TaxTMI 
TaxTMI 
2025 (4) TMI 1926
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....as well as law on the subject, the learned Pr. CIT has erred in directing the assessing officer to make fresh inquiry and verification in respect of Rs. 1,23,93,591/- being cash deposit in the bank account and thereby erred in setting aside the assessment with the direction to pass fresh assessment order in consequence to order passed u/s. 263. 3. It is therefore prayed that above order passed by Pr. CIT u/s. 263 may please be quashed or set aside as your honours deems it proper. 4. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal." 3. Brief facts of the case are that a search and seizure operation u/s 132 of the Act was conducted on 25.06.2019 and cash of Rs. 10,00,000/- was seized from Shri Amit Babulal Adnani, CEO of the assessee-company. Shri Adnani admitted in his statement u/s 132(4) that the seized cash belonged to the appellant-company. The assessee filed its return of income for AY 2020-21 on 28.01.2021 declaring total income of Rs. 24,64,670/-. The case was selected for complete scrutiny being a search assessment. The AO issued notices u/s 143(2) and 142(1) of the Act and after afford....
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....e Supreme Court in case of Malabar Industries Ltd. vs. CIT (2000) 243 ITR 83 (SC) and held that the AO has not investigated the issue before him; not applied his mind and not applied correct law while passing assessment order on 29.09.2021 u/s 144 of the Act. Hence, the order is erroneous and prejudicial to the interest of revenue. The Ld.PCIT also relied on the decisions in the cases of CIT vs. Paville Projects (P.) Ltd. (2023) 149 taxmann.com 115 (SC); CIT vs. Nagesh Knitwear's P. Ltd. and Others (2012) 345 ITR 135 (Del); Gee Vee Enterprises vs. ACIT (197) 99 ITR 375 (Del). The Ld. PCIT also referred to Explanation-2(a) of Section 263, inserted with effect from 01.06.2015, wherein the order of AO shall be deemed to be erroneous in so far as it is prejudicial to the interests of Revenue, if, in the opinion of the Ld.PCIT, the order is passed without making enquiries or verification which should have been made. Accordingly, assessment order u/s 144 was set aside with a direction to AO to pass fresh assessment order after taking into consideration the issue discussed in the order u/s 263 of the Act after granting reasonable and sufficient opportunities of being heard to assessee. ....
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....98 ITR 8 (Del). The Ld. AR also relied on the decision in case of CIT vs. V.M. Mittal Stainless Steel Pvt. Ltd. 263 ITR 0255 (SC) The Ld. AR also submitted that Explanation-2(a) is not applicable because AO has passed order after making proper enquiry and verification. In any case, the assessee explained the cash deposits in its detailed submission filed before Ld.PCIT and the Ld.PCIT did not require any further explanation or filing of explanation. Under such circumstances, the action of Ld.PCIT could not survive. 5. On the other hand, Ld. CIT-DR for the Revenue supported the order of Ld.PCIT. He submitted that the order of AO is both erroneous and prejudicial to the interests of revenue. The AO did not conduct any enquiry of cash deposit of Rs. 1,23,93,591/- in the Axis Bank account of the assessee. The AO accepted the return filed by assessee without verification, which is clearly covered under Explantion-2(a) of Section 263 of the Act. 6. We have heard both the parties and perused the materials available on record. We have also deliberated on the decisions relied upon by the parties. The Ld. AR submitted that the AO issued notice U/s 142(1) of the Act on 25.09.2021 and re....
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....ary, pass such order thereon as the circumstances of the case justify, [including,- (i) An order enhancing or modifying the assessment or cancelling the assessment and directing a fresh assessment; or (ii) An order modifying the order under section 92CA; or (iii) An order cancelling the order under section 92CA and directing a fresh order under the said section]." (emphasis supplied) 6.2 It is clear from bare reading of Section 263 of the Act that the Ld.PCIT can revise the order passed by the AO or TPO which is erroneous in so far as it is prejudicial to the interests of revenue. The Hon'ble Supreme Court in case of T. N. Civil Supplies Corporation Ltd Vs Commissioner of Income Tax, 260 ITR 82(SC) held that there is no scope for limiting phrase "order passed by ITO" in section 263 to exclude orders passed by ITO on directions of a superior authority either u/s 144A or 144B. The relevant part of the decisions is as under: "3. The High Court in its decision has followed its earlier decision in which it had referred to and relied upon the reasoning of several other High Courts on the same issue to negative the contentions of the assesse....
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....statement, month-wise list of debtors who deposited cash in the Axis bank and ledger account of such debtors are at pages 8 to 264 of the paper book. All these papers were given to the Ld.PCIT. The Ld.PCIT has also not pointed out any deficiency in the details nor did he not call for any further details before passing revision order u/s 263 of the Act. Therefore, the Ld.PCIT should have decided the matter on merit instead of setting aside the issue to the AO for fresh assessment. 6.6 In view of contentions of Ld. AR as above, we have again gone through the details and materials available on record. The assessee was engaged in manufacturing as well as retail and wholesale trade of textile goods. The goods are sold on credit as well as on cash basis. Assessee has two places of business, i.e., at Surat and Kolkata. The cash deposit of Rs. 1,23,93,591/- pertains to Axis bank account maintained by assessee at Kolkata branch. The appellant has submitted details to show that the total sales including GST of Kolkata branch was Rs. 7,01,15,045/-. It includes credit sales of Rs. 5,96,34,342/- and cash sales of Rs. 1,04,80,703/-. This is supported by the GSTR-9 as well as audited profit an....