TaxTMI 
TaxTMI 
2026 (6) TMI 915
X X X X Extracts X X X X
X X X X Extracts X X X X
....al and therefore adopting justice oriented approach and also taking guidance from the judgments of Hon'ble Apex Court in the case of Collector, Land Acquisition, Anantnag & Anr. Vs. Mst. Katiji & Ors. [(1987) 2 SCC 107] and in the case of Inder Singh Vs. State of Madhya Pradesh judgment dated 21.03.2025 (2025 INSC 382), hereby condone the delay of 323 days in filing of the instant appeal before this Tribunal and admit it for adjudication 3. The only effective ground raised by the assessee in this appeal is that, Ld.PCIT erred in passing 263 order directing the Ld. AO to frame fresh assessment. 4. Brief facts of the case are that assessee, an individual, filed his e-return of income for A.Y. 2018-19 declaring income of Rs. 5,82,720/- on 23.10.2018. The case was reopened u/s. 147 and issued notice u/s. 148 of the Act. In response to the notice issued u/s. 148, assessee filed return of income declaring income of Rs. 9,13,980/- on 06.03.2021. A search and seizure action u/s 132 of the Act was carried out in the case of Dr. Rahul Mahajan by the ADIT (Inv.)-1, Nashik on 20.02.2019. During the course of search, some documents were seized, which reveal that cash payment of more than ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....essee had agreed to declare the profit of Rs. 3,31,254 (i.e. 8% of 41,40,666). Further, while filing the ROI u/s 148 assessee had declared the same and also paid the tax due along with the interest. Also after receiving the assessment order assessee had also paid the penalty. 3. Assessee had purchased the material of Rs. 39,14,500/- (Copies of invoices are attached) (Page No. 1 to 54) from various parties declaration from them is also attached herewith (Page No. 55 to 60). Further, it is to be noted that the assessee had earned only Rs. 2,26,166/- (41,40,666 39,14,500) in this transaction with the Rahul Mahajan. Still the assessee had remained stuck with his statement given at the time of survey and offered the excess profit @ 8% ie. 3,31,254/- in ROI. 4. Also, in reference to Initial Investment added of Rs. 5 lakh in income it is noted that- Assessee was in the business of furniture material, where material was supplied only after choosing the colour and quality of material. Therefore, most of the business was done as per order basis. The assessee generally takes advance from the customer for supplying the material. On the other hand, the assessee was doing this ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ere duly substantiated through invoices and supporting evidences. Merely because the Ld. PCIT was of the view that further inquiry ought to have been conducted, the assessment order cannot be revised u/s. 263. It was further submitted that assessee, in order to buy peace and avoid litigation, had voluntarily offered additional profit @ 8% on the alleged sales during survey proceedings and the same was duly offered in the return filed in response to notice u/s. 148. Therefore, there was complete disclosure on the part of the assessee and no prejudice was caused to the Revenue. Ld.counsel argued that Ld. PCIT invoked the provisions of section 263 merely on presumptions and surmises by observing that cash payments might have been made for purchases and that third-party inquiries were not conducted. Such observations are only for conducting fishing and roving inquiries, which is impermissible under section 263 of the Act. Accordingly, it was prayed that the impugned order passed u/s. 263 be quashed. 8. Per contra, Ld. DR strongly supported the order passed by the Ld. PCIT and submitted that the alleged inquiry made by the Assessing Officer was, in effect, no inquiry at all because t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....be a case of lack of inquiry and not inadequate inquiry. The relevant portion of the order of Hon'ble ITAT is reproduced below:- "28.1 Ld. Special counsel has rightly pointed out that the expression, 'inquiry', 'lack of inquiry' and 'inadequate inquiry', have not been defined and, therefore, when the action of the AO would be suggestive of lack of inquiry or inadequate inquiry, will depend upon the facts obtaining in a particular case. What emerges as a broad principle from the various decisions is that where the AO has reached a rational conclusion, based on his inquiries and material on record, the Commissioner should not start the matter afresh in a way as to question the manner of his conducting inquiries. It is not the province of the Commissioner to enter into the merits of evidence; it has only to see whether the requirements of essential inquires and of law have been duly and properly complied with by AO or not. 28.2 It is well settled that before the Commissioner can invoke his powers u/s 263, he has to arrive at a conclusion that the assessment order is erroneous in so far as it was prejudicial to the interests of the revenue. The....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the applicability of section 69A of the Act with respect to the unrecorded receipts of Rs. 41,40,666/- and consequential taxation u/s. 115BBE of the Act. Thus, the assessment order dated 28.03.2022 passed u/s. 143(3) r.w.s. 147 of the Act was rightly held by the Ld. PCIT to be erroneous insofar as it is prejudicial to the interest of Revenue. During the course of survey proceedings conducted on 03.04.2019, the assessee admitted that sales amounting to Rs. 41,40,666/- were made outside the books of account and offered profit @ 8% amounting to Rs. 3,31,254/-. There is no whisper in the order as to how 8% is deemed reasonable by Ld. AO which smacks of object non-application of mind and flagrant of jurisprudence. However, no documentary evidence regarding purchases was furnished before the Assessing Officer during assessment proceedings. The copies of purchase invoices aggregating to Rs. 39,14,500/- were furnished for the first time during proceedings u/s. 263 of the Act, which tantamount non-verification by the Ld. Ld. AO. Even otherwise, there is nothing on record to show that the Assessing Officer made any inquiry whatsoever to verify the genuineness of such purchases or to ascertai....