SURYADARSHAN AGRO INDUSTRIES PRIVATE LIMITED, Parbhani V. Principal Commissioner of Income-Tax -1, Nashik

ITA 440/PUN/2022

AI Insights

Suryadarshan Agro Industries Private Limited appealed against the order of the PCIT, which set aside the original assessment order for the assessment year 2017-18. The PCIT had observed that the Assessing Officer did not investigate the source of a cash deposit of Rs.83,79,000 made during the demonetization period, which was significantly higher compared to previous years. The PCIT issued a show-cause notice under section 263, leading to the setting aside of the original assessment order. The tribunal upheld the PCIT's decision, emphasizing the need for adherence to procedural norms in verifying the sources of substantial cash deposits during demonetization.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 137448 (ITAT-PUNE)
• Duration Of Justice: 9 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 28-03-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 29-05-2022
• 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; Set aside
• Section: 263; 2; 143(3); 142(1); 69A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “B”, PUNE BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER आयकर अपील सं. / ITA No.440/PUN/2022 िनधाᭅरण वषᭅ / Assessment Year : 2017-18 Suryadarshan Agro Industries Private Limited, New Mondha Parbhani, Parbhani- 431401. PAN : AAUCS1764Q Vs. PCIT-1, Nashik. Appellant Respondent आदेश / ORDER PER INTURI RAMA RAO, AM: This is an appeal filed by the assessee against the order of ld. Pr. Commissioner of Income Tax-1, Nashik [‘PCIT’] dated 21.03.2022 for the assessment year 2017-18. 2. The appellant raised the following grounds of appeal :- “1. On the basis of facts and the circumstances of the case and in law, the Ld. PCIT has erred in keeping the assessment order set apart without considering the facts of case. During the year under consideration the appellant company has deposited cash of Rs.83,79,0000/- which was from sale proceeds during the year and duly recorded in books of accounts. Whereas, Ld. PCIT has assume that the cash deposited during demonization period is from unexplained source and thus, kept set aside the assessment order passed u/s 143 of the Act which is not correct. 2. The appellant craves leave to add, amend, and alter any or withdraw any grounds of appeal at or before the time of Appeal hearing.” Assessee by : Shri Anand R. Partani Shri Prashant Kabra Revenue by : Shri Sardar Singh Meena Date of hearing : 29.03.2023 Date of pronouncement : 29.03.2023 ITA No.440/PUN/2022 23. Briefly, the facts of the case are that the appellant is a company incorporated under the provisions of the Companies Act, 1956. It was engaged in the business of manufacturing of oil. The Return of Income for the assessment year 2017-18 was filed on 04.11.2017 declaring a loss of Rs.67,00,825/-. The said return of income was selected for complete scrutiny under CASS and the assessment was completed by the Assistant Commissioner of Income Tax, Circle, Jalna (‘the Assessing Officer’) vide order dated 26.12.2019 passed u/s 143(3) of the Income Tax Act, 1961 (‘the Act’) accepted the returned loss. 4. Subsequently, the ld. PCIT, on examination of the assessment record, had come to the conclusion that the Assessing Officer had not examined the source of cash deposit of Rs.83,79,000/- made during the amortization period. The ld. PCIT further made the following observations :- “As compared with the previous financial year, it is noticed that there was abnormal increase in cash sales and the amount of cash deposited in Bank. During the F.Y.2016-17, from 01.04.2016 to 08.11.2016, the assessee company has deposited only Rs.4,50,000/- and after the announcement of demonetization, the amount deposited from 09.11.2016 to 31.12.2016 was at Rs.83,79,000/- into the Bank. During the previous year in F.Y.2015-16, the closing cash in hand from April 2015 to March 2016 was less than Rs.3 lakhs for every month. However, the opening cash balance as on 01.04.2016 was Rs.2,71,569/- only, which was month by month increased to Rs.85,87,094/- upto 8th November, 2016. The assessee company has claimed loss for the year under consideration and during the year the company incurred financial cost of Rs.59,79,711/- for eight months before the cash was deposited.” ITA No.440/PUN/2022 35. Based on the above observations, the ld. PCIT was of the opinion that the cash deposit was unexplained and, therefore, the Assessing Officer should have added the cash deposit as unexplained and brought to tax under the provisions of section 69A read with section 115BBE of the Act. 6. Accordingly, a show-cause notice dated 01.03.2022 u/s 263 was issued to the appellant calling upon the appellant to show-cause as to why the assessment order dated 26.12.2019 cannot be set-aside as it was erroneous and prejudicial to the interests of the Revenue. 7. In response to the show-cause notice, the appellant had filed a detailed submissions vide his letter dated 09.03.2022 which was extracted by the ld. PCIT in para 5 of his order. 8. On due consideration of the explanation furnished by the appellant, the ld. PCIT had concluded that non-enquiry as to the source of cash deposit, rendered the assessment order erroneous and prejudicial to the interests of Revenue, accordingly, set-aside the assessment order to the file of the Assessing Officer for the purpose of verification of source of cash deposit of Rs.83,79,000/- made during the demonetisation period. 9. Being aggrieved, the appellant is in appeal before us in the present appeal. ITA No.440/PUN/2022 410. It is submitted before us that during the course of assessment proceedings, the Assessing Officer had called for certain information and on being satisfied himself as to the source of cash deposit, no addition was made. 11. On the other hand, ld. CIT-DR placing reliance on the order of the ld. PCIT submits that the Assessing Officer had failed to examine the source of cash deposit made during the demonetisation period, as the assessment was taken up for complete assessment, the assessment order is erroneous and prejudicial to the interests of the Revenue. Thus, he submits that no interference of the order of revision passed by the ld. PCIT u/s 263 is called for. 12. 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 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 ITA No.440/PUN/2022 5order 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”. 13. Now, we proceed to examine the facts of the present case to reach conclusion whether or not the Assessing Officer had examined the source of cash deposit made during the demonetisation period. We had carefully gone through the notices issued u/s 142(1) and also information furnished in response to the said notices. Admittedly, the case was taken up for complete scrutiny. From the information called for u/s 142(1), there was no query by the Assessing Officer as to the source of cash deposit made during the demonetisation period. In fact, the CBDT had issued a SOP to all the Assessing Officers in the field to verify the cash deposits made during the demonetisation period, non-following the SOP issued by the CBDT, renders the assessment order erroneous and prejudicial to the interest of the Revenue under clause (c) of Explanation 2 inserted to section 263 of the Income Tax Act, 1961. 14. Therefore, in the light of the above discussion, we are of the considered opinion that the assessment order passed by the Assessing Officer is erroneous and prejudicial to the interests of the ITA No.440/PUN/2022 6Revenue. Thus, we do not find any illegality in the revision order passed by the ld. PCIT u/s 263 of the act. 15. In the result, the appeal filed by the assessee stands dismissed. Order pronounced on this 29th day of March, 2023. Sd/- Sd/- (PARTHA SARATHI CHAUDHURY) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; ᳰदनांक / Dated : 29th March, 2023. Sujeet आदेश कᳱ ᮧितिलिप अᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The Pr. CIT-1, Nashik. 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.