing Officer would imply and mean the CIT has not examined and decided whether or not the order is erroneous but has directed the Assessing Officer to decide the aspect/question. This distinction mus....
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....nion of the Principal Commissioner or Commissioner. In our opinion, for the applicability of clause (a) of Explanation, it is necessary that the Principal Commissioner must mention in the order what inquiries or verification the Principal Commissioner desires to have been earned out by the Assessing Officer. The Principal Commissioner in this case even though stated that the Assessing Officer failed to examine during the course of the assessment proceedings the affect of change in the accounting policy on the Revenue not disclosed by the assessee but did not point out what type of inquiry or verification should have been earned out in this regard by the AO. How non examination of this aspect has resulted in under assessment. The order passed by the AO, in our opinion, shall be deemed to be erroneous in so far as prejudicial to the interest of the Revenue if the Principal Commissioner would have specifically pointed out which of the inquiries or verification should have been carried out by the AO in this regard and the AO failed to carry out those inquiries and verification as desired by the Principal Commissioner." 28. It has been held in various decisions that for invoking the ....