RAMESH KUMAR PUROHIT , MUMBAI V. PR. CIT,CITY-17, MUMBAI

ITA 692/MUM/2021

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 0394 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2011-2012
• Appeal Filed On: 04-05-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revision of order; Period of limitation; Assessment record; Reassessment proceedings
• Section: 68; 148; 263; 2; 143(3); 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “D” MUMBAI BEFORE MS. SUCHITRA RAGHUNATH KAMBLE (JUDICIAL MEMBER) AND SHRI AMARJIT SINGH (ACCOUNTANT MEMBER) ITA No. 692/MUM/2021 Assessment Year: 2011-12 Ramesh Kumar Purohit, Sahara Shopee, Shop No. 191, Off. Manish Market, S.S. Musafirkhana Road, Mumbai-400 001. Vs. Pr. CIT, City-17, Room No. 120, 1 st floor, Kautilya Bhavan, C-41 to C- 43, G Block, Bandra Kurla Complex, Bandra (E), Mumbai-400051. PAN No. AXMPP 6458 N AppellantRespondent Assessee by:Mr. Prakash Jhunjhunwala, AR Revenue by:Mr. D.K. Gupta, DR D at e o f H e a r i n g:23/12/2021 D a t e o f p r o n o u n c e m e n t:10/01/2022 ORDER PER AMARJIT SINGH, A.M. This is an appeal filed by the assessee. The relevant assessment year is 2011-12. The appeal is directed against the order u/s 263 of the Income Tax Act 1961, (the ‘Act’) passed by the Pr. Commissioner of Income Tax-17, Mumbai [in short ‘Pr. CIT’]. 2.The grounds raised by the assessee are as under : 1.0On facts and circumstances of the case and in law, Ld. Pr. CIT erred in passing the revision order ws.263 though the reassessment order passed u/s.143(3) Ramesh Kumar Purohit ITA No. 692/M/2021 2 r.w.s.147 is not erroneous and in so far is not prejudicial to the interests of the revenue; 2.0The Ld. Pr. CIT, before setting aside the assessment order de novo on invoking Expl. -2(a) to Sec 263(1), ought to have considered the understated facts, being; aThe Ld. Pr. CIT erred grossly in ignoring the original assessment order passed us 143(3) dated 7/3/2014, wherein the addition of suppressed profits corresponding to cash deposits had already been made of Rs.2,09,208/-; bThe Ld. AO had passed the original and reassessment orders on conducting proper inquiries on due application of mind and on considering all material facts and had made the understated additions:- (i)Profit estimated @ 8% of Rs.53,48,284/-₹9,09,208/- (ii)Addition u/s 68 of unexplained cash deposits of₹6,50,200/- cThe Ld. AO, on following the assessment order of earlier year (A.Y- 2010-11), had adopted the concept of real income and estimated the profit @ 8% on cash sales; dThe Ld. AO had made the addition u/s 68 of unexplained cash deposits of Rs.6.50.200/-: 3.0The order passed w/s 263 is bad in law since there is no lack of inquiry on part of Ld. AO and the cases involving inadequate inquiry does not empower the Pr. CIT to invoke the revisionary powers u/s Sec 263 of the Act. 2.1All the grounds of appeal of the assessee are interconnected based on identical facts and issue, therefore, for the sake of convenience all these grounds are adjudicated together. 3.The fact in brief is that the original assessment u/s 143(3) of the Act was made on 7 th March 2014 determining total income at ₹8,72,314/-. Thereafter, the Assessing Officer has made assessment u/s 143(3) r.w.s. 147 of the Act for the year under consideration on 17 th December 2018 determining total assessed income at ₹9,89,646/-. Subsequently, the Ld. Pr. CIT-17, Mumbai passed order u/s 263 of the Act on 17 th December 2018 holding that the assessment order passed u/s 143(3) r.w.s. 147 of the Act is erroneous in so far Ramesh Kumar Purohit ITA No. 692/M/2021 3 as it was prejudicial to the interest of the Revenue within the meaning of section 263 of the Act and directed the AO to frame the assessment de novo after conducting inquiry on the issue of cash deposit of ₹53,56,450/-. The Ld. Pr. CIT was of the view that during the assessment proceedings, the AO has added only difference in amount of cash deposit and returned income (₹53,56,450 – 47,04,250) = 6,50,200 and the AO has not enquired into the source of entire cash deposit. 