Tinaben Dipakbhai Patel, Navsari V. Principal Commissioner of Income Tax, Valsad

ITA 64/SRT/2017

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 2487 (ITAT-SURAT)
• Duration Of Justice: 4 year(s) 5 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-02-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 07-02-2022
• Assessment Year: 2007-2008
• Appeal Filed On: 21-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revision of order; Peak credit; Difference of opinion; Corroborative evidences; Change of opinion; Reassessment proceedings
• Section: 147; 131; 148; 263; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER ITA No.64/SRT/2017 (AY 2007-08) (Hearing in Virtual Court) Tinaben Dipakbhai Patel, Behind Ramji Mandir, Juna Thana, Near Patidar Samaj Wadi, Navsari. PAN: AMEPP 4811 G Vs The Principal Commissioner of Income Tax – Valsad. Appellant/ Revenue Respondent/ Assessee Assessee by None Revenue by Shri H.P.Meena – CIT(DR) Date of hearing 08/02/2022 Date of pronouncement 09/02/2022 Order under section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by the Assessee is directed against order of ld.Principal Commissioner of Income Tax-Valsad passed under section 263 of the Act dated 23.03.2017 for the Assessment Year (A.Y.) 2007-08. The Assessee raised following grounds of appeal: “1. As regards order passed u/s 263 of the Act. 1.1 The Ld PCIT was not just and proper on the facts of the case and in law in passing the order u/s 263 considering the assessment order passed u/s 143(3) as erroneous and prejudicial to the Interest of the Revenue. 2. The appellant prays that 2.1 The order passed by the Ld PCIT may be quashed. 2.2 Personal hearing may be granted. 2.3 Any other relief that your honours may deem fit may deem fit may be granted. 2.4 The appellant craves leave to add, amend, alter or delete any or all of the above grounds of appeals.” ITA No.64/SRT/2017 (AY 2007-08) Tinaben Dipakbhai Patel, Navsari 2 2. Brief facts of the case are that no return of income was filed by the assessee for the assessment year (A.Y.) 2007-08. The case of assessee was reopened under section 147 of the Act by recording the reasons that assessee deposited cash amount of Rs.11.50 lakhs in her savings bank account and that income to that extent has escaped assessment. The Assessing Officer (AO) after recording the reasons issued notice under section 148 of the Act dated 29.03.2014. In response to the notice under section 148 of the Act, the assessee filed her return of income on 01.08.2014 declaring income of Rs.1,34,510/-. In the reassessment proceedings, the AO noted that there was cash deposit of Rs.11.50 lakhs in her bank account and the assessee asked to explain the source of cash deposit with supporting evidence. In response to show cause notice, the assessee produced the bank account in Bank of Baroda. The statement of assessee was recorded under section 131 on 07.01.2015. In the statement, the assessee admitted that money deposited in the bank account belongs to her and the same is received from her relatives in her marriage and have own business of stretching and embroidery work. The explanation of assessee was not accepted by the AO by holding that it is not reflected in the books of accounts. On scrutiny, bank account, the AO was of the view that sizeable cash was deposited and withdrawn frequently and the assessee has issued cheques to other persons. The AO further was of the view that whole ITA No.64/SRT/2017 (AY 2007-08) Tinaben Dipakbhai Patel, Navsari 3 of the cash deposit cannot be treated as unaccounted, it may also be possible that cash may be relating to earlier years and earning of assessee through activities in earlier years. 3. Accordingly, the AO issued fresh show cause notice as to why peak balance of Rs.3,70,948/- appearing in the bank account should not be treated as unexplained cash deposit. The AO recorded that assessee failed to furnish satisfactory reply, and that the assessee agreed for proposed addition, thus, the AO made addition of Rs.3,70,948/- in the assessment order dated 20.01.2015 passed under section 143(3) read with section 147. 