Richfield Fertilisers P Ltd, Nashik V. Principal Commissioner of Income-Tax -1, Nashik

ITA 293/PUN/2022

AI Insights

The case involves Richfield Fertilisers P Ltd., which appealed against the order of the PCIT, Nashik-1, setting aside the assessment order for the assessment year 2017-18. The original assessment accepted the returned income without making sufficient inquiries into the cash deposits made during the demonetization period, which were under scrutiny. The PCIT invoked section 263, citing that the assessment was erroneous and prejudicial to the interests of the revenue, leading to the appeal before the Tribunal.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 134355 (ITAT-PUNE)
• Duration Of Justice: 11 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 07-02-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 01-05-2022
• Other Referred Cases: CIT vs. Amitabh Bachchan, Nirav Modi [2017] 390 ITR 292(Bom)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SARDAR SINGH MEENA IRS
• Assessee Lawyers: AD.NISHIT GANDHI
• Keywords: Gift; Revision of order; Opportunity of being heard; Principle of natural justice; Revised return; Set aside
• Section: 263; 143(3); 142(1); 143(1); 143(2); 69A; 264

Judgement Text

आयकर अपीलीय अिधकरण “बी” Ɋायपीठ पुणेमŐ। IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES “B” :: PUNE BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND DR. DIPAK P. RIPOTE, ACCOUNTANT MEMBER आयकर अपीलसं. / ITA No.293/PUN/2022 िनधाᭅरण वषᭅ / Assessment Year : 2017-18 Richfiled Fertilisers P Ltd., B-278, MIDC, Ambad, Nashik – 422010. PAN: AACCR 2567 C V s The PCIT, Nashik-1. Appellant/ Assessee Respondent /Revenue Assessee by Shri Ad.Nishit Gandhi – AR Revenue by Shri Sardar Singh Meena IRS– DR Date of hearing 08/02/2023 Date of pronouncement 28/04/2023 आदेश/ ORDER PER DR. DIPAK P. RIPOTE, AM: This appeal filed by the Assessee is directed against the order of ld.Principal Commissioner of Income Tax, Nashik-1, dated 21.03.2022 under section 263 of the Income Tax Act, 1961 for the A.Y.2017-18, emanating from assessment order dated 11.12.2019. The Assessee has raised the following grounds of appeal: “1. In the facts and circumstances of the case and in law, the order passed by the Learned Principal Commissioner of Income ITA No.293/PUN/2022 Richfield Fertilisers Private Limited [A] 2 Tax - Nashik, 1 [“the PCIT” for short] u/s 263 of the Income Tax Act, 1961 [“the Act” for short] is bad in law and deserves to be quashed since the same is passed in violation of principles of natural justice based on extraneous and irrelevant considerations while ignoring the relevant and material considerations more specifically, the submissions, details and evidences furnished by the Assessee. 2. In the facts and circumstances of the case and in law the invocation of the powers u/s 263 of the Act by the Ld. PCIT is bad in law and deserves to be set aside. 3. While invoking the provisions of section 263 of the Act, the Ld. PCIT failed to appreciate that: (a) The assessment order dated 11.12.2019 passed by the Learned Assessing Officer (“the AO” for short) u/s 143 (3) of the Act was neither erroneous nor prejudicial to the interests of the Revenue so as to enable the PCIT to invoke the provisions of section 263 of the Act; (b) While passing the original assessment order, the Ld. AO had considered the various details and submissions filed by the Assessee and after a detailed examination and scrutiny of the same passed the assessment order taking one of the courses permissible in law and hence the very same issue is not within the ambit of section 263 of the Act; (c) The PCIT cannot put himself in the shoes of the Ld. AO and determine the manner of making an assessment or the manner of conducting enquiries; ITA No.293/PUN/2022 Richfield Fertilisers Private Limited [A] 3 (d) In any case the original assessment was conducted after detailed scrutiny of various submissions made by the Assessee including the nature of business of as also the submissions in respect of cash deposited in the bank account and this fact has been admitted by the Ld. PCIT in his order u/s 263 and hence it could not even remotely lead to an inference that the Ld. AO had not made sufficient enquiry while passing the Assessment Order; and; 3. In the facts and circumstances of the case and in law, the action of the Ld.PCIT . in invoking section 263 of the Act deserves to be set-aside and the order u/s 263 passed by him deserves to be quashed. 