2023 (9) TMI 607 - ITAT DELHI

Revision u/s 263 - ‘no enquiry’ v/s ‘inadequate enquiry’ - nature and source of cash deposits nor any explanation has been furnished by the assessee; that source of investment towards purchase of property has not been correctly examined; that short term capital gain arising on sale of property has not been examined; that documentary evidence to examine the genuineness of bank charges & interest expenses - HELD THAT:- AO recorded a finding that cash deposit in saving bank account has been verified and found in order after examining the books of account of the assessee and reconciliation of cash deposit with reference to cash book and statement of account obtained from the bank by issue of notice u/s 133(6) of the Act. We also observe that the Ld. AO accepted the calculation of short-term capital gain declared by the assessee after due verification.

We are, therefore, of the view that it is not a case of no enquiry. Rather there is lot of evidence on record to indicate that there was full application of mind by the AO on the twin issue of impugned cash deposit and purchase and sale transaction/capital gain declared by the assessee.

The decisions relied upon by the assessee fully support the view canvassed by the assessee before us. In a recent decision in PCIT (Central) vs. Kanin (India) [2022 (5) TMI 1414 - PUNJAB AND HARYANA HIGH COURT] that if the Ld. PCIT did not point out what enquiries or verification should have been made but had not been made by the Ld. AO, the order passed by the Ld. PCIT under section 263 of the Act is not sustainable.

As regards expenses claimed under the head bank charges and interest and loan from three parties, the assessee submitted before the Ld. PCIT that detailed list of expenses was filed during reassessment proceedings which were verified by the Ld. AO from the ledger account and thereafter he allowed them. From certain other expenses, the Ld. AO disallowed 20% being unverifiable for the purposes of business. It was further submitted that list of unsecured loan was filed before the Ld. AO and confirmation of the parties were also filed in response to the query made by the Ld. AO. On the face of these facts on record, we are unable to subscribe to the view of the Ld. PCIT that genuineness of bank charges were not examined and that enquiry was not made in respect of loans obtained during the year from three parties.

As now well established that where the Ld. AO has examined the issues on the basis of which the case is re-opened during re-assessment proceedings by issuing various notices under section 142(1) of the Act with questionnaire and claim of the assessee is accepted by the Ld. AO, the mere fact that he has not elaborated the issues in the reassessment order will not entitle the Ld. PCIT to exercise justification under section 263 of the Act.

Placing on record by the Ld. CIT(DR) the fresh assessment order framed by the Ld. AO consequent to order u/s 263 of the Act before us is of no value in so far as the present appeal is concerned.

We have reached the conclusion that the impugned order of the Ld. PCIT passed under section 263 of the Act is not sustainable which we hereby quash. Decided in favour of assessee.