TMI Blog2015 (2) TMI 1315X X X X Extracts X X X X X X X X Extracts X X X X ..... creditors assessee has not only established the identity but has also furnished confirmation letters and it is also fact that the credits are through regular banking channel. Without bringing some material on record to show that these two creditors are not genuine or they do not have creditworthiness, CIT cannot hold the assessment order to be erroneous and prejudicial to the interest of Revenue. As it appears from record at the time of assessment proceedings, assessee has also produced confirmation letters from creditors. Therefore, it cannot be said that the A.O. has not examined the credits. In these circumstances, the assessment order passed cannot be held to be erroneous and prejudicial to the interests of Revenue. Similarly, in so far as cash deposits made to the S.B. Account is concerned, it is manifest from the revision order that CIT has accepted that the deposits have been reflected in the books of accounts. Moreover, assessee has also explained the source of such deposits - at assessment proceedings, A.O. has examined the books of accounts as well as the bank statement. Therefore, when the assessee has produced its books of accounts before the A.O. as well as befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sts of revenue. (ii) The assessee had claimed interests of ₹ 2,34,367 on creditors for finance which the A.O. allowed without making any enquiry into the genuineness of the credits. (iii) AIR information received had revealed that the assessee s SB account with ING Vysya Bank had cash deposits to the tune of ₹ 24,90,000. Apart from the declared sales turnover of ₹ 9,68,800, the assessee had no other known sources for the cash deposits. However, the A.O. completed the assessment without carrying out any verification on the sources of the cash deposits in the SB account. 3. Accordingly, a notice was issued directing the assessee to show cause why the assessment order should not be revised. In response to the show cause notice assessee submitted it s reply with reference to the issues raised therein. As far as disallowance under section 40A(3) is concerned, it was submitted, assessee had purchased agricultural land for a consideration of ₹ 9 lakhs through registered sale deed. It was submitted as registration could be completed before SubRegistrar, Nandyal on 07.03.2009 at about 4.00 PM and the seller also insisted for payment in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee during the relevant assessment year. 5. In so far as cash deposits of ₹ 24,90,000 in the savings bank account is concerned, Ld. CIT acknowledged that they have been properly reflected in the books maintained by the assessee. However, she directed the A.O. to verify the deposits. Accordingly, the assessment order passed was set aside with the above directions. 6. Learned A.R. submitted before us that at the time of assessment proceedings the A.O. has not only examined the books of accounts but has also enquired into all the issues on which the proceedings under section 263 has been initiated. It was submitted, as far as applicability of section 40A(3) is concerned, the A.O. has examined the issue as the entire transaction relating to the purchase of land was before the Assessing Officer. Only after examining the sale deed etc., the A.O. has completed the assessment. Learned A.R. submitted that the A.O. after completion of the assessment had issued a notice under section 154 of the Act pointing out that there is a mistake in the assessment order due to non-consideration of violation of section 40A(3) in respect of cash payment of ₹ 9 lakhs. Though, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . A.O. having not at all examined this issue or applied his mind, the assessment order is not only erroneous but prejudicial to the interest of the Revenue. As far as other two issues are concerned, learned A.R. submitted that the CIT has not given any specific direction but has only directed the A.O. to verify assessee s claim. Hence, there is no prejudice caused to the assessee. In support of such contention, he relied on the decision of Karnataka High Court in the case of CIT and another vs. Infosys Technologies Ltd., (2012) 341 ITR 290 (Karnataka) (HC). 8. We have considered the submissions of the parties and perused the materials on record. We are of the view that the exercise of jurisdiction under section 263 of the Act in the present case cannot be held to be invalid, atleast as far as applicability of section 40A(3) of the Act is concerned. There is no dispute to the fact that assessee has made cash payments of ₹ 9 lakhs towards purchase of land. However, the A.O. at the time of assessment, as it appears from the assessment order itself, has not at all examined the applicability of section 40A(3). Learned A.R. has not brought any material to our notice which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the revision order that Ld. CIT has accepted that the deposits have been reflected in the books of accounts. Moreover, assessee has also explained the source of such deposits. It is also not disputed that during the assessment proceedings, A.O. has examined the books of accounts as well as the bank statement. Therefore, when the assessee has produced its books of accounts before the A.O. as well as before the Ld. CIT and has also explained the source for deposit which have not been disputed or found to be incorrect by the Ld. CIT, in our view, it was not proper on the part of Ld. CIT to set aside the assessment order on that issue as the directions given by the Ld. CIT, without any positive finding of error or prejudice to the Revenue, is only in the nature of a roving and fishing enquiry to be conducted by the A.O. which is not the intent and purpose of section 263. In the aforesaid view of the matter, we direct the A.O. to only examine the issue of applicability of section 40A(3) with reference to Rule 6DD after giving due opportunity of being heard to the assessee. The order of Ld. CIT is modified to this extent. 10. In the result, appeal of the assessee is partly al ..... X X X X Extracts X X X X X X X X Extracts X X X X
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