4. In the facts and circumstances of the case and in law, the Ld. PCIT grossly erred in directing the Ld. AO to frame the assessment in a particular manner which is beyond the powers contemplated in section 263 of the Act and hence the order passed by the Ld. PCIT is unsustainable in law. 5. Each of the above grounds are without prejudice to one another and the Appellant craves leave to add, amend, alter, delete or modify all or any of the above grounds of appeal.” Brief facts of the case : 2. Assessee filed Return of Income on 29.10.2017 declaring total income at Rs.2,30,51,270/-. The case was selected for scrutiny. Assessment Order under section 143(3) was passed on 11.12.2019 by ACIT, Circle-2, Nashik(AO). The Assessing Officer (AO) has accepted Returned Income. The ITA No.293/PUN/2022 Richfield Fertilisers Private Limited [A] 4 ld.Pr.CIT after examination of the record invoked jurisdiction under section 263 of the Act. The relevant part of the ld.Pr.CIT’s order is reproduced here as under : “8.1 On verification of record, it is noticed that the case has been selected for verification of cash deposit into the bank account during the demonetization period. The assessee has deposited aggregate cash into its different bank accounts to the tune of Rs.1,72,76,000/-. The details are as under: Sr. No. Name of the Bank Amount 1 Bank of Maharashtra 45,00,500/- 2 ICICI Bank 35,52,000/- 3 State Bank of India 27,01,000/- 4 Citi Bank 42,21,500/- 5 Bank of Maharashtra 23,01,000/- Total 1,72,76,000/- During the assessment proceedings, the AO issued detailed questionnaire from time to time wherein the details of cash deposit e.g. nature & source alongwith documentary evidences have been called for. On going through the submission of the assessee dated 16.05.2019, it is noticed that the assessee has furnished partial information. It is also found that the details were not as such as sought by the AO. The assessee failed to furnished the cash deposit details, comparative chart of cash deposit during the corresponding period of the previous year and preceding year. Due to incomplete information, source of cash deposit could not be fully verified. ITA No.293/PUN/2022 Richfield Fertilisers Private Limited [A] 5 AO completed this assessment without making any addition on account of cash deposit to the extent of Rs.1,72,76,000/- during the demonetization period despite the fact that case was selected for scrutiny for that reason. It is further submitted that even during the proceedings u/s 263, the assessee company has not submitted a detailed submission in respect of cash deposited during demonetization period. Apart from submitting the cash book and confirmations, the assessee" should have submitted details of comparative chart as compared to the previous F.Y. as per the Internal Guidance Note dated 13.06.2019, which was not submitted by the assessee company during the proceedings u/s 263 which are as under: 1. Total cash deposit in Bank in F.Y. 2015-16 2. Total cash deposit in Bank from 01.04.2015 to 08.11.2015 3. Total cash deposit in Bank from 09.11.2015 to 31.12.2015 4. Total cash deposit in Bank in F.Y.2016-17 5. Total cash deposit in Bank from 01.04.2016 to 08.11.2016 6. Total cash deposit in Bank from 09.11.2016 to 31.12.2016 7. Total cash sales in F.Y.2015-16 8. Total cash sales from 01.04.2015 to 08.11.2015 9. Total cash sales in F.Y.2016-17 10. Total cash sales from 01.04.2016 to 08.11.2016 As per Internal Guidance Note dated 13.06.2020, the AO was also required, inter alia, to obtain the deposit slips and denominations of amounts deposited during demonetization period and also to obtain details of withdrawals to ascertain the destinations of withdrawals / transfers from the bank account" Therefore, it is clear that the amount deposited by the assessee during demonetization period was outside the books and should have been added to the total income, by treating it as unexplained ITA No.293/PUN/2022 Richfield Fertilisers Private Limited [A] 6 cash credit u/s 69A of the I.T. Act and should have been charged @ 60% tax u/s 115BBE of the Act. It is pertinent to mention here that the source of such cash deposited by way of SBN should have been examined in accordance with the directions given under the guidelines issued by the CBDT, New Delhi bearing F.No.225/145/2019-ITAII dated 13.06.2019. However, the source of substantial cash deposited into bank account during the demonetization period remained to be verified with the documentary evidences.” 