4. The assessment order passed by the AO was revised by the ld.Pr.CIT by exercising his power under section 263 of the Act. Before passing the order under section 263 of the Act, the ld.Pr.CIT issued show cause notice that assessment order passed by the AO is erroneous as well as prejudicial to the interest of the Revenue and issued show cause notice under section 263 of the Act dated 17.02.2017 in fixing the date of hearing on 02.03.2017. In the show cause notice, the ld.Pr.CIT recorded that the assessment order passed by the AO is erroneous and so far as prejudicial to the interest of the Revenue on the fact that the AO adopted peak credit in lieu of cash deposit in bank account. The peak credit comes to Rs.12,26,302/- against figure of Rs.3,70,948/-. During the assessment, the assessee claimed that she was doing business of ITA No.64/SRT/2017 (AY 2007-08) Tinaben Dipakbhai Patel, Navsari 4 embroidery and stitching, but no evidence in support of her claim was furnished about the business activity. The AO accepted the claim without making any enquiry. Further, the AO was fully aware of not filing return of income, the AO accepted various expenses. 5. The ld.Pr.CIT recorded that none appeared on behalf of the assessee despite the service of show cause notice. The ld.Pr.CIT called the details from the banker of assessee and concluded that amount deposited during the year is Rs.14,76,600/- and that the AO accepted the explanation of assessee without making any investigation. The AO accepted the claim on the basis of 7/12 extract of joint ownership of assessee and to other co-owners. No proof of agricultural operation was furnished. The ld.Pr.CIT further recorded that in its show cause notice under section 263 of the Act dated 16.02.2017, the issue of unsecured loan of Rs. 12 lacs availed by the assessee. The AO has not carried out any verification and accepted the claim of unsecured loan. The ld.Pr.CIT held that assessment order is passed by the AO without making any enquiries and set-aside the same with the direction to pass the fresh assessment order after giving opportunity to the assessee. Aggrieved by the order of ld.Pr.CIT, the assessee has filed present appeal before this Tribunal. 6. None appeared on behalf of the assessee when the case was taken up for hearing. Perusal of record reveals that assessee was duly served with the ITA No.64/SRT/2017 (AY 2007-08) Tinaben Dipakbhai Patel, Navsari 5 notice through RPAD. Consequent upon the service of notice, Shri Suresh K.Kabra, CA learned authorised representative (AR) filed his Authority Letter and attended the proceedings on 02.06.2021 and 08.09.2021. However, vide his letter dated 08.09.2021 Shri Suresh K. Kabra, CA/ AR of the assessee filed application for withdrawal of his authority letter, thereafter the assessee was again served with the fresh notice, but despite service of notice, none appeared on behalf of the assessee nor any application for adjudication is filed. Therefore, we left no option except to hear the submission of ld.CIT(DR) for the Revenue to decide the appeal on the basis of material available on record. 7. The learned Commissioner of Income Tax – departmental representative (ld.CIT-DR) for the Revenue submits that the order passed by the AO is erroneous and so far as prejudicial to the interest of the Revenue. The AO made addition of peak credit instead of making addition of entire credit. The AO passed assessment order without further verification and made addition of peak credit. The ld.Pr.CIT in the show cause notice, as well as in his finding held that the AO accepted the explanation of assessee about carrying out any investigation about the source of cash. No evidence was furnished about the business activities carried out by the assessee. The ld.CIT(DR) for the Revenue submits that he fully supported the order of ld.Pr.CIT. ITA No.64/SRT/2017 (AY 2007-08) Tinaben Dipakbhai Patel, Navsari 6 8. We have considered the submission of ld.CIT-DR for the Revenue and also perused the order of Lower Authorities carefully. We find that the AO made reopening by recording reasons that there was cash deposit in bank account of assessee. During the assessment, the assessee was asked to explain the source of cash deposit in Savings Bank Account No.4989 with Bank of Baroda. The AO recorded the statement of assessee under section 131 of the Act. In the statement, the assessee disclosed that amount deposited in the bank account is received from relative in her marriage and the earning of her own in the business of stitching and embroidery work. The AO after considering the case of assessee came to a conclusion that whole of the cash cannot be treated as unaccounted, it may be possible that cash may be relating to earning of assessee of earlier years, though deposited by assessee in this year only, accordingly, the AO again issued a fresh show cause notice as to why peak balance appearing in the bank account issued a fresh show cause notice as to why peak balance appearing in the bank account should not be treated as unexplained cash deposit. The AO recorded that assessee agreed for proposed addition. And accordingly made addition of peak credit while passing assessment order. 