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2016 (8) TMI 806 - ITAT MUMBAI

2016 (8) TMI 806 - ITAT MUMBAI - TMI - Power of CIT to invoke revision proceedings under section 263 - undisclosed cash deposits - Held that:- We notice that the assessing officer has taken up the case of the assessee for scrutiny upon receipt of AIR information about the cash deposits made into the bank account of the assessee as well as the proper purchased by him. Hence the during the course of assessment proceedings, the AO has asked specific queries with regard to the above said items. The .....

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2,72,745/- as on 31.3.2008. At page 14 of the paper book, the assessee has furnished the Balance Sheet of M/s SPG & Co. as on 31.3.2008, which shows a cash balance of ₹ 20,262/-. - We notice that the Ld CIT has compared the cash balance available in the books of SPG & Co., as on 31.3.2008 with the opening balance of Personal books as on 1.4.2009. Hence, we find merit in the submissions of the assessee that both the cash balances could not be compared and the Ld CIT has misdirected hims .....

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AO that he has been maintaining accounts with different banks and hence there has been overlapping of deposits. The relevant replies are available at page 11 of the paper book. The assessee has submitted the said overlapping was necessitated in connection with the purchase of property at Gaziabad. The assessee has also given the details of assessed income of past 14 years along with copy of income tax return acknowledgement and also copies of bank accounts. - With regard to the purchase of .....

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e notice that the assessee has specifically explained that his share in the property was 50% and has also explained the sources for making investment. - Thus, we notice that the assessee has given proper explanations to the assessing officer with regard to the impugned queries. The assessing officer has also discussed about the submissions made by the assessee in the assessment order and has accepted the same. Hence, the AO did not make any addition with regard to these items. - Hence th .....

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an (AM) :- The assessee has filed this appeal challenging the revision order dated 26.3.2014 passed by learned CIT-21, Mumbai and it relates to A.Y. 2009-10. 2. The assessee is challenging the validity of revision order passed by learned CIT. 3. The assessment in the hands of the assessee for the year under consideration was completed by the Assessing Officer on 13.12.2011 u/s. 143(3) of the Act. Subsequently, the CIT revised the assessment order u/s 263 of the Act with the following observation .....

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rty for a total consideration of ₹ 34,68,600/- jointly with his wife Smt. Vandana Gupta in Ghaziabad. The source of investment of 50% share of Smt. Vandana Gupta and the investment ₹ 11,00,000/- by the assessee during the financial year relevant to AY 2008-09 needs to be verified". 4. In response to the same the assessee made following submissions along with relevant documents:- 'With reference to your notice dated 15-01-2014 u/s 263 of the I.T. Act 1961 initiating proceedin .....

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01.04.2008 to 31.03.2009 is ₹ 12,72,745 (b) That the total cash withdrawals during the same period are only ₹ 4,89,940 whereas total Cash deposits amount to ₹ 22,96,337. 1.2 Only source of my income is my proprietory concern SPG & Co. Hence I file return of income disclosing income from my proprietory concern SPG & Co along with the audited P & L A/c, Balance Sheet, and Capital account appearing in the books of SPG & Co. Cash Balance shown in the balance sheet .....

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arately. In fact all cash receipts from or payments to the proprietor are shown in his capital account in the books of the business. Accordingly the it will be kindly seen that the two balances viz ₹ 20,263 with SPG & Co and ₹ 12,72,745 in my personal books are different and separate in nature and scope. 1.4 In response to an AIR query, I had explained all these facts to the A.0 and explained the opening cash balance of ₹ 12,72,245 with the help of copies of the returns of .....

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he information and documents and accepted the same and as such the assessment order suffers from no infirmity and there is no error in the assessment order. 2 CASH DEPOSITS The second reason for the proposed revision is for verification of cash deposits of ₹ 22,96,337. These deposits were explained in detail to the to the A.O. by my letter dated of 25-11-2011 and a detailed cash summary was provided explaining therein the source of deposit being the opening cash balance of ₹ 1272745 .....

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Jankalyan Bank 120000 2297125 Closing balance 11025 3 The A.O. in his assessment order considered the opening balances, our explanations and accepted the same. The A.0 correctly observed: "Regarding Cash Deposit, it is stated that "it is the opening balance of the earlier years along with cash [Balance] which is redeposited in bank". Hence the A.0 has considered the information and there is no error in his considered opinion. 4 PURCHASE OF IMMOVABLE PROPERTY 4.1 The Next second gr .....

