TaxTMI 
TaxTMI 
2026 (1) TMI 1039
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....it reveals certain apparent discrepancies and errors. The Ld. PCIT noted that the assessee had taken loan of Rs. 1,80,000/- and Rs. 3,60,000/- from his daughter Ms. Nidhi Goel and his son Shri Ankit Goel, respectively. The Ld. PCIT further noted that on the date of the receipt of the said loans, there was an equivalent amount of cash deposits in the respective bank accounts of Ms. Nidhi Goel and Shri Ankit Goel, the source of which was not examined by the Assessing Officer. Further, the Ld. PCIT noted that the assessee had received unsecured loans of Rs. 8,00,000/- from M/s Shree Balaji Filling Station on 31.12.2014 and an equal amount of Rs. 8,00,000/- in cash was deposited in the bank account of M/s Shree Balaji Filling Station the source of which was also not examined by the Assessing Officer. Further, the Ld. PCIT noted that the partner of the firm Shri Sunil Kumar had introduced fresh capital of Rs. 19,50,000/- but source of the capital introduced was not explained and also not examined by the AO. In view of these facts, the Ld. PCIT observed that the above assessment order passed was evidently erroneous in so far as it was prejudicial to the interest of the Revenue, in terms ....
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....see submitted on the basis of various case laws that assessment order cannot be revised on the ground that the enquiry should have been more detailed. 2.3 However, the Ld. PCIT did not accept the above contentions of the assessee and relied upon various case laws which held that where there was lack of proper enquiry or application of mind by the Assessing Officer the invoking of provisions u/s 263 of the Act was rightful and justified. Regarding the loan from Ms. Nidhi Goel and Sri Ankit Goel, the Ld. PCIT observed that it was very evident that both Ms. Nidhi Goel and Sri Ankit Goel, on their very meagre incomes of Rs. 2,22,000/- and Rs. 2,28,000/- in their respective return of income for A.Y. 2015-16 could not explain the above stated cash deposits, and hence, the creditworthiness of the above two loans creditors was not established. The ld. PCIT also noted from the bank account of Ms. Nidhi Goel that an amount of Rs. 5,13,000/- was transferred to Markemdeshwar University and observed that at the time of giving loan she was a full-time student. 2.4 Regarding the loan of Rs. 8,00,000/- from M/s Shree Balaji Filling Station, the Ld. PCIT noted that the Income Tax Return of M/....
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....ted that cash book of M/s Parwati Trading Co. was called for but not submitted during the course of these proceedings and observed that the credit of the said amount in the accounts of Sh. Sunil Kumar, the partner, had hence remained unsubstantiated with regard to the creditworthiness of the loan creditor and hence genuineness of the transaction and the said amount was liable to be treated as unexplained cash credit in the hands of the assessee u/s 68 of the I.T. Act, 1961. 2.6 In view of the above facts, the Ld. PCIT held that it was clear that the AO had passed the order dated 07.12.2017 in a casual and perfunctory manner without caring to go through the details of the case and conducting any worthwhile enquiries on critical issues. The Ld. PCIT further observed that the AO failed to exercise due diligence in respect of each and every issue involved in the assessee's case, and has passed a summary assessment order after simply obtaining a few documents from the assessee and placing them on record. Accordingly, the Ld. PCIT held that the order passed by the A.O. was, erroneous in so far as it is prejudicial to the interest of Revenue and accordingly set-aside with the direc....
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....namely Sh. Ankit Goel was 21 years old (DOB 26.02.1993) at the time of giving the said unsecured loan. * Similarly, the amount of Rs. 3,60,000/- was deposited in cash dated 30.03.2015 in his bank a/c and on the same day, the amount was transferred to assessee firm. Hence, it seems to be an accommodation entry. * ITR filed for A.Y 2015-16 shows a total income of Rs. 2,28,000/- again from coaching & training. On a very meager income, the creditworthiness of loan creditor thus has not been established. 3. Assessee has raised fresh unsecured loan dated 31.12.2014 of IRS. 8,00,000/- during the year under consideration, from M/S Shree Balaji Filling Station. * There is cash deposit of Rs. 8,00,000/- dated 31.12.2014 and the same amount is transferred to the assessee firm the same day. * Opening credit balance dated 31.12.2014 was Rs. 17,104/- and after credit & debit entry, the credit balance remained the same. * The ITR for A.Y 2015-16 shows a total income of Rs. 2,65,320/- only and the balance sheet filed shows a loan dated 31.12.2014 of Rs. 8,00,000/- to the assessee. Hence, when income return is so meager the genuineness and creditworthiness of unsecured loan raised....
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....egard, the ld. AR submitted that the necessary queries were made by the AO regarding the source of the above funds and the requisite replies were submitted by the assessee and upon satisfaction of replies / details filed by the assessee the Ld. Assessing Officer accepted the unsecured loan of Rs. 13,40,000/- and Rs. 19,50,000/- received as capital and passed the assessment order u/s 143(3) of the Act, dated 07.02.2017 in this case. Further, the Ld. AR referred to the query dated 19.01.2017 issued by the AO during the course of assessment proceedings placed at 50 to 52 of the Paper Book and the corresponding reply dated 18.09.2017 and 11.10.2017 filed by the assessee during the assessment proceedings placed at 53 and 54A of the Paper Book. In this regard, the relevant extract of the query of the AO and the reply of the assessee are reproduced as under: Letter dated 19.01.2017 " 9. Copy of account of secured/unsecured loans/squared up accounts/cash credits during the year alongwith confirmation of the loans raised during the year. To prove the genuineness of the said loans, capacity and credit worthiness of the creditors alongwith source from where the loans were ad....
