Sanjeev Kasturi Arora, Satara V. Principal Commissioner of Income-Tax -3, , Pune

ITA 18/PUN/2022

AI Insights

The case involves Sanjeev Kasturi Arora, an individual engaged in trading of readymade garments, who appealed against the order of the PCIT, Pune. The original assessment for the year 2015-16 was completed with certain disallowances, but the PCIT later found that the assessment did not adequately address various discrepancies and potential issues, such as large cash deposits and unverified loans. The PCIT issued a show-cause notice under section 263, leading to a revision of the assessment order. The Tribunal's decision focused on whether the PCIT was justified in exercising the revisionary powers under section 263, given the limited scope of the original scrutiny assessment.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 137514 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-02-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 22-01-2023
• Assessment Year: 2015-2016
• Appeal Filed On: 04-01-2022
• Other Referred Cases: Malabar Industrial Co. Ltd. vs. CIT, CIT vs. Max India Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Revision of order; Opportunity of being heard; Set aside
• Section: 263; 43B; 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “B”, PUNE BEFORE SHRI S. S. GODARA, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER आयकर अपील सं. / ITA No.18/PUN/2022 िनधाᭅरण वषᭅ / Assessment Year : 2015-16 Sanjeev Kasturi Arora, House No.8, Dr. Sabne Road, Bazar Peth, Mahabaleshwar, Satara- 412803. PAN : AARPA8735F Vs. Pr. CIT-3, Pune. Appellant Respondent आदेश / ORDER PER INTURI RAMA RAO, AM : This is an appeal filed by the assessee directed against the order of ld. Pr. Commissioner of Income Tax- 3, Pune [‘the PCIT’] dated 17.03.2020 for the assessment year 2015-16. 2. Briefly, the facts of the case are that the appellant is an individual engaged in the business of trading in readymade garments. The Return of Income for the assessment year 2015-16 was filed on 28.09.2015 disclosing total income of Rs.19,69,750/-. Against the said return of income, the assessment was completed by the Asstt. Commissioner of Income Tax, Satara Circle, Satara (‘the Assessee by : Shri M. K. Kulkarani & Mrs. J. R. Chandekar Revenue by : Shri Prashant Gadekar Date of hearing : 23.01.2023 Date of pronouncement : 03.02.2023 ITA No.18/PUN/2022 2 Assessing Officer’) vide order dated 27.09.2017 passed u/s 143(3) of the Income Tax Act, 1961 (‘the Act’) at a total income of Rs.21,99,750/- after making disallowance of Rs.2,30,000/- on account of expenditure incurred under the head “Transport & Hamali expenses, Repairs and Maintenance expenses”. The reasons for selecting the case for scrutiny assessment is on account of : (i) Large cash deposits in savings bank accounts. (ii) Mismatch in sales turnover reported in Audit Report and ITR. 3. Subsequently, the ld. PCIT, on review of the assessment record, had come to the conclusion that the Assessing Officer had failed to examine the following items during the course of assessment proceedings and, accordingly, formed an opinion that the assessment order passed by the Assessing Officer is erroneous and prejudicial to the interests of the Revenue and, accordingly, issued show-cause notice u/s 263 on 05.11.2018 :- (a) There is increased in the capital of the investments made by the assessee. The assessee made interest free advances as given interest free loans to Sanjeev Arora of Rs.6,00,000/-, Swapnil Patil of Rs.15,00,000/- and Rajiv Arora of Rs.51,74,438/-, on which no advance received which requires the disallowance u/s 36(1)(iii) as well as u/s 14A of the Act. ITA No.18/PUN/2022 3 (b) The assessee had received unsecured loans of Rs.9,40,000/-, Rs.10,55,000/- and Rs.1,18,50,000/- from 3 persons which remain unverified. (c) The assessee had claimed expenditure for payment of salary in respect of relatives of Sapana Arora of Rs.1,56,000/- and assessee also claimed expenditure in respect of rent payment made to his relatives. (d) The Assessing Officer had failed to assert the personal use of vehicle and the applicability of section 43B in respect of VAT payable. (e) The deposits with the bank made in cash have not been properly verified with reference to the sale bills etc. 4. On receipt of the show-cause