SUNITA JAIN , KAPURTHALA V. PRINCIPAL COMMISSIONER OF INCOME TAX -1, JALANDHAR

ITA 125/ASR/2023

AI Insights

The case involves Sunita Jain, the owner of a petrol pump, who appealed against the order of the Principal Commissioner of Income-tax-1, Jalandhar. The PCIT had set aside the original assessment order passed by the Income Tax Officer, Ward-1, Kapurthala, under section 143(3) of the Income Tax Act, 1961, claiming it was erroneous and prejudicial to the interest of the revenue. The PCIT's order was based on the grounds that the cash deposits made during the demonetization period were not adequately verified by the AO. The Tribunal examined the compliance of the AO with the SOP issued by the CBDT regarding the verification of cash deposits during demonetization and found significant deprivation of verification, leading to the dismissal of the assessee's appeal.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 114785 (ITAT-AMRITSAR)
• Duration Of Justice: 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-07-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 11-07-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 23-04-2023
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Revision of order
• Section: 263; 142(1); 143(1); 143(2); 43

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR. BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. ANIKESH BANERJEE, JUDICIAL MEMBER I.T.A. No. 125/Asr/2023 Assessment Year: 2017-18 Sunita Jain, C/o Jain Agro Industries, Sultanpur Road, Kapurthala. [PAN:-ADFPJ2712G] (Appellant) Vs. PCIT-1, Jalandhar. (Respondent) Appellant by Sh. J. S. Bhasin, Adv. Respondent by Dr.Vedanshu Tripathi, CIT DR. Date of Hearing 12.07.2023 Date of Pronouncement 17.07.2023 ORDER Per: Anikesh Banerjee, JM: The instant appeal of the assessee was filed against the order of the ld. Principal Commissioner of Income-tax-1, Jalandhar, (in brevity ‘the PCIT’) order passed u/s 263 of the Income-tax Act, 1961 (in brevity the Act) for assessment year 2017-18. The impugned order was emanated from the order of Income Tax Officer, Ward-1, Kapurthala (in brevity ‘the AO’) order passed u/s 143 (3) of the Act. 2. The assessee has taken the following grounds: I.T.A. No. 125/Asr/2023 Assessment Year: 2017-18 2 “1. That neither in facts nor on law, the Id. Pr.CIT was justified in exercising jurisdiction under section 263 of the Income Tax Act, 1961, in this case. 2. That the ld.Pr.CIT, while wrongly rejecting assessee's explanation, erred to hold that adequate analysis/ enquiries as to source of impugned cash, were not made by the AO. 3. That this being a case of Petrol Pump, permitted to make cash sales against old currency during demonetization, and Id.AO having verified date wise cash sales from cash book, the Id.PCIT misdirected herself to impose her pattern to verify the cash sales. 4. That the order under appeal is perverse, against law and facts of the case so liable to be quashed.” 3. Tersely we advert the fact of the case that the assessee is an owner of petrol pump and dealer of lubricant and petroleum product.During the demonetisation the assessee deposited cash amount of Rs.32,09,000/-. The total cash was deposited during the year Rs.34,29,000/- (+) Rs.14,13,000/-. The total cash was deposited in two banks account one SBI and J & K Bank. The assessee declared the cash amount of Rs.38,31,194/- in the return of the assessee. The assessment was completed, and the order was passed,and tax was calculated as per return. The notice u/s 263 was issued by the ld. PCIT. The contends of the ld. PCIT was that the cash deposited during demonetisation was high in comparison to other months and the amount was not verified by the ld. AO. I.T.A. No. 125/Asr/2023 Assessment Year: 2017-18 3 Further, the G.P. chart for three years was asked to produce by the ld. AO which was not submitted by the assessee during assessment. The ld. PCIT had considered the assessment order as erroneous and prejudicial to the interest of the revenue as reason for absence of verification. The ld. PCIT set aside the assessment order and passed the order u/s 263. Being aggrieved assessee filed an appeal before us. 4. The ld. AR submitted the written submission which are kept in the record. The ld. AR first invited our attention in the notice u/s 142(1) of the ld. AO which is annexed APB page 20. Accordingly, the assessee complied the notice and the supportive documents with letter is annexed in APB pages 21 to 37. Further the notice was issued by the ld. AO on dated 11.09.2019, APB page 38. The same notice was also complied by the assessee on dated 16.09.2019 and 26.09.2019.The replied letters are annexed in APB page 39 to 42. The ld. AR also drawn our attention in a letter dated 11.11.2019 where the assessee submitted the VAT return and the declared turnover which are duly annexed in APB pages 43 to 47. 