SHASHANK SUNILENDU ROY,MUMBAI V. CIT (INTERNATIONAL TAXATION), MUMBAI-4, MUMBAI

ITA 2306/MUM/2024

AI Insights

The case revolves around the reassessment of Shashank Sunilendu Roy for the Assessment Year 2013-14, where the CIT invoked Section 263 of the Income Tax Act, claiming the original assessment was erroneous and prejudicial to the revenue's interest. The CIT's action was based on the assessee's failure to file a return and a substantial cash deposit of Rs. 24,00,000 in his bank account, which was deemed undisclosed income. The assessee, studying abroad during the relevant period, argued that the funds were from his parents' savings for his education. The Tribunal examined the AO's detailed enquiries and the assessee's responses, concluding that the CIT erred in assuming jurisdiction under Section 263.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 472745 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2013-2014
• Other Referred Cases: DG Housing Projects Limited [2012] 343 ITR 329, CIT vs. Clix Finance India Pvt. Ltd. ITA 1428/2018, Ashish Natvarlal Vashi Vs. The Income Tax Officer, Ward-1, Navsari (ITA NO.3522/AHD/2016- SURAT BENCH), Amrik Singh vs. ITO 1591TD 329 (Amritsar), Krishan Kumar vs. ITO (ITANo. 3985/Del/2017 A.Y. 2007-08), Shri Bhajan Lal, Delhi vs, ITO, Ward-2, Narnaul, Haryana in ITA.No.3984/Del./2017, Shri Hashmukhbhai B. Patel (in ITA No. 193/SRT/2019), Mahavir Prasad vs. ITO in ITA.No.924/Del./2015
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KISHOR DHULE; DR
• Assessee Lawyers: ARPIT GAUR; VIRTUAL
• Keywords: Set aside; Capital asset; Reassessment proceedings; Salary income; Reopening of assessment; Principle of natural justice; Reason to believe; Revision of order
• Section: 147; 148; 143(3); 143(2); 263; 133(6); 13; 2; 20

Judgement Text

" | आयकर अपीलीय अिधकरण \fा यपीठ, मुंबई | IN THE INCOME TAX APPELLATE TRIBUNAL “G” BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, HON’BLE VICE PRESIDENT & SHRI NARENDRA KUMAR BILLAIYA, HON’BLE ACCOUNTANT MEMBER I.T.A. No. 2306/Mum/2024 Assessment Year: 2013-14 Shashank Sunilendu Roy Flat No. 203, Building No. 3C Garden Enclave, Near Vasant Vihar Thane (W) Mumbai - 400607 [PAN: ARGPR9638A] Vs CIT (International Taxation), Mumbai – 4, Mumbai अपीला थ\u0016/ (Appellant) \u0017\u0018 यथ\u0016/ (Respondent) Assessee by : Shri Arpit Gaur, C.A. (Virtual) Revenue by : Shri Dr. Kishor Dhule, CIT D/R सुनवाई की तारीख/Date of Hearing : 12/03/2025 घोषणा की तारीख /Date of Pronouncement: 19/03/2025 आदेश/O R D E R PER NARENDRA KUMAR BILLAIYA, AM: This appeal by the assessee is preferred against the order of the ld. CIT(IT), Mumbai - 4, [hereinafter ‘the ld. CIT’], dated 13/03/2024 framed u/s 263 of the Act pertaining to AY 2013-14. 2. The assessee has challenged the assumption of jurisdiction by the ld. CIT u/s 263 of the Act by which, the ld. CIT held that the assessment order dated 29/09/2021 framed u/s 147 r.w.s. 143(3) of the Act is not only erroneous but prejudicial to the interest of the revenue. 3. Representatives were heard at length, case records carefully perused and the relevant documentary evidence brought on record duly considered in the light of Rule 18(6) of the ITAT Rules, 1963. 4. Briefly stated, the facts of the case are that notice dated 24/03/2020 u/s 148 of the Act was issued by the AO asking the assessee I.T.A. No. 2306/Mum/2024 2 to file his return of income. Vide notice issued u/s 142(1), dated 03/02/2021, the assessee was asked to furnish compliance on certain queries:- “1. The reason for reopening of your case for AY 2013-14 is as under: 1. The assessee is an individual and he has not filed return of income for AY 2013- 14. 2. As per Information//TS/ 360 Degree details available with this office for the A.Y. 2013-14, it is found that the assessee has deposited cash amount of Rs. 24,00,000/- in his bank accounts maintained with /C/C/ Bank. Hence, after obtaining prior permission of the Pr. CIT-3. Ahmedabad, notice u/s 133(6) of the Act has been issued to the concerned bank/branch. In response to the same. the assessee has submitted reply. However, the same was not found acceptable and needs further verification. 