9. The ld.Pr.CIT revised the assessment order which is impugned before us.. We find that before revising the assessment order, the ld.Pr.CIT issued show cause ITA No.64/SRT/2017 (AY 2007-08) Tinaben Dipakbhai Patel, Navsari 7 notice dated 17.02.2017 wherein the ld.Pr.CIT identified the issue that the AO passed the assessment order without making any further enquiry and in absence of evidence of actual business of embroidery, the AO should not have accepted the peak credit, particularly when it was undisclosed bank account. We find that ld.Pr.CIT recorded the no reply was filed by the assessee nor the proceedings were attended before him. The ld.Pr.CIT obtained the copy of bank statement and the details were tabulated by him. On the basis of statement, the ld.Pr.CIT was of the view that the amount deposited during the year was Rs.14,76,600/-. It is further mentioned that the AO accepted the explanation of assessee without making any enquiry about the source of cash and that accepted the claim of assessee on the basis of 7/12 extract of ownership of land and that no proof agricultural land operation was carried out by assessee. We find that there is no such reference about the claim of assessee about 7/12 extract on ownership in entire assessment order. We further find that the ld.Pr.CIT in para 7 of his order recorded that in show cause notice under section 263 of the Act dated 16.02.2017 issue of claim of unsecured loan was taken and that the AO has not bothered to examine the issue. We find that the ld.Pr.CIT in the present case issued show cause notice under section 263 of the Act dated 17.02.2017 and there is no reference of issue regarding unsecured loan of Rs.12 lakhs. In our view, these facts are ITA No.64/SRT/2017 (AY 2007-08) Tinaben Dipakbhai Patel, Navsari 8 not at all related to the facts of the issue under consideration. The ld. Pr.CIT proceeded on the facts of some other case. Neither there was such issue of unsecured loan in assessment order, nor raised in the show cause notice dated 17.02.2017, thus, the reference of such unsecured loan is absolutely misplaced. 10. So far as, identification of issue on cash deposit is concerned, we find that the AO extensively examined the issue during the assessment and make addition on account of peak credit. The Hon'ble Jurisdictional High Court in Aryan Arcade Ltd., Vs PCIT (2019) 412 ITR 277 (Gujarat) held that merely because Commissioner held a different belief that would not permit him to take the order in revision, it if further held that when Assessing Officer made full enquiry, he made up his mind, the notice of revision is not valid. In CIT Vs Nirma Chemical Works (P) Ltd (2009) 309 ITR 67, the Hon’ble High Court also held that when assessing officer after making due inquiries had adopted one of the view and granted partial relief, merely because Commissioner took a different view of the matter, it would not be sufficient to permit Commissioner to exercise his powers under section 263. 11. In our view, the AO during the assessment after examination of the fact of the case has taken reasonable, plausible and legally sustainable view. In our ITA No.64/SRT/2017 (AY 2007-08) Tinaben Dipakbhai Patel, Navsari 9 view, if the view is taken by the AO is not accepted and the ld.Pr.CIT is of the other view, no revision is permissible for change of opinion. In our view, the twin condition has prescribed under section 263 of the Act is not fulfilled in the present case. Therefore, the order under section 263 of the Act is set- aside, accordingly, grounds of appeal raised by the assessee are allowed. 12. In the result, appeal of the Assessee is allowed. Order announced on 9 th February, 2022 in the open court and result was placed on the notice board. Sd/- Sd/- (Dr ARJUN LAL SAINI) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Surat, Dated: 09/02/2022 /SGR* Copy to: 1. Appellant 2. Respondent 3. CIT(A) 4. CIT 5. DR 6. Guard File By order / / TRUE COPY / / Sr.Pvt. Secretary, ITAT, Surat