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TMI Blog2020 (11) TMI 822X X X X Extracts X X X X X X X X Extracts X X X X ..... ny of facts and after verification of the details. The assessment was reopened on the ground of AIR information that the assessee had deposited in bank the amounts in cash of more than Rs. 10,00,000/-. The papers about the agreement to sale along with the family settlement(partition) memorandum were filed. After verification and detailed scrutiny the Ld. A.O framed the assessment and as such the same cannot be treated as erroneous and prejudicial and as such action u/s 263 is bad in law. 4. The order passed by the Ld. PCIT be quashed. Shriram Vaishnav ITA No.636/Ind/2019 Assessment Year 2009-10 1. The order passed by the Ld. PCIT is illegal and bad in law and hence be set aside. 2.The Ld. PCIT has erred in passing the order u/s 263 on the ground that the order passed by the Ld. A.O. is erroneous and prejudicial to the interest of the revenue. 3.It was proved before the Ld. PCI'T that the assessment was framed after due scrutiny of facts and after verification of the details. The assessment was reopened on the ground of AIR information that the assessee had deposited in bank the amounts in cash of more than Rs. 10,00,000/-. The papers about the agreement to sale al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ently Ld. Pr.CIT, Ujjain assuming his jurisdiction u/s 263 of the Act initiated the proceedings u/s 263 of the Act are issued following show cause notice dated 25.02.2019, to the assessee :- In this case, notice U/S 148 was issued on 23.03.2016. In compliance, the assessee filed return of income on 27.09.2016 declaring total income of Rs. 66,650/-. The assessment was completed u/s 143(3)1147 on 12.12.2016 by the AO (ITO-I, Dewas) at the returned income, which is considered erroneous and prejudicial to the interest of revenue for the following reasons :- On perusal and examination of records, it is noticed that the assessee has deposited cash of Rs. 19,05,600/- in the saving banks account. However, on going through the record, it is further noticed that _ (1) In respect of cash deposited in the savings bank account, the assessee stated before the Aa that the said amount was received as per family partition deed dated 21.05.2008 prepared by his father Shri Ramcharan Das. His father Shri Ramcharan Das sold agricultural land for a consideration of Rs.l,39,40,000/- as per sale agreement with Shri Santosh Patel dated 05.01.2008. The said amount was distributed amongst seven sons. . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ased father duly mentioned in the memorandum of family settlement. In view of the above submissions, the assessee has proper sources of cash deposits into bank account the same may please be accepted. 4. As regards, examine of assessee on oath, it is humbly submitted that the explanation of the assessee regarding cash receipts from father is duly supported by the documentary evidence i.e. family settlement memorandum and receipts of father is also supported by the agreement sale ancestral land. The assessee has filed both the documents before the Ld. Assessing Officer. The Ld. Assessing Officer. The Ld. Assessing Officer after seeing the documents has accepted after scrutinized the documents. Mere non examine of assessee on oath doesn't automatically lead to order of the Ld. Assessing Officer as erroneous. The father of the assessee is no more alive and as such the documents of agreement to sale and the memorandum of family settlement should be treated as conclusive proof In view of above submission and on the facts and circumstances the order of the Assessing officer is not prejudicial to the interests of the revenue. Also your honour an order cannot be termed as erron ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 63 are applicable on the issue of the case. 5. Thus, the order is erroneous and prejudicial to the interest of revenue in respect to the above issue. 6. The order of the AO is, therefore, set aside to the file of the AO with direction to examine the issue, as discussed above, and after affording proper opportunity to the assessee. The order dated 12.12.2016 passed u/s 143(3)/147 is, accordingly, set aside. 8. Now the assessee is in appeal before the Tribunal challenging the jurisdiction of Ld. PCIT assumed u/s 263 of the Act. 9. Ld. Counsel for the assessee on referring to the written submissions filed before Ld. PCIT and also before us submitted that the alleged amount of Rs. 19,05,000/- deposited by the assessee in the bank account was received from his father. The alleged amount was 1/7 part of the total consideration of Rs. 1,39,40,000/- received on family partition and the same was distributed by the father amongst his seven sons. The Ld. A.O has duly called for the details relating to alleged cash deposit during the assessment proceedings and the assessee has given specific reply with all the relevant documentary evidence in the form of bank statement, sale agreement an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment. Explanation 1.