09. In the light of the detailed discussion made hereinabove, I am of the considered opinion that the assessment order passed u/s.143(3) of the Act for Assessment Year 2017-18 on 11.12.2019 by the then AO, is erroneous in so far as it is prejudicial to the interests of Revenue, because the assessment has been made not only without proper verification but also without applying the relevant provisions of the Act properly. Therefore, the provisions of section 263 of the I.T. Act, 1961 are hereby invoked and assessment order passed by the AO on the above issue is hereby set aside on the issues mentioned in para 3.1 of this order. For verification of source of cash deposit during demonetization, the AO is directed to do analysis of Bank account, cash receipts trend as per the cash book and Stock Register. The AO is also directed to call for the quantitative details, copies of quarterly VAT returns (i.e. original / revised) and comparison of quarterly sales with the data as per Central Excise / VAT Returns. The AO should also-verify whether any quarterly VAT returns have been revised by the assessee, if yes, whether any variation with respect to original return. The AO is directed that the assessment order should be framed afresh as per the provisions of law, after considering proper facts and submissions of the assessee on the issues set-aside herein ITA No.293/PUN/2022 Richfield Fertilisers Private Limited [A] 7 above, after affording proper opportunity to the assessee within the time allowed under the Income-tax Act, 1961.” 2.1 Aggrieved by the order of the ld.Pr.CIT, the assessee filed appeal before this Tribunal. Submission of ld.Authorised Representative(ld.AR) : 3. The ld.AR filed a paper book containing 327 pages. The Index of the said paper book is as under : Sr.No. Particulars Page No. 1 Notice u/s 143(2) dated 10/08/2018- Submission dated 10/08/2018 copy of Return of Income and Computation of Income 1 to 9 2 Notice u/s 143(2) dated 27/09/2018- Submission dated 02/10/2018 copy of Return of Income and Computation of Income 10 to 18 3 Notice u/s 142(1) dated 23/04/2019 19 to 25 4 Notice u/s 143(1) dated 23/04/2019- Submission dated 16/05/2019- Manually 26 to 118 5 Notice u/s 142(1) dated 16/07/2019- Submission dated 29/07/2019 119 to 234 6 Notice u/s 142(1) dated 05/09/2019- Submission dated 24/10/2019 235 to 269 7 Order u/s 143(3) passed on 11/12/2019 270 to 277 8 Notice u/s 263 and reply 278 to 327 3.1 The ld.AR submitted that during the assessment proceedings, AO had enquired about the cash deposits made during the period of Demonetization. The AO had asked specific details regarding the cash deposits by notice under section 142(1) dated 23.04.2019. The ld.AR took us through the relevant questions. The ld.AR also submitted that vide notice ITA No.293/PUN/2022 Richfield Fertilisers Private Limited [A] 8 under section 142(1) dated 05.09.2019 the AO had asked specific questions from Question No.18 to Question No.29 regarding the cash deposits. The ld.AR submitted that all details were filed by the assessee during the assessment proceedings regarding the cash deposits. The AO after verification of the details, has accepted the Returned Income. Therefore, the assessment order is not erroneous. The ld.AR submitted that when the plausible view is taken by the AO, then the ld.Pr.CIT has no jurisdiction under section 263 of the Act. The ld.AR submitted that an order cannot be revised under section 263 merely on the ground that in the opinion of the ld.Pr.CIT “AO carried insufficient enquiries”. Even the CBDT is not empowered to direct the AO to frame the order in a particular way. In the present case, the appellant had deposited cash out of the receivable outstanding. The same are from debtors which are naturally offered to tax in earlier years as sales. Therefore, the same cannot be doubted now. Merely because the cash is deposited during the Demonetization the same could not be doubted. Assessee is into business of sale of water-soluble fertilizers. These are sold to farmers across various locations and cash has been collected from farmers. The case of the ITA No.293/PUN/2022 Richfield Fertilisers Private Limited [A] 9 assessee was selected for scrutiny under CASS with the specific reason to verify the cash deposits during the Demonetization period. The AO has verified cash