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2022 (8) TMI 1460 - AT - Income TaxRevision u/s 263 - cash deposit in the Bank Account unexplained - as dispute is settled under VSV Scheme, PCIT held that the same would be valid only to the extent of addition made by the AO and not the entire cash deposit in the Bank Account - HELD THAT:- The case was picked up for limited scrutiny of cash deposits in Bank Account during demonetization period. AO examined cash purchases and sales and came to a conclusion that purchases and sales from May, 2016 to October, 2016, were inflated and to the extent of such inflation, the AO drew an adverse inference. PCIT is of the view that the addition should have been on actual purchases and sales proved by the assessee and not on an ad hoc basis. The law is well settled that power u/s 263 of the Act cannot be exercised to substitute the view of the PCIT with that of the AO when the view taken by the AO was a possible view. It is equally well settled that the PCIT cannot invoke powers u/s 263 of the Act directing a fishing or raving enquiry. In a case where enquiry is directed to be made by the PCIT, he must give a finding as to how the enquiry made by the AO was wrong. In the present case, the enquiry made by the AO was proper and the AO has drawn proper conclusions on material available before her. The view taken by the AO was a possible view rather a very pragmatic view. The PCIT may not agree with that view. However, the powers under section 263 of the Act cannot be exercised to substitute the view of the PCIT with that of the AO. Since we have quashed the order on merits, we do not wish to go into the question regarding VSV Scheme and its effect on the power under section 263 of the Act. We also hold that the question of invoking the provisions of section 40A(3) of the Act does not arise firstly because the limited scrutiny was only to verify cash deposit in Bank Account. Secondly, the issue was not subject matter of SCN under section 263 of the Act nor was the assessee put on notice regarding the said issue by the PCIT in the proceedings under section 263 of the Act. Appeal of the assessee is allowed.
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