5. The ld. DR vehemently argued and invited our attention in the assessment order. The relevant paragraph of the assessment order is duly reproduced as below: “The assessee has filed his return of income for the Asstt. Year 2017-18 on 15.03.2018 declaring total income at Rs. 2,49,000/- I.T.A. No. 125/Asr/2023 Assessment Year: 2017-18 4 . The same was processed under section 143(1) of 4 the I.T. Act,1961 at the same figure. Thereafter, the case was selected for limited scrutiny through CASS. Notice under section 143(2) of the Income Tax Act, 1961 was issued on 09.08.2018 and duly served upon the assessee within stipulated period. Thereafter, notice under section 142(1) alongwith questionnaire were issued on 19.06.2019, 15.10.2019 and duly served upon the assessee calling for various details and information. In response to the notices, the assessee filed reply from time to time and placed on record. 2. The case was selected for limited scrutiny on the following ground:- “Cash deposits during demonetization period” 3. During the course of assessment proceedings, while examining theexpenses it was found that the assessee has claimed expenses to the tune of Rs. 5,98,160/-which included expenses at Rs. 1,42,200 on account of recovery from HPCL. The assessee was requested to furnish evidence for such expenditure. In response to which the assessee stated that it was the recovery made by the company and was recovery for the July 2015 to September 2016. Since a part of expenditure i.e. July 2016 to March 2016 is not related to the year under consideration and the assessee is following mercantile system of accounting, the same is not allowed in the year under consideration. Thus, a disallowance of Rs. 87,120/-is made on this account, which is added to the taxable income of the assessee. Penalty proceedings u/s 270A have been initiated separately for under reporting the income.” I.T.A. No. 125/Asr/2023 Assessment Year: 2017-18 5 5.1 The ld. DR further invited our attention in relevant paragraph of the order of 263 in paragraph (iii)and(v) which are as below: “iii). Post demonetization, persons depositing cash in banks were required to file an E-Response on the ITD portal owning up the cash/SBN deposited during demonetization and mention the source thereof. Ministry of Finance, CBDT, vide letter No. 225/363/2017-ITA.11 dated 05-March,2019 issued a SOP advising criteria for verification of the genuineness of the source of cash deposited declared in the E-Response. As per this SOP, the following points were to be examined. - ratio of cash to credit sales, - cash, sales made prior to 8.11.16, during demonetization period 9.11.16 to 31.12.16 and post 31.12.16 - cash sales made in the corresponding periods in the preceding FY 2015-16. - any abnormal increase in cash sales or profit ratio during FY 15-16. - Cash deposited in bank in the above periods during the FY2016-17 and FY 2015-16, etc.... Where the E-Response was not found to be satisfactory, the ITRs for AY 2017-18 relevant to the demonetization period were marked for scrutiny under CASS. “........................... .............................. I.T.A. No. 125/Asr/2023 Assessment Year: 2017-18 6 (v). Related to above also was that cash deposit of Rs. 5,04,500/- was made by the assessee in Saving Bank Account No. 10045082239 with State Bank of India during the FY 2016- 17. Cash deposits of Rs. 1,50,000 were during the demonetization period; Rs.50,000/- each was deposited on 10.11 '016 , 10.11.2016 and 18.11.2016. During the assessment proceedings, the Assessing Officer did not ask about the source of cash deposits made in the above Saving Bank Account. Nor did the assessee submit any explanation regarding the sources of cash deposits made in the saving account. 5. The AO has thus omitted to examine the source of the cash deposits made during the demonetization period mentioned in para 4(i) above which was the reason for which the case had been selected for Complete Scrutiny.” 6. We heard the rival submission and considered the documents available in the record. From the perusal of the records, it is clear that the assessee has supplied the documents and complied the details before the ld. AO during the assessment proceeding. But on the other hand, ld. AO had failed to honour the SOP of the CBDT vide letter No. 225/363/2017-ITA.2 dated 05.03.2019. The mode of verification duly prescribed by the CBDT to its officer. The assessment order was passed without verifying the G.P. ratio of the assessee in respect of other assessment years. In fact, there is significant deprivation of verification from the ld. AO. Due to absence of investigation in assessment, the order iscalled erroneous. Also order of assessment is prejudicial to the interest of I.T.A. No. 125/Asr/2023 Assessment Year: 2017-18 7 revenue. The ld. PCIT had correctly considered the issues in the order passed u/s.263 of the Act. Hence, we are inclined in the observations made by the ld. PCIT in his order. Therefore, under these circumstances, we do not find any valid reason to interfere with the order passed by learned PCIT. Accordingly, the impugned order passed u/s.263 of the Act is upheld. 7. In the result, appeal of the assessee ITA No. 125/ASR/2023 is dismissed. Order pronounced in the open court on 17.07.2023 Sd/- Sd/- (Dr. M. L. Meena) (ANIKESH BANERJEE) Accountant Member Judicial Member AKV Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T. True Copy By order