deposits during the Demonetization period, therefore, ld.Pr.CIT has erred in invoking 263. Submission of ld.Departmental Representative (ld.DR) : 4. The ld.DR supported the order of the ld.Pr.CIT. The ld.DR submitted that though the AO had asked various questions regarding cash deposits during the assessment proceedings, however, assessee had not answered all these questions. The ld.DR invited our attention to page no.28 of the assessee’s paper book which was part of the reply submitted on 16.05.2019 to the ACIT, Nashik(AO). The ld.DR pointed out that at S.No.37, assessee has submitted that cash book for F.Y. 2015-16, 2016-17 and 2017-18 will be submitted later. The ld.DR submitted that on perusal of the submission of the assessee, it is observed that cash book was never submitted. The ld.DR also submitted that even before this Tribunal cash book has not been submitted. The ld.DR submitted that at S.No.34, assessee has submitted that cash receipts are mainly from farmers/dealers for purchase of fertilizers. He invited our attention to the list submitted by ITA No.293/PUN/2022 Richfield Fertilisers Private Limited [A] 10 assessee at page no.252 to 264 of the paper book. The ld.DR submitted that in many cases assessee has not submitted proper address of the person. For example, as under : Date Particulars Amount/Rs. 7-4-2016 AkladeBhatuji, Malegaon, Nashik 13350.00 7-4-2016 Aklade Vishwanath Jibhau Malegaon, Nashik 17113.00 16-09-16 Patil Narayan, A/p Deopur Tal Niphad, Dist Nashik 90200.00 31-08-16 Patil Narayan, A/p Deopur Tal Niphad, Dist Nashik 13439.00 24-10-16 Patil Narayan, A/p Deopur Tal Niphad, Dist Nashik 134160.00 04-11-16 Patil Narayan, A/p Deopur Tal Niphad, Dist Nashik 41772.00 07-11-16 Patil Narayan, A/p Deopur Tal Niphad, Dist Nashik 13548.00 30-11-16 Shree Thakan Krishi Kendra Basedi Phatak, Tal JhotwarDist Jaipur 16000.00 03-11-16 Bankar Ashok – WalkhedMadsangvi, Adgaon –Pimpri Road, Nashik 91790.00 09-09-16 Bankar Bhanudas Mhasrual, Tal Nashik, Dist Nashik 28265.00 05-10-16 Bankar Bhanudas Mhasrual, Tal Nashik, Dist Nashik 69164.00 28-10-16 Bankar Bhanudas Mhasrual, Tal Nashik, Dist Nashik 13776.00 5. Theld.DR submitted that thus even in the list submitted by the assessee proper address of the persons has not been mentioned. The ld.DR submitted that AO has not carried out proper enquiry. There were specific guidelines issued by the CBDT for conducting enquiry in such cases. However, AO failed to carry out enquiries as mentioned in the guidelines of the CBDT. Therefore, the ld.Pr.CIT has rightly invoked provisions under section 263 of the Act. ITA No.293/PUN/2022 Richfield Fertilisers Private Limited [A] 11 Findings and Analysis: 6. We have heard both the parties and perused the records. It is an admitted fact that one of the reasons for selection of the case for scrutiny was “cash deposits during demonetization period”. The CBDT had issued specific guidelines for investigation of such cases. The CBDT had suggested the enquiry to be conducted in such cases. Section 263 is reproduced here as under : Revision of orders prejudicial to revenue. 263. (1) The 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 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 an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment. Explanation 1.—For the removal of doubts, it is hereby declared that, for the purposes of this sub-section,— (a) an order passed on or before or after the 1st day of June, 1988 by the Assessing Officer shall include— ****** (b) "record" shall include and shall be deemed always to have included all records relating to any proceeding under this Act available at the time of examination by the Principal Commissioner or Commissioner; (c) where any order referred to in this sub-section and passed by the Assessing Officer had been the subject matter of any appeal filed on or before or after the 1st day of June, 1988, the powers of the Principal Commissioner or Commissioner under this sub-section shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in such appeal. Explanation 2.