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TMI Blog2017 (10) TMI 932X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee was taken into scrutiny as there were huge cash deposits to the tune of Rs. 57.39 lacs approximately appearing in the Saving Bank Accounts of the assessee. The A.O. during the assessment proceedings noted that the assessee is an agriculturist and also has some income from sale of milk and finally the order u/s. 143(3) was passed by the A.O. on 12th August, 2013 in which he accepted the returned income of Rs. 1,59,800/-. Thereafter, from the perusal of assessment records, it was noticed that out of Rs. 57.39 lacs (approximately) cash deposited in the saving bank account of the assessee maintained with Allahabad Bank (Rs. 22.40 lacs approx.), in PNB (Rs. 18.01 lacs approximately) and in Union Bank of India (Rs. 16.98 lacs approx.). The assessee submitted that he sold agricultural land on 29.4.2010 for Rs. 12.76 lacs approximately and thereafter on 19.10.2010 for Rs. 14.54 lacs approximately. Thus, the assessee submitted some explanation for the source of cash deposits to the tune of Rs. 27.25 lacs approximately. However, for the remaining amount i.e. Rs. 30.14 lacs (approximately) remained unexplained and unverified. Further, it is also seen that even the amount of Rs. 27.25 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income namely other sources (Bank Interest) House Property and petty sale of Milk of own cattles. Agriculture Income of Rs. 5.5 Lacs from agriculture holding of 20 Acres. Alike income from agriculture in the preceding years were as under and accepted by revenue. AY 2010-11 6.50 Lacs Agriculture income in AY 2011-12 (under appeal) AY 2009-10 6.0 Lacs Reduced on account of Sale of part of lands in April 2010 AY 2008-09 5.0 Lacs AO having completed Assessment u/s 143(3) taking into consideration bank accounts, cash flow statement, called u/s 143 (2) - pages 6 - 7 Appellants reply dated 27.07.2013 duly considered - pages 8-9, 10-21 and 21-22. CIT's notice u/s 263 The notice appears to be on account of alleged deficiency of examination of records and inadequacy of funds available for making deposits in Bank. The observations of CIT that cash withdrawals have been withdrawn and re-deposited is not understood as the appellant was having the Bank Accounts and certain transactions of gift to daughter in law acquisition of plots and purchase of car were through banking channel, are relevant for taking adverse view. CIT in the light of above observations contained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ), (v) CIT v. Usha International Ltd.f2012] 348 ITR 485/210 Taxman 188/25 taxmann.com 200 (Delhi), (vi) JK. Synthetics Ltd. v. CBD7T 1972-183 ITR 335 (SC), (vii) Sirpur Paper Mill Ltd. v. CWT[1970] 77 ITR 6 (SC), (viii) Gee Vee Enterprises v. Addl. CIT[1975] 99 ITR 375 (Delhi) (ix) ITO v. D.G. Housing Projects Ltd.[20 12] 343 TTR 329/20 taxmann.com 587/[2013] 212 Taxman 132 (Delhi) 2.2 The co-ordinate bench has stated as under, "28. We have considered the detailed submissions of both the parties and have perused the record of the case keeping in view the various authoritative pronouncements in this regard. There cannot be any quarrel with the legal propositions, as advanced by both the parties. It has consistently been held that if the AO's conclusion is arrived at after due application of mind on a particular issue, then the order cannot be said to be erroneous. 'Due application of mind' implies that if the assessee has merely responded to the AO's query and the AO, without proper verification of replies, accepts the same, then, it cannot be said to be a case of due application of mind. 28.1 Ld. Special counsel has rightly pointed out that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Thus, it is evident that Hon'ble Delhi High Court in D.G. Housing Projects Ltd. (supra) clearly pointed out that the facts in Gee Vee Enterprise (supra) were entirely different. Thus, the ratio laid down in the case of Gee Vee Enterprise (supra) as well as D.G. Housing Projects Ltd. (supra), have to be taken into consideration depending upon the facts obtaining in a particular case while deciding various issues. The broad principle that emerges from various decisions is that if AO has merely accepted the assessee's explanation on various issues without proper inquiry then the same would come within the ambit of 'lack of enquiry' and not 'inadequate inquiry'. If a particular issue comes within the ambit of complete lack of inquiry then the order is to be considered as erroneous as well as prejudicial to the interests of revenue but if the case is of inadequate inquiry, then ld. ClT has to demonstrate that how the order was erroneous and prejudicial to the interests of revenue. This aspect we will take into consideration while deciding various issues on merits. In the result, this ground is disposed of accordingly"( emphasis supplied). 