Niranjanaben Jayeshkumar Patel L/H of Late Shri Jayeshbhai Chandubhai Patel), Halol V. The Pr. CIT-1, Vadodara

ITA 155/AHD/2022

AI Insights

The case involves an appeal by Niranjanaben Jayeshkumar Patel against the order of the Principal Commissioner of Income Tax-1, Vadodara, which was passed under section 263 of the Income Tax Act, 1961. The ld.Pr.CIT had found the assessment order for the assessment year 2017-18 to be erroneous and prejudicial to the interests of the revenue, primarily due to discrepancies in the reported cash deposits and the acceptance of the source of certain cash deposits. The Tribunal examined the contentions and evidence presented by both the assessee and the revenue, ultimately deciding in favor of the assessee by setting aside the revisionary order of the ld.Pr.CIT.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 133531 (ITAT-AHMEDABAD)
• Duration Of Justice: 10 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-03-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 13-03-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 09-05-2022
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revision of order; Opportunity of being heard; Set aside
• Section: 131; 263; 143(3); 69A

Judgement Text

आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरणआयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण, अहमदाबाद 瀈यायपीठ अहमदाबाद 瀈यायपीठअहमदाबाद 瀈यायपीठ अहमदाबाद 瀈यायपीठ ‘B’ अहमदाबाद। अहमदाबाद।अहमदाबाद। अहमदाबाद। IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, AHMEDABAD BEFORE SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND SHRI T.R.SENTHIL KUMAR, JUDICIAL MEMBER ITA No.155/Ahd/2022 Assessment Year :2017-18 Niranjanaben Jayeshkumar Patel L/h. of Late Shri Jayeshbhai Chandubhai Patel 19-1, Nita Nagar Society Kanjari Road, Halol 389 350. Gujarat. PAN : AKZPP 6950 D Vs. Pr.Comm. of Income Tax-1 Vadodara. (Applicant) (Responent) Assessee by : Shri Sakar Sharma, CA Revenue by : Shri Sudhendu Das, CIT-DR स ु नवाई क तार ख/D a t e o f H e a r i n g : 1 4 / 0 3 / 2 0 2 3 घोषणा क तार ख /D a t e o f P r o n o u n c e m e n t : 2 2 / 0 3 / 2 0 2 3 आदेश/O R D E R PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER This appeal has been filed by the assessee against order passed by the ld.Pr.Commissioner of Income Tax-1, Vadodara dated 31.3.2022 passed under section 263 of the Income Tax Act, 1961 [hereinafter referred to as "the Act" for short]for the Asst.Year2017- 18. 2. The grounds raised in the appeal are as under: 1. The Ld. PCIT erred on facts and in law in invoking provisions of section 263 of the Act without any justification ITA No.155/Ahd/2022 2 2. The Ld. PCIT erred on facts and in law in holding the assessment order passed u/s 143(3) to be erroneous and prejudicial to the interests of the revenue. 3. The Ld. PCIT erred on facts and in law in holding that issue with reference to cash deposits in the bank accounts and set off of Rs. 98,09,203/-while computing addition u/s 69A requires verification and inquiry even though necessary verification and inquiries had already been made by the AO while completing assessment. 4. The ld.Pr.CIT erred on facts and in law in setting aside the order of the AO without justifiable reasons. 3. A perusal of order of the ld.Pr.CIT reveals that in the present case, the assessment under section 143(3) of the Act was finalized after making addition on account of unexplained cash deposits of Rs.116,13,90,797/-. The ld.Pr.CIT found this assessment order to be erroneous causing prejudice to the Revenue for the reason that i) While the assessee had admitted to cash deposits made during the year of Rs.117.13 crores, the AO while finalizing the assessment had considered cash deposits of Rs.117.12 crores; ii) The AO had accepted the source of cash deposits out of the total cash deposits so made by the assessee of Rs.117.12/117.13 crores, Rs.98,09,203/- allegedly sourced from one person Shri Chirag Tiger on the basis of confirmation of transaction, furnishing of his copy of return of income, copy of PAN, copy of licence and ledger account for the year under consideration, which the said party furnished to the AO on summons issued to him by the AO under section 131 of the Act; but as per the ld.Pr.CIT, these documents were not available in the case records of the assessee. 