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....extract of the cash book of period as on 31.12.2014 showing an opening balance of Rs. 8,50,428.66 as placed on page 24 on the Paper Book (reproduced below) in the case of Shree Balaji KSK Filling Station was filed by the assessee, which was also the date of the cash deposit of an amount of Rs. 8,00,000/- in its bank account without giving the basis of the aforesaid cash balance as on 31.12.2014. 6.6 Similarly, only the ledger extract of the cash book of period as on 18.06.2014 as placed on page 27 in the case of Shree Balaji KSK Filling Station (reproduced below) is there on the record which is also the date of the cash deposit in the partnership firm M/s Parwati Trading Company in which the father of Shri Sunil Kumar was a partner. In this regard, the Ld. PCIT in her order had also noted that the cash book of M/s Parwati Trading Company was called for but was not submitted and thus the credit of the said amount in the accounts of Shri Sunil Kumar the partner, who introduced a sum of Rs. 19,50,000/- in the assessee's account remained unsubstantiated with regard to the creditworthiness of the loan creditors and genuineness of the transaction was not satisfied. 6.7 On perusal o....
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....or full verification, and it was held as under:- "We have considered the rival submissions of the counsel on the other side and have gone through the records. The first issue that arises for our consideration is about the exercise of power by the Commissioner of Income-tax under section 263 of the Income-tax Act. As noted above, the submission of learned counsel for the Revenue was that while passing the assessment order, the Assessing Officer did not consider this aspect specifically whether the expenditure in question was revenue or capital expenditure. This argument predicates on the assessment order, which apparently does not give any reasons while allowing the entire expenditure as revenue expenditure. However, that by itself would not be indicative of the fact that the Assessing Officer had not applied his mind on the issue. There are judgments galore laying down the principle that 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 expenditur....
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....according to him, the order should have been written more elaborately. This section does not visualise a case of the substitution of the judgment of the Commissioner for that of the Income-tax Officer, who passed the order unless the decision is held to be erroneous. Cases may be visualised where the Income-tax Officer while making an assessment examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and determines the income either by accepting the accounts or by making some estimate himself. The Commissioner, on perusal of the records, may be of the opinion that the estimate made by the officer concerned was on the lower side and left to the Commissioner he would have estimated the income at a figure higher than the one determined by the Income-tax Officer. That would not vest the Commissioner with power to re- examine the accounts and determine the income 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....
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....f 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." (emphasis supplied by us) 6.9 In view of the above facts, wherein it has been brought on record that the immediate source of the unsecured loan of Rs. 13,40,000/- (Rs. 1,80,000/- + Rs. 3,60,000/-) + Rs. 8,00,000/- and capital of Rs. 19,50,000/- totalling Rs. 32,90,000/- received by the firm is the cash deposit of equivalent of Rs. 32,90,000/- in the respective bank of accounts of the person as discussed above and detailed in the tabular chart in para no. 6 of this order, which has not been examined at all by the Assessing Officer as discussed above, it will be rare case of " lack of enquiry" as highlighted by the Hon'ble Bombay High Court in the case of CIT vs. Gabriel India Ltd. (supra) as referred above on the basis of which we hold that in the given facts of the case the order passed by the Ld. PCIT setting aside the impugned assessment order on the ground that the same was erroneous in so far as ....
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....ts received from relatives. 10.1 Again, the ld. AO, by letter dated 08.08.2017, made available at page 6 of the paper book, sought further information from the assessee with regard to specific information about cash deposits and the assessee responded to the same by letter dated 22.08.2017 made available at page 8 of the paper book wherein again, it was re-asserted that the source of cash was salary, other source of income, past savings and family members', i.e., wife's and daughter's savings. 10.2 The Ld. AR has also pointed out that the Ld. AO was also provided information with regard to the earnings of his wife and daughter which are made Further, at page No.50 of the paper book, there is copy of another letter dated 21.07.2017 written to the AO mentioning that the assessee's wife has qualification and experience to run the boutique work from home and his daughter also is qualified holding Bachelor's degree and masters degree in Computers to give coaching. Confirmations from the wife dated 17th July, 2017 and from the daughter dated 18th July, 2017 are made available at pages 51 and 55 respectively of the paper book were also provided to the....
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....has been carefully perused and the relevant extract of the said order on the relevance of audit objection for initiating proceeding u/s 263 of the Act has been discussed in para no. 7 of the said order, which is reproduced as under: "7. A reference to the provisions of Section 263 of the Act shows that jurisdiction thereunder can be exercised if the CIT finds that the order of the AO was erroneous and prejudicial to the interest of Revenue. Mere audit objection and merely because a different view could be taken, were not enough to say that the order of the AO was erroneous or prejudicial to the interest of the Revenue. The jurisdiction could be exercised if the CIT was satisfied that the basis for exercise of jurisdiction existed. No rigid rule could be laid down about the situation when the jurisdiction can be exercised. Whether satisfaction of the CIT for exercising jurisdiction was called for or not, has to be decided having regard to a given fact situation." 6.15 Thus, it is seen that the Hon'ble Punjab & Haryana High Court in the above order observed and held that it will depend on the facts of the case and the audit objection to decide as to whether the said audit....