3.1During the course of appellate proceedings before us, the Ld. counsel has vehemently contended that the issue of cash deposit of ₹53,56,450/- in the ICICI Bank account was already considered by the Assessing Officer in the original assessment order u/s 143(3) dated 7 th March 2014. Thereafter, the same issue has been taken up in the reassessment order u/s 147 of the Act dated 17 th December 2018. It is further submitted that the Assessing Officer has made adequate inquiries in the original assessment proceedings u/s 143(3) and reassessment proceedings u/s 147 of the Act. The Ld. counsel has referred the various pages of the Paper Book pertaining to the detail of information and copies of documents submitted during the course of assessment proceedings and before the Ld. Pr. CIT in the proceedings u/s 263 of the Act. The Ld. counsel has also placed reliance on judicial pronouncement in the case of CIT v. Alagendran Finance Ltd. (162 Taxman 465 (SC) & CIT v. ICICI Bank Ltd. (19 taxmann.com 142 (Bom-HC). The Ld. counsel has also submitted that order cannot be revised u/s 263 if the Assessing Officer had adopted one of the two possible views and same cannot be revised if the AO had already applied his mind. In support of his contentions, the Ld. counsel has referred judicial pronouncement (i) Malabar Industrial Co. Ltd. v. CIT 109 Taxman 66 (SC), (ii) Ramesh Kumar Purohit ITA No. 692/M/2021 4 CIT v. Kelvinator of India Ltd. 12 taxmann.com 445 (Del-HC), (iii) CIT v. Ballarpur Industries Ltd. 85 taxmann.com 37 (Bom-HC) and (iv) CIT v. Leisure Wear Exports Ltd. 11 taxmann.com 54 (Del-HC). 4.On the other hand, the Ld. DR contended that the AO has not made proper inquiry and referred Explanation 2 of section 263 of the Act. 5.Heard both the sides and perused the material on record. The Ld. Pr. CIT videorder passed u/s 263 of the Act dated 18th March 2021 held that Assessing Officer has not inquired into the source of cash deposit of ₹53,56,450/- found in the bank account of the assessee. Therefore, assessment was set aside to frame the order of assessmentde novo. In this regard, we have gone through the original assessment order u/s 143(3) of the Act passed on 17 th March 2014 and noticed that at para 4 of the assessment order the Assessing Officer has specifically discussed the issue of cash deposit at page No. 6 to 8 of the assessment order. The Assessing Officer stated that the assessee has made cash deposit into saving account in ICICI Bank to the extent of ₹51,12,450/- and the assessee was asked to explain the source of the cash deposit and also how the same was reflected in the return of income filed for the year under consideration. The Assessing Officer has conducted inquiry by issuing notice u/s 142(1) of the Act. In response to the notice u/s 142(1) of the Act, the assessee has submitted that the cash was deposited into bank account from the client’s sale transaction and there was deposit and withdrawal of cash from the bank account. After taking into consideration, the submission and explanation of the assessee, the AO has taken the total cash deposit at ₹51,12,450/- and the Ramesh Kumar Purohit ITA No. 692/M/2021 5 sale of ₹2,35,834/- totaling to ₹53,48,284/- as the total turnover of the assessee and estimated net profit @ 8% to the amount of ₹9,09,208/-. Subsequently, the case of the assessee was reopened on the similar issue on the basis of information received from the DDIT Investigation Unit, Mumbai that the assessee has deposited cash in his saving bank account maintained with ICICI Bank. During the course of reassessment u/s 143(3) r.w.s. 147 of the Act, the AO has again conducted inquiries in respect of impugned cash deposit by issuing of notices u/s 148 dated 22.03.2018 and notices u/ 142(1) dated 05.11.2018 and 07.12.2018. During the course of reassessment proceedings, the assessee has also admitted before the AO that there was mistake in the return of income filed and offered income of ₹3,76,348/- and the turnover of ₹47,04,258/-. After considering the explanation of the assessee, the AO has stated that as per the AIR information, the assessee has deposited cash of ₹53,00,000/- whereas the assessee has shown turnover of ₹47,00,000/- only. Therefore, the AO has made difference of ₹6,50,200/- as addition in the total income of the assessee as unexplained cash deposit. It is demonstrated from the assessment order u/s 143(3) dated 17.03.2014 and reassessment order u/s 143(3) r.w.s. 147 dated 17.12.2018 that the focus of the assessment was mainly on the issue of impugned cash deposit made in the ICICI Bank account and the AO had extensively discussed at length the nature of cash deposit in both the assessment orders after making inquiries by issuing of notice u/s 142(1) of the Act. Ramesh Kumar Purohit ITA No. 692/M/2021 6 5.1In the light of the above facts, it is clear that the issue of cash deposit has already been considered by the Assessing Officer in the assessment order u/s 143(3) and reassessment order made u/s 143(3) r.w.s. 147 of the Act. 5.2With the assistance of Ld. Representative, we have also gone through the judicial pronouncement referred by the Ld. counsel in the case of Alagendran Finance Ltd. (supra),“whether since Commissioner in exercising its revisional jurisdiction reopened order of assessment in relation to lease equalization fund, which was not subject of reassessment proceedings, period of limitation provided for in section 263(2) would begin to run from date of order of original assessment and not from order of reassessment”. 5.3The Ld. CIT(A) vide order dated 06.04.2018 has confirmed the aforesaid addition made by the AO u/s 143(3) of the Act. In the case of CIT v. Ballarpur Industries Ltd.(2017)85 taxmann.com37 (Bombay). TheHon’ble Jurisdictional High Court held“whether merely because Commissioner takes a different view to that of the Assessing Officer will not certainly justify exercise of his powers u/s 263 of the Act”. 5.4We have also gone through the decision of Malabar Industrial Co. Ltd. (supra), wherein it is held“when the ITO adopts one of the course permissible in law and it has resulted in loss of Revenue or where two views are possible and the ITO has taken one view with which the Commissioner does not agree. It cannot be treated as erroneous order prejudicial to the interest of the Revenue unless the view taken by the ITO is unsustainable in law”. Ramesh Kumar Purohit ITA No. 692/M/2021 7 5.5We have also gone through the decision of Kelvinator of India Ltd. (supra), wherein it is held“if the Assessing Officer has adopted one of the courses permissible in law which resulted in loss of Revenue or where two view are possible and Assessing Officer has taken one view with which Commissioner does not agree it cannot be treated as erroneous order prejudicial to the interest of Revenue unless view taken by the Assessing Officer is unsustainable in law”. 5.6In the light of above facts and judicial findings, it is observed that in the case of assessee, the Assessing Officer has already made detailed inquiry both during the course of original assessment u/s 143(3) of the Act and during the course of reassessment u/s 143(3) r.w.s. 147 of the Act as elaborated above in this order and no material has been brought on record by Ld. Pr. CIT which showed that assessee had furnished any false evidence. Therefore, the order u/s 263 of the Act is not justified. Therefore, the same is quashed and grounds raised by the assessee are allowed. 6.In the result, the appeal filed by the assessee is allowed. Order pronounced in the open Court on 10/01/2022. Sd/-Sd/- (SUCHITRA RAGHUNATH KAMBLE)(AMARJIT SINGH) JUDICIAL MEMBERACCOUNTANT MEMBER Mumbai; Dated: 10/01/2022. Rahul Sharma, Sr. P.S. Copy of the Order forwarded to : 1.The Appellant 2.The Respondent. 3.The CIT(A)- 4.CIT 5.DR, ITAT, Mumbai Ramesh Kumar Purohit ITA No. 692/M/2021 8 6.Guard file. BY ORDER, //True Copy// (Sr. Private Secretary) ITAT, Mumbai