3. As per information available with this office, it is found that the assessee has deposited Rs. 24,00,000/- by cash in his bank account. The notice u/s. 133(6) of the I. T. Act issued to bank after toking prior permission of Hon'ble PCIT-3, Ahmedabad and the bank statement of the assessee called for. As the assessee has not filed any return of income for this year, the source of the said cash deposits remain undisclosed. In response to the notice issued /s 133(6) of the Act, the assessee could not furnished any documentary evidences of sources of cash deposit made. 4. The ITBA/ITD data available in this office is verified. i) As per PAN data base the case of the assessee is found to belong to the territorial jurisdiction of this ward. (il) The assessee has not filed any Return of income for F.Y. 2012-13 pertaining to A. Y. 2013-14 nor has paid any taxes. (i) The Bank Statement of the Assessee has been called for from the respective bank. 5. The data base /TBA and ITD has been verified which revealed that the assessee has not filed Return of income for the A.Y. 2013-14. It is pertinent to mention here that in spite of having entered into huge financial transactions to the tune of Rs. 24,00,000/- the assessee has not filed return of income and, therefore, the said cash deposits remain undisclosed and the assessment year under consideration is deemed to be case where income chargeable to tax has escaped assessment. Therefore, the assessee has failed to disclose fully and truly all material facts related to his income. 6. In view of the above, I have reason to believe that the income chargeable to fax has assessed to the extent of Rs.24,00,000/-for the A.Y. 2013-14 within the meaning of section 147 of the I.T. Act. 1961. The income of Rs.24,00,000/-has escaped assessment by reason of failure on the part of the above assessee who failed to disclose fully and truly all the material facts necessary for the assessment year 2013-14 within the meaning of section 147 of the I.T. Act. I.T.A. No. 2306/Mum/2024 3 7. In this case no return of income was filed for the year and no assessment was made, hence, the only requirement to initiate proceeding u/s. 147 of the Act for which reason to believe has been recorded in para 6 above. 8. It is pertinent to mention here that in this case the assessee has chosen not to file return of income for the year under consideration although the total income of the assessee had exceeded the maximum amount which is not chargeable to tax as discussed above and the assessee was assessable under the Act: In view of the above, the provisions of clause (a) of Explanation 2 to section 147 are applicable to facts of this case and the assessment year under consideration is deemed to be a case where income chargeable to tax has escaped assessment. In this case more than four years have lapsed from the end of assessment year under consideration. Hence, necessary sanction to issue notice u/s. 148 is requested from the Principal Commissioner of Income Tax as per the provisions of section 151 of the Act. 2. In your case, notice under section 148 of the Income-tax Act, 1961 was issued on 24.03.2020 wherein it was requested to furnish ITR for the AY 2013-14 in response to the said notice. However, it is seen that till date you have not furnished ITR for A.Y. 2013-14 Therefore you are once again requested to furnish the ITR for A.Y. 2013-14 in pursuance of notice under section 148 of the Income-tax Act, 1961 dated 24.03.2020. 3. In this regard you are requested to submit the following details: i) Please furnish your computation of income for the A.Y. 2013-14. ii) It is noticed that during the F.Y: 2012-13, there was deposit of Rs. 24,00.000/- in cash in ICICI Bank. In view of this you are requested to furnish proof of source of cash deposits along with documents in support of your claim. iii) Copy of all your bank statements” 5. The assessee filed a detailed reply which reads as under:- Submission Date 06/02/2021 To National Faceless Assessment/Appeal Center In the Matter Of Assessee SHASHANK SUNILENDU ROY PAN ARGPR9638A A.Y. 2013-14 In response to Proceedings Assessment u/s. 147 I.T.A. No. 2306/Mum/2024 4 Letter/Notice Dt 03/02/2021 DIN