notice, the appellant had not submitted explanation saying that when the case was selected under limited scrutiny for the purpose of verification of cash deposits, the question of verification of other items does not arise. Therefore, the revision order passed u/s 263 by the ld. PCIT was not maintainable. However, the ld. PCIT rejecting the said contention of the appellant held that non-verification of those items rendered the assessment erroneous and prejudicial to the interests of the Revenue and, accordingly, set aside the assessment order with a direction to re-do the assessment after affording an opportunity of being heard to the appellant. ITA No.18/PUN/2022 4 5. Being aggrieved by the order of revision passed u/s 263, the appellant is in appeal before us in the present appeal. 6. It is submitted that when the assessment was selected for scrutiny under limited scrutiny purpose, the Assessing Officer is barred to enquire into the other items or expenditures incurred and, therefore, the ld. PCIT was not justified in exercising the power of revision vested with him u/s 263 in respect of other items of income. He further submitted that in respect of cash deposes made, the Assessing Officer after examining the evidence filed in support of the sources, took a plausible view and chosen to make no addition and, therefore, no revision u/s 263 should be maintained. 7. On the other hand, ld. CIT-DR supports the order of the ld. PCIT passed u/s 263 of the Act. 8. We heard the rival submissions and perused the material on record. The issue in the present appeal relates to the validity of assumption of jurisdiction u/s 263 by the ld. PCIT. The Parliament had conferred the power of revision on the Commissioner of Income Tax u/s 263 of the Act in case the assessment order passed is erroneous and prejudicial to the interests of revenue. In order to invoke the power of revision, the above two conditions are required to be satisfied cumulatively. References in this regard can be made to the decision of the Hon’ble Supreme Court in the case of Malabar ITA No.18/PUN/2022 5 Industrial Co. Ltd. vs. CIT, 243 ITR 83 (SC) and in the case of CIT vs. Max India Ltd., 295 ITR 282 (SC). The error in the assessment order should be one that it is not debatable or plausible view. In a case where the Assessing Officer examined the claim took one of the plausible views, the assessment order cannot be termed as an “erroneous”. 9. Now, we proceed to examine the facts of the present case, whether the Assessing Officer had examined the items which were subject matter of revision during the course of original assessment proceedings. We had also gone through the assessment order passed consequent to the order u/s 263, wherein, the Assessing Officer only made addition in respect of cash deposits of Rs.1,04,50,000/-, as the appellant had failed to offer any explanation in support of the sources for cash deposits, despite reasonable opportunity to the appellant. Moreover, the appellant also could not demonstrate before us that this issue was examined by the Assessing Officer during the course of assessment proceedings and took a plausible view. This fact only goes to prove that neither the Assessing Officer had enquired into the sources of cash deposits nor the appellant had offered any explanation in support of the sources for cash deposits. This clearly goes to prove the Assessing Officer had failed to examine this issue during the course of original ITA No.18/PUN/2022 6 assessment proceedings, which rendered the assessment order erroneous and prejudicial to the interests of the Revenue. In these circumstances, we are of the considered opinion that the ld. PCIT was justified in exercising the power of revision vested with him u/s 263 of the Act. Therefore, we do not find any merit in the appeal filed by the assessee. 10. In the result, the appeal filed by the assessee stands dismissed. Order pronounced on this 03 rd day of February, 2023. Sd/- Sd/- (S. S. GODARA) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; ᳰदनांक / Dated : 03 rd February, 2023. Sujeet आदेश कᳱ ᮧितिलिप अᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The Pr. CIT- 3, Pune. 4. िवभागीय ᮧितिनिध, आयकर अपीलीय अिधकरण, “B” बᱶच, पुणे / DR, ITAT, “B” Bench, Pune. 5. गाडᭅ फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune.