SUNRISE ENTERPRISE,RAJKOT V. THE PRINCIPAL COMMISSIONER OF INCOME TAX -1, RAJKOT

ITA 273/RJT/2024

AI Insights

The case involves Sunrise Enterprise, a partnership firm engaged in providing Angadia services, which appealed against the order of the PCIT, Rajkot. The PCIT had set aside the original assessment order passed by the Assessing Officer (AO) under sections 143(3) and 143(3B) of the Income-tax Act, 1961, for the assessment year 2018-19. The original assessment had made an addition of Rs. 35,72,04,999 as unexplained cash withdrawal, without verifying the bank statements. The PCIT found that the AO did not properly verify the nature of bank transactions and the sources of cash deposits totaling Rs. 42,20,21,094 in the assessee's bank accounts. The Tribunal dismissed the appeal of Sunrise Enterprise, agreeing with the PCIT's decision to set aside the assessment order and direct a fresh assessment.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 780140 (ITAT-RAJKOT)
• Duration Of Justice: 1 year(s) 5 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-10-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2018-2019
• Appeal Filed On: 01-05-2024
• Other Referred Cases: Pareshkumar Narsibhai Siroy ITA No.127/RJT/2022
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SANJAY PUNGLIA
• Assessee Lawyers: VIMAL DESAI; LD
• Keywords: Set aside; Onus to prove; Assessment record; Revision of order
• Section: 143(3); 263

Judgement Text

" आयकर अपीलȣय अͬधकरण, राजकोट Ûयायपीठ, राजकोट। IN THE INCOME TAX APPELLATE TRIBUNAL, RAJKOT BENCH, RAJKOT BEFORE DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER AND SHRI DINESH MOHAN SINHA, JUDICIAL MEMBER आयकर अपील सं/.ITA No.273/RJT/2024 Ǔनधा[रणवष[ / Assessment Year: 2018-19 Sunrise Enterprise 317, Auto Point Complex, SVP Road, Near Lodhawad Police Chowki, Rajkot-360002 PAN : ACZFS1180N बनाम Vs. The Pr.CIT-1, Rajkot, Rajkot (अपीलाथȸ/Appellant) : (Ĥ×यथȸ/Respondent) Ǔनधा[ǐरती कȧ ओर से/Assessee by : Shri Vimal Desai, ld.AR राजèव कȧ ओर से/Revenue by : Shri Sanjay Punglia, CIT-DR सुनवाई कȧ तारȣख /Date of Hearing : 15/07/2025 घोषणा कȧ तारȣख /Date of Pronouncement : 07/10/2025 ORDER Per, Dr. Arjun Lal Saini, Accountant Member: By way of this appeal, the assessee has challenged the correctness of the order dated 31-03-2024, passed by the Learned Principal Commissioner of Income- tax (in short “Ld PCIT”) under section 263 of the Income-tax Act, 1961 (hereinafter referred to as 'the Act'), for the assessment year 2018-19.Grievances raised by the assessee, which, being interconnected, will be taken up together, are as follows: 1. The order u/s. 263 of the Act is bad in law. Printed from counselvise.com Sunrise Enterprise ITA No.273 /RJT/2024 (AY : 2018-19)) 2 2. The learned Pr. CIT has erred in law as well as on facts in not considering the submissions of the appellant on the strength of which the re-assessment order was neither erroneous nor prejudicial to the interest of revenue and therefore, the provisions of Section 263 of the Act were not applicable to the case of the appellant. 3. The learned Pr. CIT has erred in law as well as on facts in setting aside the assessment order passed by the Ld. Α.Ο. u/s. 143(3) and directing de-novo assessment regarding verification of the sources of the cash deposits. 3. Succinctly, the factual panorama of the case is that assessee before us is a Partnership- Firm, and engaged in the business of providing Angadia service during the year under consideration. The Assessee had filed its return of income for assessment year (A.Y.) 2018-19, on 21/07/2018, declaring total income of Rs. 9,690/-. The Assessment was finalised u/s 143(3) r.w.s.143(3A) & 143(3B) of the Income-tax Act, 1961, on 09/04/2021, determining the total income of Rs.35,72,14,689/-, by making an addition u/s 69A of the I.T. Act of Rs.35,72,04,999/-, treating the cash withdrawal as unexplained money within the meaning of section 69A of the Act. 4. Later on, the Learned Principal Commissioner of Income-tax (in short “Ld PCIT”), exercised his jurisdiction under section 263 of the Income-tax Act, 1961. On verification of case records, it was found by ld PCIT that during the year under consideration, the assessee has deposited aggregate cash of Rs.3,57,67,601/- in its bank account No.36183880330 maintained with State Bank of India. Thus, during the year under consideration, total amount of Rs.42,20,21,094/- (Rs.38,62,53,493 + Rs.3,57,67,601) were credited in its bank accounts. However, while finalizing