No. ITBA/AST/F/142(l)/2020-21/1030332085(l) U/s. 142(1) Dear Sir, I am in receipt of above mentioned notice through which I have been informed that my income tax assessment case for A.Y. 13-14 is reopened U/S. 147 of the act. The reason for the reopening as informed to me through the said notice is cash deposit of Rs. 24 lakhs in my savings account. It has been mentioned in the notice that since I have not filed return of my income for AY2013-14, therefore “the said cash deposits remain undisclosed and the assessment year under consideration is deemed to be the case where income chargeable to tax has escaped assessment. ” In this regard I submit as follows: From January 2011 to May 2015, I was a student of Aero Space Engineering course in Florida Institute of Technology, USA and was studying in USA itself (copy of my Student I’d Card attached). Being away from India since 2011, there was no occasion for me to earn any income in India during financial year 12- 13 (AY 13-14). The cash which has been deposited in my bank account is savings of my mother out of her pin money and savings of my father out of his salary income. I am attaching bank statements of my father and my mother where there is regular withdrawal from the bank. My father Mr. Sunilendu Roy was working at that time in pharmaceutical company M/s. Zydus Cadilla, Ahmedabad as President. My father is a regular Income Tax Assessee and filed his return of income regularly. He is also a joint account holder with in the bank account under con sideration. My parents have deposited this money in order to pay the fees and expenditure of my education. Accordingly, I hereby lodge my objections to reopening of the case based on the fact that since I was not in India for the period under consideration, as such I had no occasion to earn any income here. Money under consideration had been deposited by my parents from their past savings/pin money. Accordingly, I submit that my case is not the case of any income escaping assessment and thus needs to be dropped. The reason I could not submit my ITR earlier after receiving notice under section 148 was due to pandemic. I believe Govt, of India has granted a general extension of dates in this regard till 31/03/2021. However, now I have submitted my return for AY 2013-14 online and copy of my computation of income as asked in the notice is attached herewith. The copy my bank statement, as asked in the notice, is also attached herewith. I would also like to mention that the information regarding cash deposit by me had been earlier made available to me through compliance portal of Income Tax Department against which I had submitted my reply online on 3rd of August 2015 vide Acknowledgement Number 11690023030815 (copy attached). It is clear that I.T.A. No. 2306/Mum/2024 5 department was having this information with them in the year 2015 itself still they chose to reopen the case only in the month of March 20. Your notice is dated 3rd of February and I have been asked to submit my reply within a short period of 5 days, by 8th of February (which included 2 non working days of Saturday and Sunday also). Due to this paucity of time given to me, I request you that if any further clarification, information, evidence or document in above matter is expected from me, this may please be intimated to me and I shall be duty bound to submit the same. Encl: 1. Proof of my studies in USA during the period under consideration 2. Bank Statement of father : Mr. S.B. Roy 3. Bank Statement of mother: Mrs. Reena Roy 4. Bank statement of Assessee 5. Computation of Income for AY 13-14. 