4. On account of the above two issues, the ld.Pr.CIT was of the view that the assessment had been framed in the present case ITA No.155/Ahd/2022 3 without making due verification or inquiry on the above issues. The notice issued to assessee under section263 of the Act, bringing out the above, is placed before us at PB Page No.193 &194and reproduced hereunder: ITA No.155/Ahd/2022 4 5. Before the ld.Pr.CIT the assessee contended that the figure of cash deposits submitted to the AO of Rs.117.12 crores was in fact incorrect, and the assessee had committed computational mistake leading to inflated report of cash deposits. Further, in respect of the amount of source of cash deposits found unexplained by the AO ITA No.155/Ahd/2022 5 amounting to Rs.98,09,203/-, the assessee contended that necessary documents and details had been submitted to the AO during the assessment proceedings. But the ld.Pr.CIT dismissed all these contentions of the assessee, and held that since the details were not found in the file of the AO, the issue required verification and inquiries, and accordingly, held the assessment order passed to be erroneous causing prejudice to the Revenue. The ld.Pr.CIT set aside the assessment order with direction to the AO to pass fresh assessment order after taking into consideration issues already considered together with the issues discussed in his order. His finding at para-5 of his order in this regard are as under: 6. Pleadings of the ld.counsel for the assessee, while challenging of this order passed by the ld.Pr.CIT under section 263 of the Act was that – ITA No.155/Ahd/2022 6 a) with respect to issue of cash deposit made in the bank account of the assessee, wherein ld.Pr.CIT had noted difference of Rs.1,00,000/- in the figure considered by the AO, the ld.counsel for the assessee contended that before the ld.Pr.CIT, the assessee had submitted entire cash book of the assessee for the year, and had pointed out to him that the amount of cash deposits in fact was to the tune of Rs.113.66 crores and not Rs.113.12 crores or Rs.117.13 crores as noted in the order of the AO. He contended that copy of the entire cash book was given to the ld.Pr.CIT during the revisionary proceedings to evidence such facts. But he had completely ignored the same and without making any further inquiry or investigation had gone to hold the assessment order erroneous on account of AO having considered figure of Rs.117.12 crores as the cash deposits in the bank account of the assessee, as opposed to Rs.117.13 crores as contended by the assessee before the AO. b) with respect to source of cash deposits of Rs.98,09,203/- accepted by the AO, the ld.counsel for the assessee contended that the AO had noted satisfaction of the same in respect to documents substantiating genuineness of the source provided by the depositor i.e Shri Chirag Tiger in response to the summons issued to the assessee during the assessment proceedings under section 143(3) of the Act itself. He further pleaded that these documents had also been provided to the ld.Pr.CIT during the revisionary proceedings and again without dealing with these documents, he had gone on to hold the order passed by the AO as erroneous, finding these evidences not on record in the assessment file. ITA No.155/Ahd/2022 7 His contention, therefore, was that though the assessee had demonstrated to the ld.Pr.CIT that there were no error in the order of the AO, and had substantiated the same also, the ld.Pr.CIT without even considering the explanation or making any further inquires on the evidences filed by the assessee had gone on to hold the assessment order as erroneous, which was against the provision of law as laid under section 263 of the Act itself. The Ld.DR however supported the order of the Ld.PCIT. 7. We have considered the contentions of the ld.counsel for the assessee, and have also gone through the order of the Ld.PCIT. We find merit in the contention of the Ld.Counsel for the assessee that the finding of error by the Ld.PCIT in the order of the AO was in total disregard of the explanation and evidences filed by the assessee before him and therefore in gross violation of the provisions of section 263 of the Act. The fact, as noted above, are that the assessment order was found to be erroneous on account of : • the AO considering figures of cash deposited in the bank account of the assessee short by Rs.1,00,000/- i.e taking it as Rs.117.12 crores as opposed to the assessee submitting to the AO a figure of Rs.117.13 crores, and secondly; • for the reason, the AO accepting the genuineness of the cash deposits of Rs.98,09,203/- from one of the parties on the basis of certain documents filed,which as per the Ld. PCIT were found to be missing in the case records. ITA No.155/Ahd/2022 8 Undeniably before the ld.Pr.CIT the assessee had claimed that the assessment order was not erroneous on either of the grounds, and had substantiated the same also. 8. With respect to the anomaly found in the figure of cash deposits made by the assessee during the year, the assessee had infact clarified to the Ld.PCIT that before the AO he had mentioned an inflated figure of cash deposits of Rs.117.12/Rs.117.13 crores, and in fact the actual amount of cash deposits was of Rs.113.66 crores. He had substantiated the same by furnishing of his entire cash books. His reply to the Ld..PCIT dated 18-01-2022 to this effect is placed before us at P.B 15-21 alongwith the copy of the cash book submitted and placed before us at P.B 29-181. The reply of the assessee is as under: “2. Without prejudice to the above, I submit that I have carefully gone through the notice issued u/s.263 and find that assessment order passed by the Assessing Officer is neither erroneous nor prejudicial to