—For the purposes of this section, it is hereby declared that an order passed by the Assessing Officer shall be deemed to be erroneous in so far as it is prejudicial to the interests of the revenue, if, in the opinion of the Principal Commissioner or Commissioner,— (a) the order is passed without making inquiries or verification which should have been made; ITA No.293/PUN/2022 Richfield Fertilisers Private Limited [A] 12 (b) the order is passed allowing any relief without inquiring into the claim; (c) the order has not been made in accordance with any order, direction or instruction issued by the Board under section 119; or (e) the order has not been passed in accordance with any decision which is prejudicial to the assessee, rendered by the jurisdictional High Court or Supreme Court in the case of the assessee or any other person. The explanatory Memorandum to Finance Act has explained the Amendment to Section 263 as under : Quote, “Revision of order that is erroneous in so far as it is prejudicial to the interests of revenue The existing provisions contained in sub-section (1) of section 263 of the Income-tax Act provides that if the Principal Commissioner or Commissioner considers that any order passed by the assessing officer 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 an enquiry pass an order modifying the assessment made by the assessing officer or cancelling the assessment and directing fresh assessment. The interpretation of expression “erroneous in so far as it is prejudicial to the interests of the revenue” has been a contentious one. In order to provide clarity on the issue it is proposed to provide that an order passed by the Assessing Officer shall be deemed to be erroneous in so far as it is prejudicial to the interests of the revenue, if, in the opinion of the Principal Commissioner or Commissioner,— (a) the order is passed without making inquiries or verification which, should have been made; (b) the order is passed allowing any relief without inquiring into the claim; (c) the order has not been made in accordance with any order, direction or instruction issued by the Board under section 119; or (d) the order has not been passed in accordance with any decision, prejudicial to the assessee, rendered by the jurisdictional High Court or Supreme Court in the case of the assessee or any other person. This amendment will take effect from 1st day of June, 2015. [Clause 65]” Unquote. 7. Thus, the Memorandum has clarified that the expression “erroneous inso far as prejudicial to the interest of revenue ” was a contentious issue hence in order to provide clarity the explanation 2 has been introduced w.e.f. 01/06/2015. Thus, as per Explanation 2 of Section 263 an assessment order is Erroneous and Prejudicial to the Interest of the Revenue if the ld.Commissioner or ld.Pr.Commissioner of Income Tax is of the opinion that it has been passed without making proper inquiry or ITA No.293/PUN/2022 Richfield Fertilisers Private Limited [A] 13 verification which should have been made. Thus, with the introduction of Explanation 2 to Section 263, the Parliament has widened the powers of CIT/PCIT of revision. The explanation 2 to Section 263 has introduced a deeming fiction. The Explanation 2 to Section 263 has explained the meaning of word erroneous for the purpose of section 263. Therefore, after the introduction of explanation 2 to section 263, it is the relative satisfaction of the CIT/PCIT regarding enquiry required in a particular case. Therefore, if the Pr.CIT/CIT is of the opinion that inquiry required to be made in a particular case has not been made the assessment order will be deemed to be erroneous and prejudicial to the interest of the revenue. The CBDT had issued specific direction regarding inquiries to be conducted in the cases where Specified Denomination Notes were deposited in banks after 8 th November 2016. It is also a fact that the AO have not carried out specific enquiries which were required as per directions of CBDT. In this case, as seen from the paper book, the assessee has submitted list of the persons from whom cash has been collected by the Assessee (page no.252 to264 of the paper book). On perusal of the said list, it is observed that ITA No.293/PUN/2022 Richfield Fertilisers Private Limited [A] 14 cash of Rs.43,14,500/- was deposited from the persons whose PAN has not been mentioned in the list.  Cash from persons whose PAN not mentioned in the list- 43,14,500/-.  (Cash from persons whose PAN provided in the list) – 1,30,99,120/-) 8. The AO had not carried out any enquiry regarding these persons whose PAN is not available in the list. There are 79 entries whose PAN is not available. Also, in the said list the addresses are cryptic or incomplete. The AO had not carried out any enquiry to find out the whereabouts of these persons or to get complete address of these persons from the assessee. 