6. Copy of Acknowledgement of reply submitted earlier. Thanking You 6. Again vide notice dated 24/09/2021, the AO issued showcause which reads as under:- GOVERNMENT OF INDIA MINISTRY OF FINANCE INCOME TAX DEPARTMENT OFFICE OF THE INCOME TAX OFFICER WARD 3(3)(5) AHMEDABAD/ To, SHASHANK SUNILENDU ROY Flat No. 203 .Building No 3C, Garden Enclav Near Vasant Vihar, Thane (W) Mumbai 400607 .Maharashtra India PAN: ARGPR9638A AY: 2013- 14 DIN & Notice No: ITBA/AST/F/147(SCN)/202l- Dated: 24/09/2021 Hearing Date and Time: 27/09/2021 02:00 PM SHOW CAUSE NOTICE Please refer to notice issued u/s.142(1) pf the Income-tax Act dated 30.09.2020, vide which you were asked to furnish certain information/details on 15.10.2020 in connection with the assessment proceedings your case for A.Y. 2013-14. Further, in response to notice u/s.148 of the Act you have filed return of income for A.Y. 2013-14 on 06.02.2021. Accordingly, notice u/s. 143(2) of the Act was issued on 23.02.2021 alongwith reasons recorded for reopening the case. I.T.A. No. 2306/Mum/2024 6 2. In reply, you have objected the reopening of assessment and your objection to the reopening of assessment was duly disposed off after passing a detailed order. Further, vide notice u/s.142(1) of the Act dated 23.09.2021 you were asked to submit justification for huge cash deposits made in your bank account No.029501001945 of ICICI Bank. 3. In response to the said notice dated 23.9.2021, you have submitted reply dated 24.09.2021 alongwith bank account copy of your parents for the period April, 2009 to March-31, 2010 & for the period July 1, 2010 to September 30, 2010 for A/c.No.xxx2463. However, the submission and evidences submitted by you are not justifying the cash credits appearing in your bank account. In absence of any corroborative evidence, you are requested to show cause as to why the cash credits of Rs.24,00,000/- deposited on various dates in the bank account No.029501001945 of ICICI Bank should not be treated as your unaccounted cash credit/cash deposits from unexplained sources for the year under consideration and assessed accordingly. 4. As the assessment is a time barring one i.e. getting barred by limitation on 30.09.2021, your co-operation is solicited in completion of the assessment proceedings in your case. Therefore, keeping in mind the principle of natural justice, an opportunity to submit the details/information requisitioned vide the said notices/letters is provided herewith. 5. Your reply, if any, should reach to the undersigned online electronically in ‘E- Proceeding’ facility through your account in e-filing website [www.incometax.gov.ln]on or before 27.09.2021 at 2:00 P.M. No further opportunity will be granted to you in this matter, which may please be noted.” 7. The assessee filed a detailed reply which reads as under:- Submission Date 24/09/2021 To ITO WARD 3(3)(5) AHMEDABAD In the Matter Of Assessee SHAS HANK SUNILENDU ROY PAN ARGPR9638A A.Y. 2013-14 In response to Proceedings Assessment u/s. 147 Letter/Notice Dt. 23/09/2021 DIN No. ITBA/AST/F/142(l)/2021-22/1035840955(l) U/s. 142(1) “Dear Sir, I am in receipt of above mentioned notice and would like to submit as follows in this regard- I.T.A. No. 2306/Mum/2024 7 1. At the outset, assessee would like to bring to your kind attention that assessment proceeding for the same year (i.e. AY 13-14) u/s 147 is also pending at National Faceless Assessment Centre. Assessee has already received a notice vide DIN ITBA/AST/ F/142(l)/ 2020- 21/1030332085(1) from National e- Assessment Centre in this regard and has already filed his detailed submission to them. After receiving notice from your good self, assessee is in a fix as to which authority now have jurisdiction over him. (Copy of notice received from NFAC is attached). 2. With respect to present notice, it is observed from your digital signatures on the notice that the same has been issued on 23rd September at 7:11 p.m and assessee has been asked to submit his reply upto 2:30 p.m on 24th September 2021 i.e a time period of only about 20 hours has been given to the assessee. Assessee has submitted his objections to reopening of assessment on 25/02/2021. Your goodself have responded to these objection only on 23/09/2021 i.e. after 7 months and now require the assessee to respond within 20 hours only. Assessee is compelled to submit that this is gross violation of principal of natural justice and with due respects would also like to submit that it is nothing but a sheer harassment of law abiding citizen of the country. 3. It has been mentioned in your notice that “no justification has been offered for making such huge cash deposits when banking channel are readily available with you and your parents”. Assess humbly submits that there is no section in the income tax which requires a justification for depositing cash by parents in the account of son. It is submitted that requiring a justification when there is no such provision in the act is clearly beyond your justification. 