assessment, the Assessing Officer has made addition of Rs.35,72,04,999/-, being unexplained cash withdrawal from bank accounts on the basis of information available on ITS Data and without verifying the bank statements of assessee's bank account available with him. Thus, the Assessing Officer did not verify the nature of the bank transactions, Printed from counselvise.com Sunrise Enterprise ITA No.273 /RJT/2024 (AY : 2018-19)) 3 source of amount credited in above referred bank account. Besides, the Assessing Officer did not make any effort to obtain bank statement of bank account No. No.36183880330, maintained with State Bank of India to ascertain amount of total credit. Thus, without necessary verification and investigation, the Assessing Officer has made addition of Rs.35,72,04,999/- only treating the cash withdrawal made during the year under consideration from assessee's aforementioned bank account, as unexplained within the meaning of section 69A of the Act. As explanation offered for the source and nature of money deposited in assessee's bank accounts was not found satisfactory, the source of entire amount of Rs.42,20,21,094/- credited in assessee's bank account is remained unexplained. Therefore, the Assessing Officer ought to have made addition of entire deposits/credit of Rs.42,20,21,094/- u/s 69A of the Income-tax Act, 1961. Therefore, difference of Rs.6,48,16,095/- (Rs.42,20,21,094/- minus Rs.35,72,04,999/-) was required to be treated as unexplained within the meaning of section 69A of the Income-tax Act, 1961. However, the assessing officer failed to add difference of Rs.6,48,16,095/-, while finalizing the assessment order. It is thus appeared that the assessment order has been passed without making due inquiry/verification. Hence, in terms of Explanation 2 to section 263 of the Act, such order is erroneous in so far as it is prejudicial to the interests of revenue. Considering such facts, notice u/s 263 of the Income-tax Act, 1961 dated 29.02.2024 was issued and duly served upon the assessee. The relevant portion of said show cause is reproduced by learned PCIT in its revision order under section 263 of the Act, vide page no.2 to 4 of the order. 5. In response to the show cause notice of the PCIT, the assessee submitted its reply before the PCIT. The assessee, vide its letter dated 05.03.2024 requested to provide the copy of the order sheet and the office note prepared by the Faceless assessing officer while completing the assessment proceedings Printed from counselvise.com Sunrise Enterprise ITA No.273 /RJT/2024 (AY : 2018-19)) 4 u/s.147 of the I.T.Act for preparation of case. Accordingly, assessee's request was considered and the copy of the order sheet and the office note was provided by ld.PCIT and another notice u/s 263 of the Income-tax Act, 1961 dated 08.03.2024 was also issued by ld PCIT and duly served upon the assessee. In response to the notice of learned PCIT under section 263 of the Act, the assessee submitted its reply. The assessee submitted that assessee`s case for assessment year (A.Y.) 2018-19 was selected for the Limited Scrutiny Assessment, for the following issues which is evident from the first page of the assessment order proposed to be set aside. (i) Cash Withdrawals (ii) Cash Deposits Accordingly, during the course of the assessment proceedings, the assessing officer duly verified all five bank accounts maintained during the year under consideration. Considering the limited scope of the assessment proceedings, the assessing officer duly verified the above figures of total cash deposits and withdrawals and made the addition of the higher amount of Rs. 35,72,04,999/- , that is, total cash withdrawals made during the year under consideration.The ld. PCIT has proposed the revision of the above assessment order contending that the assessing officer ought to have made addition of entire deposits/credit of Rs.42,20,21,094/- since the explanation offered for the source and nature of money deposited in bank accounts was not found satisfactory.Therefore, the addition of entire deposits/credit of Rs. 42,20,21,094/- is not within the purview of the examination of the assessing officer in the limited scrutiny assessment and therefore, the assessment order cannot be treated as erroneous. Printed from counselvise.com Sunrise Enterprise ITA No.273 /RJT/2024 (AY : 2018-19)) 5 6. However, Ld. PCIT rejected the assessee’s contention and observed that contention of the assessee that the addition of entire