2.4 The ratios of va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs and returned a findings the in spite of being new creditors, in 7 cases, no enquiry was made. 3.6 The CIT has also examined the ledger accounts of the sundry creditors( e.g. Prayan Enterprise and Aggarwal Brothers) which show cash payments of below the prescribed limit on consecutive days. A person of ordinary prudence, much less income tax officer, can clearly see a pattern in such payments which is unnatural. 3.6 During the course of proceedings u/s 263, the CrT examined the ledger 'accounts of the sundry creditors and (through application of mind) found specific instances of violation of provisions of section 40A(3) which were not seen by AO. It shows non-application of mind by the AO. 4.1 After considering the relevant material on record and giving due opportunity of being heard to the assessee, the CIT came to a logical and judicious conclusion that this issue was not considered by the AO. 4.2 Presumption is in the favour of the revenue by virtue of sub-section ( e) of 114 of Evidence Act, 1872 which reads as under:- " Section 114 in The Indian Evidence Act, 1872 114 Court may presume existence of certain facts. -The Court may presume the existence of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne in case of ' opinion', also. 5.3 The assessee has failed to submit cogent material to show that this opinion is perverse." 8. In this case the AO has passed the following order u/s. 143(3) of the I.T. Act, 1961 vide order dated 12.8.2013: "The assessee has filed his income tax return on 26.9.2011 for the AY 2011-12 declaring income at Rs. 1,59,800/- which was processed on 17.1.2013. Later on, the case was selected for scrutiny through CASS. Accordingly, notice u/s. 143(2) dated 14.8.2012 was issued and served upon the assessee fixing the case for 29.8.2012. On the fixed date of hearing, Sh. Kehar Singh himself attended the hearing. Notice u/s. 142(1) dated 17.5.2013 alongwith detailed questionnaire was issued and served upon the assessee fixing the case for 05.6.2013 and the same was complied with. In response to questionnaire and various order sheet entries, the assessee through its counsel Sh. SB Gupta, Adv. has filed his replies on various dates which have been perused. The assessee is an agriculturist and has some income from sale of milk. He is not doing any business. After discussion, returned income at Rs. 1,59,800 is accepted. Assessed. Issue requisite docu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. Pr. CIT rightly issued notice u/s. 263 of the I.T. Act to the assessee on 28th December, 2015 on the issues discussed above. In response, the assessee/his Advocate attended the proceedings on 13th January, 20th January and 3rd February, 2016 and also filed the written submissions to support their case that the action u/s. 263 of the Act is not warranted in this case. The assessment records and the submissions filed by the assessee during assessment proceedings as well as during the proceedings u/s. 263 have been perused carefully and assessee submissions/explanation cannot be accepted on account of the following reasons :- i) The assessee mainly submitted that he had already filed the cash flow statement and about the source of cash deposits, he mainly submitted that the cash is credited out of sale of agricultural land (twice), withdrawals from Bank Pass Books and sale of agriculture produce. He also filed the copies of the Saving Bank Accounts of the assessee. a) As far as the details of sale of agriculture produce is concerned, it is found that the agriculture produce was sold in April, 2010 and the total sale amount is shown as Rs. 5.72 lacs. Here it is also relevant to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... look at the nearest cash deposit in the three Bank accounts of the assessee, then we find that on 23rd September, the assessee had deposited Rs. 9 lacs in PNB so there is gap of 26 days and then the next nearest date is on 11th November, 2010 where Rs. 5 lacs is deposited by the assessee in Union Bank account. Here also there is gap of 23 days after the date of Registry. Thus, considering the substantial gaps of time, no matching amounts, no credit can be allowed to the assessee on account of sale of agricultural land by him. c) As far as the assessee's claim of withdrawing from one Bank and later depositing again in the same Bank/other banks is concerned then, if we look at the dates of withdrawals of substantial amounts then we find that the withdrawals are made for specific purpose like purchase of property (Rs.7.25 + 7.25 lacs on 29th November, 2010), for purchase of car (Rs.4.83 lacs on 24th June, 2010), gift given to assessee's daughter-in-law (for booking a plot for Rs. 7lacs on 20th May, 2010) etc. Secondly, usually the withdrawals are not meant for depositing the same as cash in the same Bank account or in other bank accounts on the same day/other dates. Thirdly ..... X X X X Extracts X X X X X X X X Extracts X X X X
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