4. In your separate letter dated 23.09.2021, rejecting the objections of assessee, it has been mentioned that “as per provision of section 139(1), the assessee ought to have filed Return of Income as he has visited a foreign country during the relevant Assessment Year. It is submitted for your kind information that the provision you are referring to has been made inapplicable long back w.e.f. 01-04-2006. 5. Assessee still maintains that there are no valid reason to believe that there is income escaping assessment in his case and thus again requests that assessment proceeding against him may kindly be dropped. 6. Further to my above submissions, I am reproducing below, the submissions I have made to National Faceless Assessment centre in response to their notice in the matter: i. From January 2011 to May 2015,1 was a student of Aero Space Engineering course in Florida Institute of Technology, USA and was studying in USA itself(copy of my Student I’d Card attached). Being away from India since 2011, there was no occasion for me to earn any income in India during financial year 12-13 (AY 13- 14). ii. The cash which has been deposited in my bank account is savings of my mother out of her pin money and savings of my father out of his I.T.A. No. 2306/Mum/2024 8 salary income. I am attaching bank statements of my father and my mother where there is regular withdrawal from the bank. My father Mr. Sunilendu Roy was working at that time in pharmaceutical company M/s. ZydusCadilla, Ahmedabad as President. My father is a regular Income Tax Assessee and filed his return of income regularly. He is also a joint account holder with me in the bank account under consideration. My parents have deposited this money in order to pay the fees and expenditure of my education. iii. I would also like to mention that the information regarding cash deposit by me had been earlier made available to me through compliance portal of Income Tax Department against which I had submitted my reply online on 3rd of August 2015 vide Acknowledgement Number 11690023030815 . It is clear that department was having this information with them in the year 2015 itself still they chose to reopen the case only in the month of March 20. iv. I am further submitting two affidavits of my father Mr. Sunilendu Roy and my Mother Mrs. Reena Roy, confirming that money in my account had been deposited by them, out of there earnings and savings, in order to fund my education expenditure in USA. Income tax returns of my father for AY 10-11 to AY13-14 are also attached. Encl: 1. Proof of my studies in USA during the period under consideration 2. Bank Statement of father: Mr. S.B. Roy 3. Bank Statement of mother: Mrs. Reena Roy 4. Affidavits of parents 5. Copy of Income tax returns of my father for AY 10-11 to AY13-14 8. On further query, the assessee replied as under:- Submission Date 27/09/2021 To ITO WARD 3(3)(5) AHMEDABAD In the Matter Of Assessee SHASHANK SUNILENDU ROY PAN ARGPR9638A A.Y. 2013-14 In response to Proceedings Assessment u/s. 147 Letter/Notice Dt 24/09/2021 I.T.A. No. 2306/Mum/2024 9 DIN No. ITBA/AST/F/147(SCN)/2021-22/1035874543(l) U/s. 142(1) Dear Sir, I am in receipt of above mentioned notice and would like to submit as follows in this regard- 1. I have already submitted following documents in support of the contention that money deposited in the bank account under consideration is not mine but has been deposited by my parents : a. Documents to show that I was studying out of India during the year under consideration. Being out of India, there was no occasion for me to deposit cash in his Indian bank account. b. Sworn affidavits of my parents, confirming that money in my account had been deposited by them, out of there earnings and savings, in order to fund my education expenditure in USA. Income tax returns of my father for AY 10-11 to AY13-14 are also attached. Based on above, I again submit that the cash deposit in my bank account is not mine but of my parents, who have deposited it from their earnings and savings. 