deposits / credits or withdrawals was not within the purview of examination with the assessing officer in the limited scrutiny assessment, is without any merit. As noted in the first para of the assessment order, the case is selected for limited scrutiny on the issue of (i) Cash withdrawal & (ii) Cash deposits. Thus, examination of cash deposits/withdrawals in the bank accounts maintained by the assessee was well within the scope of limited scrutiny carried out by the Assessing Officer.The ld PCIT further noticed that the introduction of cash deposits/credits amounting to Rs.42,20,21,094/-, has not been properly verified by the Assessing Officer at the time of finalisation of assessment, the assessing officer has made addition on the basis of ITS data and without verifying the bank account available within him. The ITS data, actually does not show the complete cash deposits of the credits or withdrawals debits made by the assessee. It is seen that the bank statements of the accounts with PNB, BOB, HDFC Bank and Bank of India are available on record, whereas in respect of State Bank of India only ITS statement is available. On analysis of the bank statements available on record and the ITS data in respect of State Bank of India, it is seen that the actual cash deposits/credits is Rs.42,20,21,094/-. Thus, the figure adopted by the Assessing Officer based on the ITS data alone, that is, Rs.35,72,04,999/- is on the lower side by Rs.6,48,16,095/-. From this, it is obvious that the Assessing Officer has made additions without due inquiry and while ignoring the data available on record. The ld.PCIT noticed that the onus to prove the source of cash deposited/credits by the assessee in his bank accounts lies upon the assessee. By not producing any convincing and concrete evidences of source and nature of money deposited in the bank accounts, the assessee has failed to discharge the primary onus. Hence, amount of Rs.42,20,21,094/-, deposited/credited in bank account remain unexplained. Therefore, the Assessing Officer ought to have Printed from counselvise.com Sunrise Enterprise ITA No.273 /RJT/2024 (AY : 2018-19)) 6 made addition of entire deposits/credit of Rs.42,20,21,094/- u/s 69A of the Income-tax Act. Therefore, difference of Rs.6,48,16,095/- (Rs.42,20,21,094/- minus Rs.35,72,04,909) is required to be treated as unexplained within the meaning of section 69A of the Income-tax Act, 1961. However, the assessing officer failed to add difference of Rs.6,48,16,095/-while finalizing the assessment order.Therefore, learned PCIT noticed that it is clear that the Assessing Officer has failed to carry out meaningful inquiry by taking into account all the information available with him. As the assessee has failed to produce any convincing or satisfactory explanation regarding the source of cash deposits/credits and withdrawals from the bank account, the source of entire cash of Rs.42,20,21,094/- remains unexplained and the entire amount should have been treated as unexplained and treated as income of the assessee u/s. 69A r.w.s. 115BBE of the IT Act. Therefore, learned PCIT set aside the assessment order passed by the assessing officer, under section 143(3) r.w.s. 143(3A) of the Act, to the extent of the issues discussed above, and directed the assessing officer to pass a fresh assessment order. 7. Aggrieved by the order of the ld.PCIT, the assessee is in appeal before us. 8.Learned Counsel for the assessee submitted that the assessment was for a Limited Scrutiny, for cash withdrawal and cash deposits and therefore, the assessing officer could not have made the addition of total credits in the bank accounts. Further to the above, the Id. PCIT contended that the assessing officer did not make any effort to obtain the bank statement of SBI Account No. 36183880330.On the basis of the above, the ld. PCIT contended that the assessing officer ought to have made the addition of Rs. 42,20,21,094/- comprising of total credits of aforesaid 4 bank accounts of Rs. 38,62,53,493/- and cash deposits of Rs. 3,57,67,601/- in the SBI Bank Account No. 36183880330. In this regard, assessee submitted before learned PCIT that the Printed from counselvise.com Sunrise Enterprise ITA No.273 /RJT/2024 (AY : 2018-19)) 7 assessment was a Limited Scrutiny case for cash withdrawal and cash deposits and therefore, the assessing officer could not have made the addition of total credits in the bank accounts. Therefore, learned Counsel argued that Id. PCIT has transgressed the boundaries of Limited Scrutiny which was confined only to cash deposits & withdrawals. The same is not permissible. Since the assessing officer has rightly restricted himself to the issue of Limited Scrutiny, hence order of the assessing officer was not erroneous. 