Affaque Builders Private Limited, Ahmedabad V. The PCIT-1, Ahmedabad

ITA 299/AHD/2024

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 5529 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 14-05-2024
• Assessment Year: 2013-2014
• Appeal Filed On: 18-02-2024
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revision of order; Assessment record
• Section: 147; 68; 148; 263; 143(3); 40(a)(ia)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “C” BENCH Before: Smt. Annapurna Gupta, Accountant Member And Shri T.R. Senthil Kumar, Judicial Member Affaque Builders Private Limited 39-40, Sagar Complex, Nr. Savan Hotel Sarkhej Ahmedabad-382210, Gujarat PAN: AAECA7910N (Appellant) Vs The Pr.CIT-1, Ahmedabad (Respondent) Assessee Represented: Shri Jignesh Parikh, A.R. Revenue Represented: Shri R.N. Dsouza, CIT-DR Date of hearing : 15-05-2024 Date of pronouncement : 30-07-2024 आदेश/ORDER PER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER:- This appeal is filed by the Assessee as against Revision order dated 06.02.2024 passed by the Principal Commissioner of Income Tax, Ahmedabad-1 revising the assessment under section 263 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) arising out of the re-assessment order passed under section 147 r.w.s. 144 of the Act relating to the Assessment Year 2013-14. ITA No. 299/Ahd/2024 Assessment Year 2013-14 I.T.A No. 299/Ahd/2024 A.Y. 2013-14 Page No Affaque Builders Pvt. Ltd. vs. PCIT 2 2. The brief facts of the case are that the assessee is a Private Limited Company engaged in the business of construction filed its Return of Income for the Asst. Year 2013-14 on 01.10.2013 declaring a loss of (-) Rs.2,81,953/-. Information received from Investigation Unit that the assessee had huge cash deposits of Rs.1,04,47,400/- and cash withdrawal of Rs.48,00,000/- in its bank account maintained with Bank of India, Sarkhej Branch, Ahmedabad during the financial year. Therefore the assessment was reopened by issuing a notice u/s. 148 of the Act. After detailed verification and calling information from the assessee, reassessment was completed by making addition of unexplained cash deposits u/s. 68 of Rs. 1,00,00,000/- disallowance u/s. 40A(3), u/s. 40(a)(ia) and u/s. 40A(2)(b) of the Act thereby assessing the total income of Rs.1,67,43,373/-. 2.1. On perusal of the above reassessment records by Ld. PCIT, the assessee company has made total cash deposits of Rs.2,09,79,700/-, however in the reassessment order, the Assessing Officer has made an addition only to the extent of Rs.1 crore. Thus the reassessment order passed by the A.O. is erroneous and prejudicial to the interest of Revenue, thereby issued a show cause notice u/s. 263 of the Act as to why the reassessment order should not be revised. In response, the assesse filed its reply dated 18.01.2024 stating that once opening balance, cash withdrawal and sales are accepted, this automatically justifies the genuineness of cash deposits in bank and hence, as a matter of fact, addition of Rs.1 crore made by the A.O. itself absolutely wrong and there is no question of assessment being erroneous insofar as I.T.A No. 299/Ahd/2024 A.Y. 2013-14 Page No Affaque Builders Pvt. Ltd. vs. PCIT 3 it is not prejudicial to the interest of Revenue and thus the Revision proceedings is liable to be dropped. However, the Ld. PCIT held that the Assessing Officer erred in making partial addition Rs.1 crore u/s. 68 of the Act whereas the A.O. should have made total addition of Rs.2,09,79,700/- u/s. 68 of the Act. Thus Ld. PCIT held that the A.O. erred in completing the reassessment order which has resulted in loss to the Revenue and thereby set aside the reassessment order passed by the Assessing Officer with a direction to the A.O. to pass fresh assessment order, in accordance with law and duly examining the facts of the case by giving reasonable opportunity of hearing to the assessee. 3. Aggrieved against the same, the assessee is in appeal before us raising the following Grounds of Appeal: 1. That on the facts and the circumstances of the case and in law, the learned Principal Commissioner of Income Tax -1, Ahmedabad ("ld. PCIT- 1") has erred in initiating the revisionary proceedings and passing an order under section 263 of the Income-tax Act, 1961 ("the Act") for the year under consideration. 2. That on the facts and the circumstances of the case and in law, the proceedings under section 263 of the Act are not in accordance with law and consequently ought to be struck down. 3. That on the facts and the circumstances of the case and in law, the Ld. PCIT-1 has erred in treating the Assessment Order dated 31.03.2022 as erroneous, considering it to be prejudicial to the interests of the revenue. 4. The Ld. PCIT-1, Ahmedabad failed to appreciate that the first appeal of the Appellant against addition made in the assessment order on impugned issue was pending before the Commissioner (Appeals) and therefore the order u/s 143(3).r.w.s 147 could not be revised u/s 263 of the Act. 4. We have heard the rival submissions in detail and perused the Paper Book filed by the assessee. During the reassessment I.T.A No. 299/Ahd/2024 A.Y. 2013-14 Page No Affaque Builders Pvt. Ltd. vs. PCIT 4 proceedings under faceless assessment, the assessee filed its reply which reads as follows: “......In response to the above referred notice the assessee would like to submit most respectfully as under; 1. Your honour has raised concern as regards genuineness of the cash deposited in all amounting to Rs 82,01,154/-during the year under assessment. The assessee has in its earlier reply has submitted that the said cash deposit out of cash balance at the beginning of the year which is not only disclosed in the financial statement but also assessed u/s 143(3) and out of money received from the various building construction work done during the year under assessment. The list of the persons for whom the assessee has carried out the construction/renovation work is enclosed herewith and marked as Annexure A to this document. The assessee can provide the affidavit of any of the said person mentioned in the list if so desired by your good office. The assessee has also provided the address as well hence your good office can also cross confirms if required by Issuing notice u/s 133(6). 