9. It is also observed that assessee in its submission dated 16.05.2019 submitted that cash book for A.Y.2015-16, 2016-17 & 2017-18 will be submitted later. On analysis of the subsequent submission of the assessee, nowhere it has been mentioned that assessee has submitted cash book for all these years. Rather copy of the cash book for A.Y.2017-18 has not been filed before us also, therefore, we cannot comment whether it was filed before the Assessing Officer or not. In such cases of Cash Deposits, the Cash Book is very important. ITA No.293/PUN/2022 Richfield Fertilisers Private Limited [A] 15 10. At page no.116 of the paper book is the ‘Notes to accounts enclosed with the Audit Report for A.Y.2017-18. The same is reproduced here as under : Note 32 Disclosure On Specified Bank Notes During the year, the Company had Specified Bank Notes (SBNs) or other denomination notes as defined in the MCA notification, G.S.R. 308 E, dated March 31,2017 The details of SBNs held and transacted during the Period from November 8,2016 To December 30,2016, the denomination-wise SBNs and other notes as per the notification are as follows : Particular SBNs Other denominat ion notes Total Closing cash in hand as on November 08, 2016 17,276,000 46,167 17,322,167 Add : Permitted Receipt - 1,357,882 1,357,882 Less : Permitted Payments - 1,20,830 1,207,830 Less : Amount deposited in Banks 17,276,000 - 17,276,000 Closing cash in hand as on December 30, 2016 - 196,219 196,219 For the purpose of this clause, the term “Specified Bank Notes” shall ‘Have the same meaning provided in the notification of Government of India, in the Ministry of Finance, Department of Economic Affairs number S.O.3407’(E) dated November 8, 2016.” 11. On Page no.266 of paper book the assessee has provided details of cash deposits made between 01.04.2016 to 31.03.2017. The relevant part is reproduced here as under : Month Op. Cash in hand Cash collection Cash deposited in Bank Cash Withdrawn from Bank Closing Cash in hand November till 08-11-2016 101.48 72.82 - - 174.22 09-11-2016 to 30-11-2016 174.22 0.06 174.13 4.00 0.78 December, 2016 0.78 1.89 - 7.70 1.96 ITA No.293/PUN/2022 Richfield Fertilisers Private Limited [A] 16 11.1 It can be observed from above chart that as per the Audit Report, amount deposited in bank during 08.11.2016 to 30.12.2016 is Rs.1,72,76,000/-which includes cash in specified denominations of Rs.1,72,76,000/- and other denominations Nil. Whereas, as per the chart submitted by the assessee during assessment proceedings, cash deposited in bank during the specified period is Rs.174.13 lakhs. Thus, there is a clear difference between the figures mentioned in the notes to accounts enclosed with Audit Report and the figures mentioned in the submission of the assessee dated 24.10.2019. The AO has not bothered to inquire regarding the said difference. We have perused the submission of the assessee which is part of the paper book and nowhere assessee has explained the difference of cash deposited in bank of Rs.174.13 lakhs and Rs.1,72,76,000/-. This explains that AO has not carried out any enquiry and has merely filed the submission filed by the assessee. The column regarding Cash Deposits during demonetization was specifically introduced by Parliament in the Audit Report after the demonetization. 12. The Ld.AR has pleaded before us that the persons from whom alleged cash was received were Debtors of the assessee, ITA No.293/PUN/2022 Richfield Fertilisers Private Limited [A] 17 however, the Ld.AR has not filed any document to prove that these impugned persons were debtors of the assessee. The Assessee has not filed any document even during the assessment proceedings to prove that the impugned persons were debtors of the assessee. The Assessee has not filed copy of any Sale Bill issued by the assessee to any of these person to prove that the person had purchased some goods from the assessee and the amounts were outstanding. The AO has also not made any inquiry regarding the same. The said inquiry is essential because the assessee has claimed that all these persons from whom assessee has received cash were its debtors. 12.1 Though assessee has claimed that confirmation letters have been filed during assessment proceedings, however, assessee has not filed any such confirmation letter in the paper book to demonstrate his claim. 