2. I also maintain that the whole reopening of my case is without any jurisdiction as the reasons taken by your goodself for reopening can not be equated with reasons to believe that income has escaped assessment. The rejection by your goodself of my objections for reopening is devoid of any merits. 3. I would also like to bring to your kind notice that judiciary has unequivocally held that mere cash deposit in the bank can not be a reason for reassessment. Following are some important citations in this regard : •Ashish Natvarlal Vashi Vs. The Income Tax Officer, Ward-1, Navsari (ITA NO.3522/AHD/2016- SURAT BENCH)- Held as follows o We note that Assessing Officer has opined that an income of Rs. 22,77,550/- has escaped assessment of income because the assessee has deposited Rs 22,77,550/- in his bank account but then such an opinion proceeds on the fallacious assumption that the bank deposits constitute undisclosed income, and overlooks the fact that the sources of deposit need not necessarily be income of the assessee. The amount deposited in the bank account may be out of sale proceeds of investments, property or agricultural income of the assessee which may be exempted under the Income Tax Act. Of course, it may be desirable, from the point of view of revenue authorities, to examine the matter in detail, but then reassessment proceedings cannot be resorted to only to examine the facts of a case, no matter how desirable that be, unless there is a reason to believe, rather than suspect, that an income has escaped assessment. o Thus, just to reopen the assessment, based on the cash deposits would not make the Revenue’s case strong, because mere fact that these cash deposits have been I.T.A. No. 2306/Mum/2024 10 made in a bank account, which according to us do not indicate that these deposits constitute an income which has escaped assessment. Such cash deposit may be out of past savings. The above reasons recorded for reopening the assessment do not make out a case that the assessee was engaged in some business and has not been filed return of income. Therefore, the cash deposit in the bank account could not be basis for holding the view that income has escaped assessment. The assessee may have deposited the cash out of his sale of capital asset, sale of property and sale of investment etc. Therefore, reasons recorded by the Assessing Officer are not valid and hence the reassessment proceedings initiated based on the reasons recorded is bad in law. • Order of ITAT Amritsar Bench in the case of Amrik Singh vs. ITO 1591TD 329 (Amritsar) in which it was held as under: \"When the assessment proceedings u/s 147 are initiated on the fallacious assumption that the bank deposits constituted undisclosed income, overlooking the fact that the source of the deposits need not necessarily be the income of the assessee, the proceedings is neither countenanced, nor sustainable in law.\" •Ashok Kumar, Ghaziabad vs. Ito, Ward-1(1), Ghaziabad ITA No. 2740 1384 & 2647/Del./2018 (ITAT Delhi) •Krishan Kumar vs. ITO (ITANo. 3985/Del/2017 A.Y. 2007-08 •Shri Bhajan Lal, Delhi vs, ITO, Ward-2, Narnaul, Haryana in ITA.No.3984/Del./2017 (ITAT Delhi) •Shri Hashmukhbhai B. Patel (in ITA No. 193/SRT/2019) •Mahavir Prasad vs. ITO in ITA.No.924/Del./2015 Based on above, I request you to kindly drop the reassessment proceedings as the same is without any jurisdiction.” 8. A perusal of the aforementioned enquiries made by the AO show that specific queries were raised in respect of cash deposited in the bank account to which, specific replies were filed along with justification of the cash deposit with its source. After thorough examination, the AO took a plausible view in accepting the source of cash deposit. 9. By assuming jurisdiction conferred upon him by the provisions of Section 263 of the Act, the ld. CIT revisited the same facts and came to I.T.A. No. 2306/Mum/2024 11 the conclusion that the assessment order dated 29/09/2021 is not only erroneous but prejudicial to the interest of the revenue. 