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2025 (5) TMI 884 - AT - Income TaxRevision u/s 263 - cash deposit in the bank account - Validity of reassessment proceedings - HELD THAT - After verifying the reply and the document produced by the Assessee AO made no addition on account of cash deposit in the bank account and passed assessment order u/s 147/143(3) of the Act on 13/11/2018. Further it is also contended by the Assessee that the Assessee has deposited the cash of Rs. 9, 00, 000/- on 07/02/2011. Thus it is clear that A.O. made proper enquiry and it is not the case that no enquiry has been made by the AO to invoke the provision of Section 263 by the PCIT. Thus in our considered opinion invocation of provision of Section 263 was nothing but fishing and rowing enquiry. Accordingly the impugned order of the PCIT is hereby quashed. Appeal of the Assessee is allowed.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered by the Tribunal in the present appeal include:
2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Validity of invoking jurisdiction under Section 263 of the Act by PCIT Relevant legal framework and precedents: Section 263 empowers the PCIT to revise an assessment order if it is found to be erroneous and prejudicial to the interest of revenue. The power is discretionary and can be exercised only when the order is demonstrably erroneous. The precedent in Ranbaxy Laboratories Ltd. vs. CIT (336 ITR 136) holds that if the primary ground for reopening an assessment under Section 147 ceases to exist, further additions or reassessments cannot be made. Court's interpretation and reasoning: The Tribunal observed that the PCIT's order invoking Section 263 was based on the assumption that the AO had not made any enquiry regarding cash deposits. However, the AO had conducted enquiry, examined the source of cash deposits, and accepted the explanation supported by documentary evidence including ancestral property valuation and sale consideration. Key evidence and findings: The Assessee had deposited Rs. 10,00,500/- in his bank account, explained as proceeds from sale of ancestral property shared among four legal heirs. The AO verified the documents and did not make any addition on account of cash deposits but added only Rs. 4,053/- as interest income, which was accepted by the Assessee. Application of law to facts: Since the AO had made proper enquiry and passed the assessment order after independent application of mind, the Tribunal held that the PCIT's invocation of Section 263 was unfounded. The primary ground for reopening under Section 147 was the cash deposit, which was satisfactorily explained and accepted. Treatment of competing arguments: The Department argued that the cash deposits were undisclosed and escaped assessment, justifying revision under Section 263. The Assessee countered that the AO had examined the source and no addition was warranted. The Tribunal sided with the Assessee, finding no lack of enquiry or error in the AO's order. Conclusion: The invocation of Section 263 by the PCIT was held to be erroneous and amounted to a fishing enquiry without basis. Issue 2: Applicability of Explanation 2 to Section 263 regarding allowance of relief without inquiry Relevant legal framework: Explanation 2 to Section 263 states that an order is deemed erroneous if the AO allows any relief without inquiring into the claim. Court's reasoning: The Assessee did not claim any relief in the return or during assessment proceedings. The PCIT's reliance on Explanation 2 was thus misplaced. Conclusion: Explanation 2 was not applicable as no relief was claimed or allowed without inquiry. Issue 3: Whether the assessment order was erroneous and prejudicial to the revenue Relevant legal framework: The power under Section 263 can be exercised only if the order is erroneous and prejudicial to the interest of revenue. Court's reasoning: The AO had examined the cash deposits, accepted the explanation, and made only a minor addition on interest income. The PCIT failed to demonstrate how the order was erroneous or prejudicial to revenue. Conclusion: The assessment order was not erroneous nor prejudicial to revenue. Issue 4: Validity of assessment order passed without quoting DIN Relevant legal framework: CBDT Circular No. 19/2019 mandates issuance of computer-generated DIN for all communications by Income Tax Authorities after 01.10.2019. Court's reasoning: The assessment order passed on 23.03.2022 consequent to the Section 263 order did not quote any DIN, rendering the order invalid as per the circular. Conclusion: The assessment order without DIN was invalid. 3. SIGNIFICANT HOLDINGS The Tribunal held: "It is clear that the Ld. A.O. made proper enquiry and it is not the case that no enquiry has been made by the A.O. to invoke the provision of Section 263 by the PCIT. Thus, in our considered opinion, invocation of provision of Section 263 was nothing but fishing and rowing enquiry." Core principles established include:
Final determinations:
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