13. The Hon’ble Supreme Court in the case of CIT vs. Amitabh Bachchan 384 ITR 200 has held as under: “19. The learned C.I.T. took the view that notwithstanding the withdrawal of the claim by the assessee, in view of the earlier stand taken that the said expenses were incurred for security purposes of the assessee, the Assessing Officer ought to have proceeded with the matter as the assessee was following the cash system of ITA No.293/PUN/2022 Richfield Fertilisers Private Limited [A] 18 accounting and the filing of the re-revised return, prima facie, indicated that the additional expenses claimed had been incurred. In this regard, the following findings/reasons recorded by the learned C.I.T. in the order dated 20th March, 2006 would be of particular relevance: "Withdrawal of claim by assessee can be for variety of reasons and this does not mean that Assessing Officer should abandon enquiries regarding sources for incurring expenses. Assessee follows cash system of accounting and the claim regarding additional expenses was made through duly verified revised return. The claim was pressed during assessment proceedings carried on by A.O. after filing revised return and it was specially stated in letter dated 13.02.2004 that expenses were for security purposes and that payments have been made out of cash balances available etc. Under the circumstances, the Assessing Officer was expected to examine the matter further to arrive at a definite finding whether assessee incurred expenses or not and in case, actually incurred, then what were sources for incurring these expenses. Assessing Officer was satisfied on withdrawal of the claim and in my view, his failure to decide the matter regarding actual incurring of additional expenses and sources thereof resulted into erroneous order which is prejudicial to the interest of revenue." 20. An argument has been made on behalf of the assessee that notice under Section 69-C was issued by the Assessing Officer and thereafter on withdrawal of the claim by the assessee the Assessing Officer thought that the matter ought not to be investigated any further. This, according to the learned counsel for the assessee, is a possible view and when two views are possible on an issue, exercise of revisional power under Section 263 would not be justified. ITA No.293/PUN/2022 Richfield Fertilisers Private Limited [A] 19 Reliance in this regard has been placed on a judgment of this Court in Malabar Industrial Co. Ltd. v. CIT [2000] 243 ITR 83/109 Taxman 66 which has been approved in CIT v. Max India Ltd. [2007] 295 ITR 282/[2008] 166 Taxman 188 (SC) 21. There can be no doubt that so long as the view taken by the Assessing Officer is a possible view the same ought not to be interfered with by the Commissioner under Section 263 of the Act merely on the ground that there is another possible view of the matter. Permitting exercise of revisional power in a situation where two views are possible would really amount to conferring some kind of an appellate power in the revisional authority. This is a course of action that must be desisted from. However, the above is not the situation in the present case in view of the reasons stated by the learned C.I.T. on the basis of which the said authority felt that the matter needed further investigation, a view with which we wholly agree. Making a claim which would prima facie disclose that the expenses in respect of which deduction has been claimed has been incurred and thereafter abandoning/withdrawing the same gives rise to the necessity of further enquiry in the interest of the Revenue. The notice issued under Section 69-C of the Act could not have been simply dropped on the ground that the claim has been withdrawn. We, therefore, are of the opinion that the learned C.I.T. was perfectly justified in coming to his conclusions insofar as the issue No. (iii) is concerned and in passing the impugned order on that basis. The learned Tribunal as well as the High Court, therefore, ought not to have interfered with the said conclusion.” 13.1 Thus, in the case of Amitabh Bachchan, the Hon’ble Supreme Court has upheld the order u/s 263, even though the assessee has withdrawn the claim of expenditure by filling re- ITA No.293/PUN/2022 Richfield Fertilisers Private Limited [A] 20 revised return, on the ground that further inquiry was required on the impugned issue. 