9. On the other hand, the ld.DR for the Revenue submitted that there were five bank accounts in which the assessee has deposited cash and made withdrawal of cash. The assessee is doing angandia business. During the assessment proceedings, out of five bank accounts, only four bank accounts were submitted. Therefore Assessing Officer failed to call the fifth bank statement. Therefore, Ld. PCIT has rightly exercised his jurisdiction u/s 263 of the Act, stating that assessee has failed to file fifth bank statement, which is not available in the assessment records also. Therefore, Ld. PCIT was of the view that how it can be possible for verification of cash deposit without bank statement. The Ld. D.R. therefore, submitted that assessee has failed to submit bank statement and sources of cash deposit. 10. The Ld. D.R. also submitted before the Bench, the consequential order passed by the assessing officer u/s 143(3) r.w.s. 263 of the Act, dated 27-03- 2025, wherein the assessing officer asked to furnish the bank statement, which was not submitted during the original assessment proceedings. However, during the appeal effect proceedings, the assessee has failed to provide the bank statement and other details to the assessing officer, therefore the assessing officer made the addition, observing as follows: “ 2.8 Conclusion drawn in appeal effect order under section143(3) r.w.s. 263 of the Act dated 27-03-2025 Printed from counselvise.com Sunrise Enterprise ITA No.273 /RJT/2024 (AY : 2018-19)) 8 As the assessee has not submitted any requisite details in response to the notices issued from time to time, it is inferred that the assessee has nothing to say in the addition proposed vide the SCN dated 20.03.2025. In light of the above, amount to the tune of Rs. 42,20,21,094/- is treated unexplained money u/s 69A and added back to the total income of the assessee for AY 2018-19 Penalty proceedings u/s 271AAC(1) is initiated separately for concealing of income. Assessed u/s 143(3) r.w.s 144B in pursuant to order passed u/s 263 of the Income Tax Act, 1961 at Rs. 42,20,30,784/-.Penalty proceedings u/s 271AAC(1) is initiated separately for concealing of income.Issue Computation Sheet and Notice of Demand.” 11. We have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld PCIT and other materials brought on record. We find merit in the arguments advanced by the learned DR for the Revenue to the effect that Printed from counselvise.com Sunrise Enterprise ITA No.273 /RJT/2024 (AY : 2018-19)) 9 assessee has failed to provide the impugned bank statement in the original assessment proceedings, as well as, in the appeal effect proceedings under section143(3) r.w.s. 263 of the Act. In the appeal effect proceedings under section143(3) r.w.s. 263 of the Act, as we have reproduced above, the assessee has not submitted any requisite details in response to the notices issued from time to time, therefore, it was inferred by the assessing officer that the assessee has nothing to say in the addition proposed vide the SCN dated 20.03.2025. Hence, we find that order passed by the assessing officer, is erroneous as well as prejudicial to the interest of the revenue, as the assessee failed to furnish relevant documents in original assessment proceedings, as well as, in appeal effect proceedings. 12. The contention of ld. Counsel for the assessee that the addition of entire deposits / credits or withdrawals was not within the purview of examination with the assessing officer in the limited scrutiny assessment, is not acceptable, as the cash withdrawal and cash deposit was the subject matter of limited scrutiny, therefore, assessing officer needs to examine the bank statement, hence the arguments advanced by the learned Counsel for the assessee, is without any merit. As noted in the first para of the assessment order, the case is selected for limited scrutiny on the issue of (i) Cash withdrawal & (ii) Cash deposits. Thus, examination of cash deposits/withdrawals in the bank accounts maintained by the assessee was well within the scope of limited scrutiny carried out by the Assessing Officer, and assessee has failed to provide the bank statement to the assessing officer in the original assessment proceedings, as well as