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2023 (3) TMI 259 - AT - Income TaxRevision u/s 263 by CIT - Cash deposits during the monetization period - conclusion by the learned PCIT, that inquiries or verification which ought to have been done, had not carried out by the AO - whether AO has carried out the inquiries or verification in regard to cash deposits under reference which ought to have been carried out in the circumstances of the case? - HELD THAT:- As submitted that AO has issued specific show cause notice wherein the assessee was asked to substantiate the genuineness of the high cash sales made in the month of October 2016. In response thereto, the assessee filed submissions on 24/12/2019, which are available - The other notices issued and information called under section 133(6) of the Act are also in relation to high cash sales. In such circumstances, it cannot be said that Assessing Officer ignored the fact of the cash sales. The evidences like sale bills, sale registers, stock register, partywise cash sales, have been filed during assessment proceeding, which demonstrates that not only purchases, but sales were also duly verified by the AO. PCIT stated that assessee has purchased diamonds and sold diamonds to small customers, which is not practical as a small retail customers don't buy loose diamonds. In this regard, the assessee submitted that it has not sold loose diamonds to customers, but loose diamonds are purchased and after engaging labourers, jewelry was made, which was then sold. The sales are only in respect of the jewelry during October 2016 and which includes bangles, pendants, rings, earrings etc, which is evident from the copy of the bills, ledger accounts, labour bills etc. detailed filed in the paperbook. The finding of the PCIT that enquiry or verification which ought to have been done, had not been done, is devoid of merit and not justified. The Explanation -2 to section 263 of the Act cannot be invoked in such circumstances. The order of the Ld. PCIT is accordingly set aside. The grounds of the appeal of the assessee are accordingly allowed.
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