AKASH KUMAR, Aurangabad V. PR. CIT-1, PATNA

ITA 143/PAT/2019

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 5793 (ITAT-PATNA)
• Duration Of Justice: 2 year(s) 7 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2014-2015
• Appeal Filed On: 09-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revision of order
• Section: 263; 143(3)

Judgement Text

1 ITA No.143/Pat/2019 Shri Akash Kumar, A.Y. 2014-15 IN THE INCOME TAX APPELLATE TRIBUNAL PATNA BENCH VIRTUAL HEARING AT KOLKATA [BEFORE SHRI ABY. T. VARKEY, JUDICIAL MEMBER & SHRI RAJESH KUMAR, ACCOUNTANT MEMBER] I.T.A. No. 143/Pat/2019 Assessment Year: 2014-15 Shri Akash Kumar (PAN: AMUPK9986F) Vs. PCIT-1, Patna Appellant Respondent Date of Hearing (Virtual) 20.12.2021 Date of Pronouncement 22.12.2021 For the Appellant Shri Ajay Kumar Rastogi, Advocate For the Respondent Shri Sanjay Mukherjee, CIT, DR ORDER PER SHRI A.T. VARKEY, JM: This is an appeal preferred by the assessee against the order of the Ld.PCIT-1, Patna dated 28.03.2019 for A.Y. 2014-15 u/s 263 of the Income Tax Act (hereinafter referred to as the ‘Act’). 2. At the outset, the Ld. Senior Counsel for the assessee, Shri Ajay Kumar Rastogi submitted that the Ld. PCIT has invoked the revisional jurisdiction without satisfying the condition precedent as laid down u/s 263 of the Act i.e. without validly holding that the AO’s order is erroneous as well as prejudicial to the interest of the revenue. Since the jurisdictional issue has been raised, we will first of all adjudicate the legal issue. The Ld. Counsel drew our attention to the impugned order of the Ld. PCIT and brought to our notice that the Ld. PCIT has interfered by taking note that AO while passing the assessment order dated 29.08.2016 u/s 143(3) of the Act did not enquire about “discrepancy in turnover shown in ITR and cash deposit in bank A/c”. Thereafter, the Ld. PCIT cite from the order sheet noting dated 30.06.2016, that though the assessee had submitted a bank statement, the assessee was asked to 2 ITA No.143/Pat/2019 Shri Akash Kumar, A.Y. 2014-15 produce the cash book so that the AO can verify the bank statement on 12.07.2016. According to the PCIT, there was no compliance on the part of the assessee, so the AO had issued show cause notice to the assessee to produce the cash book for verification of the bank statement on 29.08.2016. However, according to the Ld. PCIT as per the order sheet noting on 29.08.2016, it is seen that the AR of the assessee appeared and produced the cash book and the bank statement was verified on text check basis by the AO who passed the order u/s 143(3) on the same day. According to the Ld. PCIT, the assessee’s case was selected for CASS because cash deposit in savings bank account was more than the turnover. Therefore, according to the Ld. PCIT, the AO had to ensure reconciliation of the same which according to the Ld. PCIT has not been done. Therefore, according to him, this is a case of lack of enquiry, so he was pleased to hold the AO’s order as erroneous as well as prejudicial to the interest of the revenue and he cancelled it with a direction to re-do it. According the Ld. Counsel, the impugned order of the Ld. PCIT is erroneous because according to him, the AO has made enquiry into this issue which was CASS selected issue for scrutiny. The Ld. Counsel drew our attention to the assessment order wherein the AO had noted that he has asked the assessee to produce the copy of return of income, audit report, bank statement, details of unsecured loan, sundry creditors, ledger of all major expenses with supporting documents to be produced on 30.05.2016 and since none appeared, he issued penalty notice for non-appearance. Thereafter, the A.O noted that the AR of the assessee appeared and furnished the audit report. Shri Ajay Kumar Rastogi pointed out that in the assessment order, the AO noticed that pursuant to his direction, the assessee furnished bank statement and reconciled the difference between cash deposit and turnover. He drew our attention to the finding of the A.O that the discrepancy in turnover shown in ITR and cash deposit in bank A/c was explained. Thus according to the Ld. counsel, the A.O has examined the bank account statement in the light of the turnover reported in P&L A/c and on the basis of examination of bank a/c statement and turnover as per P&L A/c, the return of income of the assessee was accepted. Therefore, according to Ld Counsel, the Ld. PCIT erred in interfering with the order of the AO dated 29.08.2016 on the ground of lack of enquiry when it 3 ITA No.143/Pat/2019 Shri Akash Kumar, A.Y. 2014-15 can be seen that A.O had in fact enquired about it. Therefore, the action of the Ld. PCIT to exercise revisional jurisdiction is without jurisdiction and so it need not be quashed. 