the interests of the revenue. Therefore, assessment order so passed by the Assessing Officer cannot be revised within the meaning and under the provisions of section 263 of the Act on the issues referred to in the show cause notice. I request your honour to take into consideration following specific points which need specific consideration while making order u/s.263 of the Act. ITA No.155/Ahd/2022 9 9. With respect to the source of deposits found to be genuine by the AO of Rs.98,09,203/-, the assessee again provided copies of all the documents which were furnished to the AO. His explanation alongwith evidences, in the reply filed to the Ld.PCIT vide letter dated 18-01-2022 is as under: “(v) Vide Para 3 of the notice u/s.263, your honour have also proposed to withdraw the exclusion of Rs.98,09,203/- granted by the Assessing Officer in the name of Chirag Tiger to whom summons u/s.131 were issued in which he had confirmed the transactions and had also. ITA No.155/Ahd/2022 10 ITA No.155/Ahd/2022 11 10. This fact has not been disputed by the Revenue before us. But as rightly pointed out by the ld.counsel for the assessee, the ld.Pr.CIT has not even cared to consider this contention/explanation of the assessee. He has simply taken all the material on record, and sent it to the AO for verification without himself applying his mind to it. We agree with the ld.counsel for the assessee that this act of the ld.Pr.CIT goes against the very spirit of section 263 itself, which in very clear term states that in revisionary proceedings, the assessee is to be confronted with the error noted in the assessment order, given an opportunity of hearing, his contentions need to be ITA No.155/Ahd/2022 12 considered and inquired into and only then, ld.Pr.CIT has to arrive at his finding of error after considering all contentions and evidences furnished by the assessee. A plain reading of provisions of section 263(1) brings out the above and the same being reproduced below for clarity: Section 263(1) The [Principal Chief Commissioner or Chief Commissioner or Principal Commissioner] or] Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the [Assessing] Officer [or the Transfer Pricing Officer, as the case may be,] is erroneous in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, [including,— 11. In the facts of the present case, despite the assessee explaining to the ld.Pr.CIT that there were no errors in the order of the AO in accepting the cash deposited in the bank account of the assessee at Rs.117.12 crores, and also in accepting source of cash deposits Rs.98,09,203/-, substantiated with evidences also, the ld.Pr.CIT has not cared to even consider this contention and explanation of the assessee. The Ld.PCIT has given no finding as to why the assessment order was in error on the issue of cash deposit short considered by the AO. And with respect to the error relating to the issue of acceptance of source of cash deposit of Rs.98.09 lacs by the AO he has merely reiterated his earlier observation that no evidences proving the source as noted by the AO were found in the case record. Ignoring the explanation of the assessee, we find, the Ld.PCIT has simply reiterated his reason for assuming jurisdiction to revise the order of the AO, while finding the assessment order erroneous and causing prejudice to the Revenue. There cannot, in such facts and circumstances, be said to be any finding of error in the order of the AO causing prejudice to the Revenue, by the Ld.PCIT. ITA No.155/Ahd/2022 13 12. Moreover merely because documents, noted by the AO to be produced by the creditor of source of cash deposit of Rs.98.09 lacs in response to summons issued to him u/s 131 of the Act, were not found in the case records, that cannot be the reason for holding the assessment order to be in error for accepting the genuineness of the source of cash deposit. The fact of issuance of summons by the AO is not doubted or disputed by the Ld.PCIT. The AO has also categorically noted relevant documents submitted by the depositor proving genuineness of the source of cash deposit. The Ld.PCIT has not found those documents in the case file. This cannot lead to the inference that no inquiry was conducted by the AO, as held by the Ld.PCIT. It is not his case that the findings of the AO were false. He should have sought an explanation from the AO for the missing documents and if no explanation is given only then he could have held that the findings of the AO were false and there was actually no inquiry conducted by the AO to arrive at his satisfaction of source of cash deposit. 13. In the light of the above, we hold that there is no finding of error in the order of the AO by the Ld.PCIT. The order passed by the ld.Pr.CIT u/s 263 of the Act therefore needs to be set aside 14. In the result, the appeal of the assessee is allowed in above terms. Order pronounced in the Court on 22 nd March, 2023 at Ahmedabad. Sd/- Sd/- (T.R. SENTHIL KUMAR) JUDICIAL MEMBER (ANNAPURNA GUPTA) ACCOUNTANT MEMBER Ahmedabad, dated 22/03/2023 vk*