-For the removal of doubts, it is hereby declared that, for the purposes of this sub-section,- (a) an order passed on or before or after the 1st day of June, 1988 by the Assessing Officer shall include- (i) an order of assessment made by the Assistant Commissioner or Deputy Commissioner or the Income-tax Officer on the basis of the directions issued by the Joint Commissioner under section 144A; (ii) an order made by the Joint Commissioner in exercise of the powers or in the performance of the functions of an Assessing Officer conferred on, or assigned to, him under the orders or directions issued by the Board or by the Principal Chief Commissioner or Chief Commissioner or Principal Director General or Director General or Principal Commissioner or Commissioner authorised by the Board in this behalf under section 120; (b) "record" shall include and shall be deemed always to have included all records relating to any proceeding under this Act available at the time of examination by the Principal Commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner was not required to show any reason. It is a part of his administrative control to call for the records and examine them. The second feature would come when he will judge an order passed by an Assessing Officer on culmination of any proceedings or during the pendency of those proceedings. On an analysis of the record and of the order passed by the Assessing Officer, he formed an opinion that such an order is erroneous in so far as it is prejudicial to the interests of the Revenue. By this stage the learned Commissioner was not required the assistance of the assessee. Thereafter the third stage would come. The learned Commissioner would issue a show-cause notice pointing out the reasons for the formation of his belief that action under section 263 is required on a particular order of the Assessing Officer. At this stage the opportunity to the assessee would be given. The learned Commissioner has to conduct an inquiry as he may deem fit. After hearing the assessee, he will pass the order. This is the fourth compartment of this section. The learned Commissioner may annul the order of the Assessing Officer. He may enhance the assessed income by modifying the order. 14. It is wel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer's order must be erroneous and also prejudicial to revenue and if one of them is absent, i.e., if order of Income-tax Officer is erroneous but is not prejudicial to revenue or if it is not erroneous but is prejudicial to revenue, recourse cannot be had to section 263(1) - Held, yes - Whether if due to an erroneous order of ITO, revenue is losing tax lawfully payable by a person, it will certainly be prejudicial to interests of revenue - Held, yes - Assessee-company entered into agreement for sale of estate of rubber plantation - As purchaser could not pay installments as scheduled in agreement, extension of time for payment of installments was given on condition of vendee paying damages for loss of agricultural income and assessee passed resolution to that effect - Assessee showed this receipt as agricultural income - Resolution passed by assessee was not placed before Assessing Officer - Assessing Officer accepted entry in statement of account filed by assessee and accepted same - Commissioner under section 263 held that said amount was not connected with agricultural activities and was liable to be taxed under head 'Income from other sources' - Wheth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loss of revenue or prejudicial to the interests of the revenue. Unless both these factors co-exist or exist simultaneously, the Commissioner cannot invoke or resort to section 263. It cannot be exercised to correct every conceivable error committed by an ITO. Before the suomoto power of revision can be exercised, the Commissioner must at least prima facie find both the requirements of section 263, namely, that the order sought to be revised is prima facie erroneous and prejudicial to the interests of the revenue. If one of the other factor was absent, the Commissioner cannot exercise the suomoto power of revision under section 263." [emphasis supplied] 19. At this stage, before considering the multi-fold contentions of the learned representatives, we deem it pertinent to take note of the fundamental tests propounded in various judgments relevant for judging the action of the Commissioner of Income-tax taken under section 263. The Income-tax Appellate Tribunal in the case of Mrs. Khaiiza S. Oomerbhoy v. ITO [2006] 101 TIJ 1095 (Mum), analysed in detail various authoritative pronouncements including the decision of the hon'ble Supreme Court in the case of Malabar Industrial Co. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be simply because in his order he does not make an elaborate discussion in that regard. 20. In the light of the above decision and the ratios laid down therein and examining the facts of the case we find that the Ld. A.O vide his notice dated 3.10.2016 issued u/s 143(2) of the Act enclosed a Annexure and through point No.13, the assessee was required to explain the source of cash deposit in his saving bank account. In reply filed on 5.12.2016 the assessee has given complete details of the transaction in Para 13 & 14 in his reply and the same is reproduced below:- 13. As regards cash deposits in to saving bank account with Narmada Malwa Gramir Bank, Dewas, it is humbly submitted that the assessee has deposited Rs. 19,05,000/- in such account out of amount received in family partition from father. The father of the assessee sold ancestral agricultural land situated a Village Jasodgarh, Tehsil and District-Dewas Survey No. 414 admeasuring about 5.66 Hectare inherited by him. He has sold land for Rs. 1,39,40,000/- out of which he distributed Rs. 19,15,000/- amongst his seven sons. As such each son received share in ancestral property at Rs. 19,15,000/-. The assessee ha: deposited ..... X X X X Extracts X X X X X X X X Extracts X X X X
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