10. The issues raised by the ld. CIT in assuming jurisdiction u/s 263 of the Act, we find that all the issues have been considered by the AO during his enquiries before framing the impugned assessment order. If the ld. CIT was of the firm belief that the AO has not conducted proper enquiries, nothing prevented him to conduct enquiries as held by the Hon’ble Supreme Court in the case of DG Housing Projects Limited [2012] 343 ITR 329. The relevant part of the decision of the Hon’ble Supreme Court reads as under:- “\"Section 263 has been enacted to empower the CIT to exercise power of revision and revise any order passed by the Assessing Officer, if two cumulative conditions are satisfied. Firstly, the order sought to be revised should be erroneous and secondly, it should be prejudicial to the interest of the Revenue. The expression „prejudicial to the interest of the Revenue‟ is of wide import and is not confined to merely loss of tax. The term „erroneous‟ means a wrong/incorrect decision deviating from law. This expression postulates an error which makes an order unsustainable in law. The Assessing Officer is both an investigator and an adjudicator. If the Assessing Officer as an adjudicator decides a question or aspect and makes a wrong assessment which is unsustainable in law, it can be corrected by the Commissioner in exercise of revisionary power. As an investigator, it is incumbent upon the Assessing Officer to investigate the facts required to be examined and verified to compute the taxable income. If the Assessing Officer fails to conduct the said investigation, he commits an error and the word „erroneous‟ includes failure to make the enquiry. In such cases, the order becomes erroneous because enquiry or verification has not been made and not because a wrong order has been passed on merits. In cases of wrong opinion or finding on merits, the CIT has to come to the conclusion and himself decide that the order is conducting necessary enquiry, if required and necessary, before the order under Section 263 is passed. In such cases, the order of the Assessing Officer will be erroneous because the order passed is not sustainable in law and the said finding must be recorded. CIT cannot remand the matter to the Assessing Officer to decide whether the findings recorded are erroneous. In cases where there is inadequate enquiry but not lack of enquiry, again the CIT must give and record a finding that the order/inquiry made is erroneous. This can happen if an enquiry and verification is conducted by the CIT and he is able to establish and show the error or mistake made by the Assessing Officer, making the order unsustainable in Law. In some cases possibly though rarely, the CIT can also show and establish I.T.A. No. 2306/Mum/2024 12 that the facts on record or inferences drawn from facts on record per se justified and mandated further enquiry or investigation but the Assessing Officer had erroneously not undertaken the same. However, the said finding must be clear, unambiguous and not debatable. The matter cannot be remitted for a fresh decision to the Assessing Officer to conduct further enquiries without a finding that the order is erroneous. Finding that the order is erroneous is a condition or requirement which must be satisfied for exercise of jurisdiction under Section 263 of the Act. In such matters, to remand the matter/issue to the Assessing Officer would imply and mean the CIT has not examined and decided whether or not the order is erroneous but has directed the Assessing Officer to decide the aspect/question. This distinction must be kept in mind by the CIT while exercising jurisdiction under Section 263 of the Act and in the absence of the finding that the order is erroneous and prejudicial to the interest of Revenue, exercise of jurisdiction under the said section is not sustainable. In most cases of alleged \"inadequate investigation\", it will be difficult to hold that the order of the Assessing Officer, who had conducted enquiries and had acted as an investigator, is erroneous, without CIT conducting verification/inquiry. The order of the Assessing Officer may be or may not be wrong. CIT cannot direct reconsideration on this ground but only when the order is erroneous. An order of remit cannot be passed by the CIT to ask the Assessing Officer to decide whether the