2. Further we also enclose herewith following documents as requested vide earlier notice. Sr. No. Particulars Annexure Reference No 1 Cash Collection Sheet A 2 Axis Bank Ltd. – Bank Book B 3 Bank of India - Bank Book C 4 ICICII Bank Ltd - 1029 - Bank Book D 5 ICICI Bank Ltd - 2977 - Bank Book E 6 Monthly Cash Deposit In Bank Summary F 7 Monthly Purchase Summary G 8 Monthly Sales Summary H 9 Standard Chartered Bank Book I 10 Day Wise Cash Book j Thus in view of the above referred facts and circumstances of the case, the cash deposit stands justified and no addition on this issue should be called for however if your honour is not satisfied with the reply of the assessee then before passing the assessment order an opportunity of personal hearing through video conferencing be granted and assessee be obliged.” 4.1. Further to the show cause notice issued by the Assessing Officer, the assessee replied as follows: I.T.A No. 299/Ahd/2024 A.Y. 2013-14 Page No Affaque Builders Pvt. Ltd. vs. PCIT 5 “.......With reference to the above referred notice, the assessee would like to statement and or to submit most respectfully as under, 1. The assessee has supplied all the bank statements vide its earlier however the assessee submits the same again for your ready reference. The same are enclosed herewith and marked as Annexure A to this document. 2. The assessee has vide earlier reply submitted that cash deposited in the bank account is out of opening cash balance, previous withdrawals and cash deposited out of cash collection from the customers for the construction activities carried out by the assessee. The reconciliation is give under; Sr. No Particulars Amount in Rs Cash Balance as per Audited Balance Sheet as on 1 st April. (Please note that the same has been accepted in the assessment order gassed u/s 143(3) for the previous- financial year) The COPY is attached as Annexure B B Add Cash Collection from Customers for the construction activity done for them. Please note that the assessee has already credited the same to the Profit and Loss Account. The assessee has also supplied the list of the parties from whom the said amount is received along with Name and Address in the last reply filed with your good office. The assessee has also volunteered to file affidavit of few of the customers as may be selected by your good office but since no such communication is received from you good till now the assessee has suomoto filed notarized affidavit few customers to substantiate genuineness of its claim as Annexure-C to this document. 127,63,998/- C Add Cash Withdrawals from the bank accounts 87,20,400/- D Total (A+B+C) 308,09,021/- E Cash Expense incurred during the year including other cash payments 85,73,791/- F Cash Deposited in bank 209,79, 700/- I.T.A No. 299/Ahd/2024 A.Y. 2013-14 Page No Affaque Builders Pvt. Ltd. vs. PCIT 6 G Closing Cash Balance (D-E-F) 12,55,530/- H Cash balance as on 31 st March as per Audited Financial Statement 12,55,530/- I Un reconciled difference (G-H) NIL 3. Thus from the perusal of the above referred reconciliation submitted by the assessee it is clear beyond any iota of doubt that the cash deposit of Rs 2.09 Cr is precisely out of Opening Cash balance of Rs 93.24 Lacs, Revenue for the current year Rs 1.27 Cr and cash withdrawal from Bank Rs 87 Lakhs. Your honour has in the above referred notice compared only cash deposit with the revenue of the assessee only. Further the opening cash balance is duly accepted in the last year assessment order as well. Thus in view of the same no addition should be called for and returned income should be accepted. We hope that your good office will find this in order and the assessee assures your good office best co-operation to ensure smooth completion of the assessment. In case your good office is not satisfied with the reply filed by the assessee then before passing the order an opportunity of personal hearing be granted and assessee be obliged.” 5. On perusal of the impugned Revision order passed by the Ld. PCIT, it is not demonstrated how the reassessment order passed by the Assessing Officer as erroneous and prejudicial to the interest of Revenue. Further the Ld. PCIT has discussed the powers u/s. 263 of the Act with various case laws, but failed to bring out how the reassessment order by the A.O. as erroneous and prejudicial to the interest of Revenue. Further the Ld. PCIT failed to consider the replies filed by the assessee before the Assessing Office explaining the cash deposits of Rs.2.09 crores are precisely out of opening cash balance of Rs.93.24 lacs, Revenue for the current year of Rs.1.27 crores and cash withdrawal from Bank of Rs.87 lacs. Further the opening cash balance is duly accepted in the previous assessment year while passing the assessment order. Without considering the above submission and proper verification of records I.T.A No. 299/Ahd/2024 A.Y. 2013-14 Page No Affaque Builders Pvt. Ltd. vs. PCIT 7 the Ld. PCIT directed the Assessing Officer to make the entire addition of Rs.2,09,79,700/- u/s. 68 of the Act. Further, it is seen from the reply filed by the assessee before the Assessing Officer that the Ld. A.O. had made enquiries on the issues and however made the addition of Rs. 1 crore on account of unexplained cash deposits. Thus, in our considered view, the Ld. PCIT has not brought out clearly how the reassessment order passed by the A.O. as erroneous and prejudicial to the interest of Revenue. Thus the Revision proceedings initiated by the Ld. PCIT is liable to be dismissed. 6. Since the Revision proceedings itself is quashed, the remaining Grounds of Appeal raised by the assessee does not require specific adjudication. 7. In the result, appeal filed by the Assessee is hereby allowed. Order pronounced in the open court on 30 -07-2024 Sd/- Sd/- (ANNAPURNA GUPTA) (T.R. SENTHIL KUMAR) ACCOUNTANT MEMBER True Copy JUDICIAL MEMBER Ahmedabad : Dated 30/07/2024 आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपीलȣय अͬधकरण, अहमदाबाद