13.2 In the case under consideration, the ld.Pr.CIT has given a categorical finding that proper enquiry has not been conducted by the Assessing Officer and the Assessee has not filed all the details called for by the assessee. We have already observed in earlier paragraphs that AO has failed to carry out proper enquiry. This is not the case where two plausible views exists and AO adopted one. This is a case of lack of enquiry. Therefore, as per Explanation – 2 of section 263 the case falls in the category of “erroneous assessment prejudicial to the interest of revenue”. We have already discussed that Explanation 2 to Section 263 was introduced w.e.f. 01/06/2015.The explanation has introduced a deeming fiction. Earlier section 263 had not explained the meaning of the word “erroneous” but w.e.f. 01/06/2015, explanation 2 to section 263 has explained the meaning of word erroneous. The explanation 2 has widened the powers of the CIT/PCIT u/s 263. Therefore, w.e.f. 01/06/2015 any order passed without making required inquiry in the opinion of the Pr.CIT/CIT will be erroneous and prejudicial to the interest of the revenue. In the case under consideration, we have ITA No.293/PUN/2022 Richfield Fertilisers Private Limited [A] 21 already referred to specific instances of not making proper inquiry. Therefore, we are of the opinion that the assessment order is erroneous and prejudicial to the interest of revenue as the AO has failed to make necessary inquiry. Therefore, we uphold the order of ld.Pr.CIT passed under section 263 of the Act. Therefore, Ground No.2 and 3 of the assessee is dismissed. Distinguishing Case laws relied by the Ld. AR: 14. Ld.AR has relied on various case laws. Ld.AR has relied on the decision of Hon’ble Bombay High Court in the case of Nirav Modi [2017] 390 ITR 292(Bom). In this case the issue was Gift received from assessee’s father who was an NRI. In that case the AO was satisfied about Identity of donor, genuineness of transaction and creditworthiness of the donor. In the case of a gift only these three ingredients are required to be proved. Hence, the Hon’ble High Court held that Assessment Order was not erroneous. However, in the case under consideration, we have specifically pointed out failure of the AO in conducting inquiry which was essential. Hence, this case law is distinguishable on facts. ITA No.293/PUN/2022 Richfield Fertilisers Private Limited [A] 22 14.1 Similarly, the other case laws relied by the Ld.AR are distinguishable on facts. Most of the case relied by the Ld.AR pertain to the period prior to insertion of Explanation 2 to Section 263, hence, they are distinguishable. Ground No.1 : 15. The assessee has claimed that order under section 263 is bad in law as principle of natural justice is violated. We have studied the order under section 263, the replies filed by the assessee in response to notice under section 263. It is observed that ld.Pr.CIT has given proper opportunity to the assessee. It is also observed that order is not based on extraneous irrelevant consideration as pleaded in the grounds of appeal. Therefore, Ground No.1 of the assessee is dismissed Ground No.4 : 16. In the order under section 263 the ld.Pr.CIT has directed the AO to verify the cash deposits, source of cash deposits. Therefore, we find that ld.Pr.CIT has merely asked the AO to make certain enquiries. The ld.Pr.CIT has not asked the AO to frame the order in a particular way, as pleaded by assessee in the grounds of appeal. The ld.Pr.CIT has directed the AO to frame ITA No.293/PUN/2022 Richfield Fertilisers Private Limited [A] 23 the assessment order as per law. Therefore, we do not find these directions beyond power contemplated under section 263 of the Act. Therefore, Ground No.4 of the assessee is dismissed. Ground No.5 : 17. Ground No.5 is general in nature, does not need any adjudication as assessee has not modified or altered its grounds of appeal. Accordingly, Ground No.5 is dismissed. 18. In the result, appeal of the assessee is dismissed. Order pronounced in the open Court on 28 th April, 2023. Sd/- Sd/- (S.S.GODARA) (DR. DIPAK P. RIPOTE) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; ᳰदनांक / Dated : 28 th April, 2023/ SGR* आदेशकᳱᮧितिलिपअᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The CIT(A), concerned. 4. The Pr. CIT, concerned. 5. िवभागीयᮧितिनिध, आयकरअपीलीयअिधकरण, “बी” बᱶच, पुणे / DR, ITAT, “B” Bench, Pune. 6. गाडᭅफ़ाइल / Guard File. आदेशानुसार / BY ORDER, // TRUE COPY // Senior Private Secretary आयकरअपीलीयअिधकरण, पुणे/ITAT, Pune.