order was erroneous. This is not permissible. An order is not erroneous, unless the CIT hold and records reasons why it is erroneous. An order will not become erroneous because on remit, the Assessing Officer may decide that the order is erroneous. Therefore CIT must after recording reasons hold that the order is erroneous. The jurisdictional precondition stipulated is that the CIT must come to the conclusion that the order is erroneous and is unsustainable in law. We may notice that the material which the CIT can rely includes not only the record as it stands at the time when the order in question was passed by the Assessing Officer but also the record as it stands at the time of examination by the CIT [see CIT vs. Shree Manjunathesware Packing Products, 231 ITR 53 (SC)]. Nothing bars/prohibits the CIT from collecting and relying upon new/additional material/evidence to show and state that the order of the Assessing Officer is erroneous. In the present case, the findings recorded by the Tribunal are correct as the CIT has not gone into and has not given any reason for observing that the order passed by the Assessing Officer was erroneous. The finding recorded by the CIT is that \"order passed by the Assessing Officer may be erroneous\". The CIT had doubts about the valuation and sale consideration received but the CIT should have examined the said aspect himself and given a finding that the order passed by the Assessing Officer was erroneous. He came to the conclusion and finding that the Assessing Officer had examined the said aspect and accepted the respondents computation figures but he had reservations. The CIT in the order has recorded that the consideration receivable was examined by the Assessing Officer but was not properly examined and therefore the assessment order is \"erroneous\". The said finding will be correct, if the CIT had examined and verified the said transaction himself and given a finding on merits. As held above, a distinction must be drawn in the cases where the Assessing Officer does not conduct an enquiry; as lack of enquiry by itself renders the order being erroneous and prejudicial to the interest of the Revenue and cases where the Assessing Officer I.T.A. No. 2306/Mum/2024 13 conducts enquiry but finding recorded is erroneous and which is also prejudicial to the interest of the Revenue. In latter cases, the CIT has to examine the order of the Assessing Officer on merits or the decision taken by the Assessing Officer on merits and then hold and form an opinion on merits that the order passed by the Assessing Officer is erroneous and prejudicial to the interest of the Revenue. In the second set of cases, CIT cannot direct the Assessing Officer to conduct further enquiry to verify and find out whether the order passed is erroneous or not.\" 11. Considering the facts of the case in totality, we are of the considered view that the AO has made specific enquiries to which the assessee has given specific replies. Therefore, it cannot be said that no enquiries were made by the AO and as held by the Hon’ble High Court of Delhi in the case of CIT vs. Clix Finance India Pvt. Ltd. ITA 1428/2018, order dated 01/03/2024, inadequacy of enquiry by the AO, would not in itself be a reason to invoke powers enshrined u/s 263 of the Act. Therefore, we have no hesitation in holding that the ld. CIT erred in assuming jurisdiction u/s 263 of the Act. We accordingly set aside the order of the ld. CIT dated 13/03/2024 and restore that of the AO dated 29/09/2021. 12. In the result, appeal of the assessee is allowed. Order pronounced in the Court on 19th March, 2025 at Mumbai. Sd/- Sd/- (SAKTIJIT DEY) (NARENDRA KUMAR BILLAIYA) VICE-PRESIDENT ACCOUNTANT MEMBER Mumbai, Dated 19/03/2025 *SC SrPs *SC SrPs *SC SrPs *SC SrPs I.T.A. No. 2306/Mum/2024 14 आदेश की \u0015ितिलिप अ\u001aेिषत /Copy of the Order forwarded to : 1. अपीलाथ\u001c / The Appellant 2. \u0015\u001dथ\u001c / The Respondent 3. संबंिधत आयकर आयु\" / Concerned Pr. CIT 4. आयकर आयु\" ) अपील ( / The CIT(A)- 5. िवभागीय \u0015ितिनिध ,आयकर अपीलीय अिधकरण, मुंबई /DR,ITAT, Mumbai, 6. गाड& फाई/ Guard file. आदेशानुसार/ BY ORDER TRUE COPY Assistant Registrar आयकर अपीलीय अिधकरण ITAT, Mumbai "