in the appeal effect proceedings under section143(3) r.w.s. 263 of the Act, therefore, order passed by the assessing officer is erroneous as well as prejudicial to the interest of the Revenue. Printed from counselvise.com Sunrise Enterprise ITA No.273 /RJT/2024 (AY : 2018-19)) 10 13. Since the assessee`s case under consideration, belongs to Angadia business, and on the same facts and circumstances, in the case of Pareshkumar Narsibhai Siroy, vide ITA No. No.127/RJT/2022, for assessment year 2018–19, the Coordinate Bench of ITAT Rajkot upheld the revision proceedings under section 263 of the Act, observing as follows: “22.We find that in assessee`s case under consideration, the order passed by the assessing officer is erroneous and prejudicial to the interest of the revenue, as the view taken by the Assessing Officer is unsustainable in law, as stated by us in above para of this order. The Assessing Officer passed the order on incorrect assumption of fact, incorrect application of law and the order passed by the Assessing Officer is without application of mind and moreover the AO has not investigated the issue before him, with help of the documentary evidences. Moreover, the assessee has not explained the source and nature of the cash and cheques deposited in the bank account. The assessee stated that the cash and cheques, so deposited in the bank account belonged to his customers, however, when the assessing officer, asked the assessee to submit the name and address of the customers, the assessee has failed to give name and address to the assessing officer, during the assessment proceedings . The assessee did not provide even a single name of his customer, whereas, there is huge cash deposit in the bank account of the assessee, to the tune of Rs. Rs.38,01,13,684/-, hence, there is loss to the revenue. Hence, order passed by the assessing officer is erroneous and prejudicial to the interest of the revenue. Hence, the view taken by the assessing officer is not a plausible view and therefore order passed by the assessing officer is erroneous as well as prejudicial to the interest of the revenue, therefore, ld. PCIT has rightly exercised his jurisdiction under section 263 of the Act. The conclusions arrived at by the ld. PCIT are, therefore, correct and admit no interference by us. We, approve and confirm the order of the ld. PCIT and dismiss the appeal of the assessee. 23. Before parting we would like to mention that the Co-ordinate Bench of ITAT Rajkot has remitted the issue back to the file of the assessing officer in Angadia cases vide ITA No. 381/382/RJT/2024, order dated 26.02.2025 and upheld the revision proceedings under section 263 of the Act, on identical facts. 24. In the result, the appeal filed by the assessee is dismissed”. 14. In the conclusion, we are of the view that the reasons set out by the ld. PCIT for invoking the jurisdiction u/s 263 of the Act are sustainable. The impugned order of ld. PCIT has to be upheld for the reason that order of the AO sought to be revised in the impugned order was erroneous as well as prejudicial Printed from counselvise.com Sunrise Enterprise ITA No.273 /RJT/2024 (AY : 2018-19)) 11 to the interest of the revenue for the reason mentioned above. We accordingly upheld the order u/s 263 of the Act and dismiss the appeal of the assessee. 15. In the result, the appeal of the assessee in ITA No.273/RJT/2024 is dismissed. Order is pronounced in the open court on 07/10/2025 Sd/- Sd/- (DINESH MOHAN SINHA) JUDICIAL MEMBER (DR.ARJUN LAL SAINI) ACCOUNTANT MEMBER राजकोट /Rajkot (True Copy) िदनांक/ Date: 07/10/2025 आदेश कì ÿितिलिप अúेिषत/ Copy of the order forwarded to :  अपीलाथê/ The Appellant  ÿÂयथê/ The Respondent  आयकर आयुĉ/ CIT  आयकर आयुĉ(अपील)/ The CIT(A)/(NFAC), Delhi.  िवभागीय ÿितिनिध, आयकर अपीलीय आिधकरण, राजकोट/ DR, ITAT, RAJKOT  गाडªफाईल/ Guard File By order/आदेशसे , /T Assistant Registrar/Sr. PS/PS ITAT, Rajkot 1. Draft dictated on (dictation sheet is enclosed with main file.) 15.07.2025 2. Draft placed before author .07.2025 3. Draft proposed & placed before the second member 4. Draft discussed/approved by Second Member. 5. Approved Draft comes to the Sr.PS/PS 6. Kept for pronouncement on Printed from counselvise.com Sunrise Enterprise ITA No.273 /RJT/2024 (AY : 2018-19)) 12 7. File sent to the Bench Clerk 8. Date on which file goes to the AR 9. Date on which file goes to the Head Clerk. 10. Date of dispatch of Order. 11. Draft dictation sheets are attached Printed from counselvise.com "