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TMI Blog2019 (12) TMI 1255X X X X Extracts X X X X X X X X Extracts X X X X ..... ng into account the assessee's submissions and documents were furnished by him and no material whatsoever has been brought on record by the PCIT which showed that there was any discrepancy or falsity in evidences furnished by the assessee. Hence, the order u/s.263 may be set-aside on all the issues. 3. Since, the basis issue in this ground of appeal is lack of inquiry. Therefore, all the grounds are considered together for the sake of brevity and convenience. 4. Brief facts of the case are that the PCIT noticed that assessment was re-opened on the ground that the assessee has deposited cash amount to be at Rs. 41,06,000/- in his bank account. On verification, it was noticed that the assessee has produced 40 bills of construction in which all amounts were below Rs. 20,000/-. The bills were computer print out. Therefore, the AO has failed to verify the correctness of such construction of business. Further, the assessee has produced cash book which showed cash deposit and cash withdrawal on various dates which were in the nature of payment booking advance by cash and cheque. However, the AO has failed to verify the booking and advances and advances received back during the year. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The ld. counsel submitted that the AO has issued an inquiry dated 29-06-2016 (PB-12), which was replied by the assessee vides letter dated 11-08-2016 which was placed paper book at page 14 to 15. According to the submission, the assessee has submitted that the nature of business activity is construction as contractor. Thus, the nature of business were duly explained to the assessee by his aforesaid letter and the AO has also mentioned in page 1 of his assessment order that the assessee is engaged in the business of construction and as filed his return of income u/s.44AD of the Act for the year under consideration. The ld. counsel further referred that the return was filed u/s.44AD, however the assessee has disclosed his income as net profit at Rs. 1,46,077/- as against the total turnover of Rs. 7,05,050/- which gives the NP @20% which is more than the income required to the different u/s.44AD of the Act. The assessee has also filed a copy of profit and loss account appeared at paper book page 4 with capital account, therefore the facts that the assessee is engaged in the business of construction has been duly disclosed to the AO and same stands verified by him. Therefore, the ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions which the assessment order should be erroneous and pre-judicial to the interest of the revenue of the discussed in the light of decision of Hon'ble Bombay High Court in the case of CIT v. Nirav Modi 390 ITR 292 (Bombay). In the said case that decision of Bombay Tribunal in the case of Narayan Tau Rane v. ITO 70 taxmannn.com 227, was also discussed wherein it was held that the ld. CIT should show that the view taken by the AO is unsustainable in law. In the case of M/s. Indus Best Hospitality (supra), the tribunal as specifically held that we have considered the query was raised by the AO, as to why interest was not received on the loan given to the related parties and as also why disallowance of intent should not be made u/s.141 of the Act. In respect of the said query assessee filed detail explanations which are duly supported to the judicial decisions, therefore, it was held that revision proceeding u/s.263 of the Act directing the AO to re-examine the interest expenditure was incorrect and in justified. The appeal of the assessee is allowed. The ld. counsel further submitted that the assessment was reopened on the basis of cash deposit in bank account, however, in the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the CIT over the AO. The Pr. CIT is empowered to act under section 263 of the Act when he considers that AO's order is erroneous as far as it is prejudicial to the interest of Revenue. It is a settled position of law that the aforesaid twin condition i.e. AO's order is erroneous and prejudicial to the interest of revenue is sine qua non for assumption of revisionary jurisdiction by CIT. As per the scheme of the Act, AO has a dual role to discharge while assessing the income of an assessee. He is both an investigator as well as an adjudicator. If the AO fails in discharging any of the two said duties i.e. as an investigator or that of an independent/impartial adjudicator, the CIT's supervisory jurisdiction is attracted because the order of the AO would be erroneous for lack of inquiry. Thus if he does not investigate, it would be erroneous for failure of AO to adjudicate as an independent/impartial adjudicator which means that if the AO passes assessment order in violation of natural justice, or there is bias or arbitrariness etc. then also the order of AO would be erroneous. When we say that lack of inquiry makes an AO's order erroneous, one has to keep in mind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome-tax Officer adopted one of the courses permissible in law and it has resulted in loss of Revenue; or where 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." 12. We find that that the AO had not verified the credit of Rs. 9,95,000/- on 10-12-2008 from M/s. Neer Developer with respect to the provisions of section 68 of the Act, on which no interest was charged by the assessee. The genuineness of amount of Rs. 22,32,000/- as loan given to his wife Smt. Anita Panchal, which were shown as outstanding in balance sheet was not examined as the same had to be verified as the assessee had not filed his return of income for the earlier years. Further, the loan given to his wife, No bank account or any such proof that the loan was given has been produced or called for the assessee during the assessment proceedings. The assessee has filed his return of income u/s.44AD, however no proof of business was called from the assessee by the AO and in form of any government li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 263 of the Act. The Ld. CIT (DR) relied on the judgement of Hon`ble Supreme Court in the case of Deniel Merchants P. Ltd. & Anr v. Income Tax Officer [SLP No(s) 23976/2017 dated 29.11.2017] in which various SLPs arising out of Hon`ble Calcutta High Court final order dated 10.04.2017 in GA NO. 599/2016 was dismissed. While dismissing the SLP, the Hon`ble Supreme Court observed as "In all these cases, we find that the Commissioner of Income-tax had passed an order under section 263 of Income Tax Act, 1961 with the observation that the Assessing Officer did not make proper inquiry while making the assessment and accepting the explanation of the assessee(s) insofar as receipt of share application money is concerned. On that basis the Commissioner of Income-tax had, after setting aside the order of the Assessing Officer, simply directed the Assessing Officer to carry out through and detailed inquiry. It is this order, which is upheld by the High Court. We see no reason to interfere with the order of the High Court." (Emphasis supplied by underline). The facts and circumstances of the above case of Hon`ble Supreme Court is applicable to the present case as in this case also no enquiry ..... X X X X Extracts X X X X X X X X Extracts X X X X
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