TMI Blog2016 (12) TMI 799X X X X Extracts X X X X X X X X Extracts X X X X ..... y worded as have been noted in the audit objection. Therefore, subsequently on mere audit objection, the Ld. Principal CIT, was not justified in initiating the proceedings u/s.263of the I.T. Act. The Principal CIT was, therefore, not justified in holding that Assessing officer did not make necessary enquiry into the matter. The Ld. Principal CIT merely disagree with the findings of the Assessing officer, therefore, it could not be termed as assessment order to be erroneous and prejudicial to the interest of Revenue. Therefore, we do not subscribe to the view of the Principal CIT in exercising jurisdiction u/s.263 - Decided in favour of assessee - ITA No. 499/CHD/2016 - - - Dated:- 9-11-2016 - Bhavnesh Saini, Judicial Member And Annapurna Gupta, Accountant Member Ajay Jain,Rohit Kaura and B.M. Monga for the Appellant Ravi Sarangal, CIT, DR for the Respondent ORDER Per Bhavnesh Saini, JM This appeal by the assessee has been directed against the order of Ld. Principal CIT, Patiala dated 02.03.2016 for assessment year 2011-12 u/s.263of the Income-tax Act, 1961. 2. We have heard the Ld. Representatives of both the parties and perused the material on record. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on 1.4.2010 with Sukha Singh for leasing out the agricultural land for two years. The assessee also filed an agreement executed on 13.11.2009 for sale of agricultural land for ₹ 16,40,000/- per acre and agreed to execute the sale deed/Registry upto 15.6.2011. It is noted in the show cause notice that agreement is not registered with the Sub Registrar, Rajpura. It is also noted that the agreement prepared is fake and bogus. There is huge cash deposits in the bank accounts of the assessee details of which are noted in the notice. It was therefore found that except cash flow and books of account, the Assessing officer did not make enquiries with regard to source of deposit and since Assessing officer failed to verify/enquire the cash deposits amputating to ₹ 40,70,000/- and ₹ 32,49,500/- deposited in Allahabad Bank and ICICI bank, Rajpua respectively, therefore, it was inferred that assessment order passed by the Assessing officer is erroneous in so far as it is prejudicial to the interest of the Revenue. 5. The assessee in response to the show cause notice filed a detailed reply before Ld. Principal CIT which is reproduced in the impugned order in which the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see. His finding in paras 4 and 5 of the impugned order are reproduced as under:- 4. I have considered the submissions carefully. As evident from the aforesaid notice and assessee's reply, this case has been selected for verifying the cash deposits exceeding ₹ 10 lacs in the assessee's saving bank account with Allahabad Bank, Rajpura and ICICI Bank, Rajpura amounting to ₹ 40,70,000/- and ₹ 32,49,500/-, respectively. During the course of assessment proceedings, the assessee was asked to explain the source of these cash deposits with the Bank. In response, the assessee stated that the main source of these cash deposits was an advance received in view of the agreement to sell the agricultural land measuring 17.5 acres situated at Village Harpalpur, Tehsil Rajpura. The assessee also filed a photocopy of Ikrarnama dated 13.11.2009 and cash flow statement in support of her claim. The AO accepted assessee's submissions without making any further enquiry and verifying the contents of the Ikrarnama, as the said Ikrarnama was not registered with the Competent Authority i.e. concerned sub-registrar. No instance has been recorded from the assessment record wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Malabar Industrial Ltd. vs. CIT reported at Further in the case of Gee Vee Enterprises vs. Addl. CIT and Ors.99 ITR 315 (Del), the Hon'ble Delhi High Court have held in that not making an inquiry warranted on the facts of a case will make the assessment order erroneous. Similar view has been taken by the Hon'ble Madras High Court in the case of K.A. Ramswamy Chettiar and Anr vs. CIT Moreover, the facts of the case are squarely covered by Explanation 2 of Sec.263, which is inserted w.e.f. 01.06.2015. It reads as under:- For the purposes of this section, it is hereby declared that an order passed by the Assessing Officer shall be deemed to be erroneous in so far as it is prejudicial to the interests of the revenue, if, in the opinion of the principal Commissioner or Commissioner:- a) The order is passed without making inquiries or verification which should have been made; b) The order is passed allowing any relief without inquiring into the claim; c) The order has not been made in accordance with any order, direction or instruction issued by the Board under section119; or d) The order has not been passed in accordance with any decision which is pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rained from alienating the suit property. He has also submitted that all the details were filed before the Principal CIT which have not been examined by him. He has relied upon the order of the ITAT Chandigarh Bench in the case of Jaswinder Singh vs. CIT in ITA No. 690/Chd/2010 dated 9.3.2012 in which the Tribunal following the decision of the Hon'ble Punjab and Haryana High Court in the case of CIT vs. Sohana Woolen mills 296 ITR 238 (P and H)] and other has held that further it is apparent that the Commissioner of Income Tax has initiated the revision proceedings only on the basis of Audit Objection. Such