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a and b) the investment of ₹ 11,00,000 during the financial year relevant to A. Y. 2008-09 4.2 I had purchased a residential house in Ghaziabad jointly with wife Vandana Gupta for ₹ 32,02,500. Stamp duty and other expenses amounted to ₹ 2,66,100. Thus the total cost of the house property was ₹ 34,68,600 to be contributed equally by both the joint owners viz me and my wife each contributing ₹ 17,34,300 ( Copy of Agreement enclosed vide Annexure -4). 4.3 Since Vandana .....

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al balance sheet. 4.5 I explained the position to A.O explaining that payment of 9,32,000 made during the current year and was covered in cash and bank summary. Hence the, question remains about verification of ₹ 11,00,000 paid during the A. Y. 2008-09. I had a loan facility form Janakalyan Sahkari Bank, which was utilized for making payment. The cheque was issued from the ICICI from the money transferred from Janakalyan Sahkari Bank as would be seen from the bank certificate and the copy .....

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7; 38,00,000/- with joint name of his wife Snit Vandana Gupta (PAN No ANJPG3909Q. The assessee has paid ₹ 11,00,000/- during the assessment year 2008-09 A's 9,32,500 during the assessment year 2009-10' 4.7 It is, therefore submitted that the A.O. while making assessment of MY income for A Y 2009-10 had sought, got and verified all the relevant books, documents, records and information and passed a wellconsidered order dated 13-12-2011 , hence it is respectfully submitted that there .....

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ks. With regard to the investment made in the purchase of flat, the Ld CIT took the view that the AO did not examine the sources of the assessee s wife, even though she was assessed to tax. Accordingly he took the view that the assessment order is erroneous and prejudicial to the interests of the revenue. Accordingly he set aside the assessment order and directed him to decide the issues afresh, after due verification. 6. We heard the rival contentions and perused the record. Before going into t .....

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e-tax Act, 1961 empowers the Commissioner to call for and examine the record of any proceedings under the Act and, if he considers that any order passed therein, by the Assessing Officer is erroneous in so far as it is prejudicial to the interests of the Revenue, to pass an order upon hearing the assessee and after an enquiry as is necessary, enhancing or modifying the assessment or cancelling the assessment and directing a fresh assessment. The key words that are used by section 263 are that th .....

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ction will be attracted . The Supreme Court held that an incorrect assumption of fact or an incorrect application of law, will satisfy the requirement of the order being erroneous. An order passed in violation of the principles of natural justice or without application of mind, would be an order falling in that category. The expression prejudicial to the interests of the Revenue , the Supreme Court held, it is of wide import and is not confined to a loss of tax. What is prejudicial to the intere .....

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two views are possible and the Income-tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the Revenue unless the view taken by the Income-tax Officer is unsustainable in law. The principle which has been laid down in Malabar Industrial Co. Ltd. [2000] 243 ITR 83 (SC) has been followed and explained in a subsequent judgment of the Supreme Court in CIT v. Max India Ltd. [2007] 295 ITR 282. 7. We shal .....

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rd to the above said items. The assessee, vide his letter dated 25-11-2011, has furnished his replies. The copy of the reply letter is placed at pages 8 to 12 of the paper book. A perusal of the same would show that the assessee has explained the details and sources for purchase of properties as well as the opening balance of cash. At page 18 of the paper book, the assessee has also furnished the personal Capital account and Personal Balance Sheet. We notice that the Personal Balance Sheet discl .....

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d and the Ld CIT has misdirected himself in comparing both of the same. The cash balance shown in the books of SPG & CO. shall be carried forward to the next year in the accounts of business. Similarly, the cash balance shown in the personal book shall be carried forward to the next year in the personal books only. Hence the first reasoning given by Ld CIT, in our view, is without proper appreciation of the facts available on record. 9. With regard to the cash deposits found in the bank acco .....

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10. With regard to the purchase of property, the assessee has given the PAN details of his spouse Smt. Vandana Gupta and has stated that the property was purchased in joint name. The assessee has stated that his share in the property is 50%. He has further stated that a sum of ₹ 11.00 lakhs was paid in the immediately preceding year. The assessee has also furnished cash flow statement, copies of bank statement of all banks. He has also stated that the payment for purchase of property was .....

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