3. Per contra, the Ld. CIT, DR Shri Sanjay Mukherjee, supported the action of the Ld. PCIT and submitted that the AO has enquired only on test check basis the CASS issue and has not reconciled or explained the “discrepancy in turnover shown in ITR and cash deposit in bank A/c”. Therefore, according to the Ld. CIT, DR, Ld. PCIT rightly interfered with the order of the AO. Therefore, he does not want us to interfere with the order of the Ld. PCIT. 4. We have heard both the parties and also perused the records. Before we advert to the facts and law involved in this lis before us, let us revisit the law governing the issue before us. The assessee has challenged in the first place, the very usurpation of jurisdiction by Ld. Principal CIT to invoke his revisional powers enjoyed u/s 263 of the Act. Therefore, first we have to see whether the requisite jurisdiction necessary to assume revisional jurisdiction is existing in this case before the Pr. CIT rightfully exercises his revisional power. For that, we have to examine as to whether in the first place the order of the Assessing Officer found fault by the Principal CIT is erroneous as well as prejudicial to the interest of the Revenue. For that, let us take the guidance of judicial precedence laid down by the Hon’ble Apex Court in Malabar Industries Ltd. vs. CIT [2000] 243 ITR 83(SC) wherein their Lordship have held that twin conditions needs to be satisfied before exercising revisional jurisdiction u/s 263 of the Act by the CIT. The twin conditions are that the order of the Assessing Officer must be erroneous and so far as prejudicial to the interest of the Revenue. In the following circumstances, the order of the AO can be held to be erroneous order, that is (i) if the Assessing Officer’s order was passed on incorrect assumption of fact; or (ii) incorrect application of law; or (iii)Assessing Officer’s order is in violation of the principle of natural justice; or (iv) if the order is passed by the Assessing Officer without application of mind; (v) if the AO has not investigated the issue before him; [because 4 ITA No.143/Pat/2019 Shri Akash Kumar, A.Y. 2014-15 AO has to discharge dual role of an investigator as well as that of an adjudicator] then in aforesaid any event the order passed by the Assessing Officer can be termed as erroneous order. Coming next to the second limb, which is required to be examined as to whether the actions of the AO can be termed as prejudicial to the interest of Revenue. When this aspect is examined one has to understand what is prejudicial to the interest of the revenue. The Hon’ble Supreme Court in the case of Malabar Industries (supra) held that this phrase i.e. “prejudicial to the interest of the revenue’’ has to be read in conjunction with an erroneous order passed by the Assessing Officer. Their Lordship held that it has to be remembered that every loss of revenue as a consequence of an order of Assessing Officer cannot be treated as prejudicial to the interest of the revenue. When the Assessing Officer adopted one of the courses permissible in law and it has resulted in loss to the revenue, or where two views are possible and the Assessing Officer has taken one view with which the CIT does not agree, it cannot be treated as an erroneous order prejudicial to the interest of the revenue “unless the view taken by the Assessing Officer is unsustainable in law”. 5. Keeping the aforesaid settled position of law in mind, in the present case we note that the Ld. PCIT has alleged lack of enquiry on the part of the AO in respect of scrutiny of the CASS item “discrepancy in turnover shown in ITR and cash deposit in bank A/c”. We note that the assessee is running petrol pump business. From the perusal of the assessment order, we note that the AO had called for the documents/records from the assessee and has made the specific finding of fact that pursuant to his notices, the assessee had furnished the same as well as the reconciliation in respect of the discrepancy in turnover shown in ITR and cash deposit in bank account. The AO has made a finding after calling for relevant documents to scrutinize the CASS issue that the assessee has been able to explain the discrepancy by filing the reconciliation. Since the AO has made a categorical finding on the issue on which the Ld. PCIT found fault with and when this fact has been brought to the notice of the Ld. PCIT during the revisional proceedings, the Ld. PCIT after taking note that A.O has made enquiry on the issue, then if he is still not satisfied with the enquiry conducted by the 5 ITA No.143/Pat/2019 Shri Akash Kumar, A.Y. 2014-15 AO on that issue, then according to us the Ld PCIT ought to have conducted enquiry himself and demonstrated how the AO erred in accepting the reconciliation/explanation given by the assessee while explaining/reconciling the discrepancy. According to us, without doing such an exercise in the light of the AO’s finding that the assessee has explained/reconciled the discrepancy in turnover shown in ITR and cash deposit in bank a/c, the action of Ld PCIT to find fault with the AO’s action as erroneous for lack of enquiry cannot be countenenced. Therefore, we cannot agree with the Ld. PCIT that AO’s scrutiny assessment u/s 143(3) dated 29.08.2016 is erroneous for non-enquiry. Therefore, the Ld. PCIT erred in assuming jurisdiction u/s 263 of the Act. Therefore, it is quashed. 6. In the result, the appeal of the assessee is allowed. Order is pronounced in the open court on 22 nd December, 2021 Sd/- Sd/- (Rajesh Kumar) (A.T. Varkey) Accountant Member Judicial Member Dated: 22.12.2021 Biswajit, Sr. PS Copy of the order forwarded to: 1. Appellant- Shri Akash Kumar, C/o. Maa Vaishnavi Service Centre, Nabinagar, Aurangabad, Bihar-824101. 2. Respondent – PCIT-1, Patna. 3. The CIT(A)-I 4. CIT- 5. DR, True Copy By Order Senior Private Secretary ITAT, Kolkata Benches, Kolkata 6 ITA No.143/Pat/2019 Shri Akash Kumar, A.Y. 2014-15