exercise of power under section263of the Act is not tenable in law. The order us263of the Act was set aside and appeal of the assessee has been allowed. He has also relied upon the order of the ITAT Chandigarh Bench in the case of Shri Kirti Anand vs. CIT-II, Chandigarh in ITA No. 540/Chd/2013 dated 14.10.2015 in which also the Tribunal following the decision of the Hon'ble Punjab and Haryana High Court in the case of CIT vs. Sohana Woolen Mills (supra) decided the issue in favour of the assessee and set aside the order u/s.263of the Act. He has submitted that there wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the Assessing officer and Assessing officer asked the assessee to file evidence in respect of land holding, copies of all bank account with source of the deposits therein, basis of estimation of the agricultural income and basis of estimation of business income. The assessee filed copies of the purchase deed and 'biana' (agreement) in respect of land purchased and sold along with copies of bank statement of Allahabad bank and ICICI bank before the Assessing officer. The assessee also filed details of payments received and paid on account of land sold and flat purchased. Copy of the cash book was filed and placed on record. The Assessing officer after examining all the evidences and material and advance money received through the agreement to sell accepted the claim of the assessee of source of ₹ 90 lakhs received through the agreement to sell in question. The Assessing officer, therefore, did not take any adverse view against the assessee in this regard. It may be noted here that since the assessment was taken up for scrutiny only for the purpose of verifying the cash deposits in these two bank accounts of the assessee, therefore, there is no question that Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... avour of the purchaser. The judgment of the Civil Court clearly proves that assessee genuinely entered into the agreement to sale dated 13.11.2009 because assessee has been restrained from alienating suit properly to any third person. The Principal CIT observed in the impugned order that these facts and judgments of the Civil Court was not submitted before the Assessing officer during the course of assessment proceedings, therefore, same cannot be considered at this stage. The findings of the Ld. Principal CIT cannot be sustained in law because the Assessing officer passed the assessment order on 17.9.2013 and Civil Court passed the judgment on 16.2.2016, therefore, there is no question of the producing the copy of the judgment before Assessing officer at assessment stage. The Ld. Principal CIT also held that the judgment the Civil Court was not part of the record, therefore, cannot be admitted to at the stage of proceedings u/s.263of the I.T. Act. These findings of the Ld. Principal CIT are also not sustainable in law because the judgment of the Civil Court is admissible in evidence without proving the same at any stage. The judgment of the Civil Court cannot be ignored for the pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the assessee was engaged in the process of manufacturing of products and accordingly he had granted concession under section80-IB. The claim of the assessee had been found to be genuine. The Assessing Officer had also examined the various workers of the assessee and then recorded the finding. The Assessing Officer was justified in granting the special deduction under section80-IB. The order of revision disallowing the special deduction was not valid. 13. The Hon'ble Gauhati High Court in the case of Smt. Lila Choudhary vs. CIT and Another 289 ITR 226 (Gauhati) held as under:- Held, that in the order the Commissioner had not recorded any opinion that the order of assessment of the petitioner for the assessment year 1992-93 was erroneous and prejudicial to the interests of the Revenue. That was the opinion recorded in the notice dated August 14/19, 1996, but the opinion being recorded in a notice issued to the petitioner asking to show cause, must be understood to be rebuttable. Such opinion was required to be reiterated after hearing the petitioner and after holding the necessary enquiry. On receipt of the show cause notice, the petitioner submitted an elaborate rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Court in the case of Director of Income-tax vs. Jyoti Foundation 357 ITR 388 (Delhi) held that if Reversionary authority finds case of inadequate enquiry, must must inquiry to make a case u/s.263of the I.T. Act 17. The Hon'ble Gujarat High Court in the case of CIT vs. Amit Corporation21 Taxman.Com 64 (Gujrat)held that where Assessing officer after detailed verification of record and making inquiry had framed assessment, the CIT cannot revised it u/s.263of the I.T. Act. 18. The ITAT Chandigarh Bench in the case of Jaswinder Singh vs. CIT in ITA No. 690/Chd/2010 dated 9.3.2012 (supra) set aside the order u/s.263of the I.T. Act because CIT has initiated the revision proceedings only on the basis of audit objections. Similar view is taken in the case of Kirti Anand vs. CIT-II, by ITAT Chandigarh vide order dated 14.10.2015 (supra) following the decision of Hon'ble Punjab and Haryana High Court in the case of CIT vs. Sohana Woolen mills (P and H)], in which it was held that a mere audit objection and the fact that a different view could be taken, are not enough to say that the order of the Assessing Officer was erroneous or prejudicial to the interests of the Revenue . ..... 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