TMI Blog2020 (11) TMI 822X X X X Extracts X X X X X X X X Extracts X X X X ..... family partition, the transaction was treated as explained by the Ld. A.O. All necessary evidences which could explain the source of cash deposits in the bank account by the respective assessee(s) is established and in the family partition deed the name of three assessee(s) named S/Shri Ram Swarrop Bairagi, Sriram Vaishnav and Shailendra Vashav who are in appeal before us are appearing. The nexus of cash deposit is proved with copy of sale deed, partition deed and bank pass book. We therefore in the given facts and circumstances of the case are of the considered view that specific information was called by Ld. A.O about the alleged cash deposits and the assessee has satisfied the Ld. A.O with complete details giving the source of cash deposit in the bank account. Therefore it is neither a case of no enquiry or inadequate enquiry - PCIT has wrongly assumed jurisdiction u/s 263 of the Act and the impugned order deserves to be quashed - Decided in favour of assessee. - ITA.No.633/Ind/2019, ITA No.636/Ind/2019, ITA No.639/Ind/2019 - - - Dated:- 24-11-2020 - Hon ble Kul Bharat, Judicial Member And Hon ble Manish Borad, Accountant For the Assessee : Shri S.S. Deshpande, CA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... airagi) ITA No.639/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 ₹ 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. 3. As all the issues raised in the instant appeals relates to the same group of assessee(s) and the facts giving arise to the order u/s 263 of the Act are also same therefore these were heard together and been disposed off by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... veracity of the transactions. In the light of entire facts discussed above, I am of the considered view that the assessment order passed u/s 143 (3)/147 on 12.12.2016 for the A. Y. 2009 10 in your case is erroneous as well as prejudicial to the interest of revenue, which requires to be revised u/s 263. However, before I proceed to invoke the powers u/s 263 and pass an appropriate order, I deem it proper to give you an opportunity of being heard in the matter. 6. The assessee duly replied to the above show cause notice submitting as under:- The assessee is an individual. He is earning income from bonk interest only. The assessee is not engaged in business or profession. The asssessee has received Rs. I9,15,000/- from father out of sale proceeds of ancestral agricultural land. He has deposited cash of ₹ 19, 05,000/@ in bank account out of above receipts. The father of the assessee had expired on 19/02/2016. 2. As regards cash deposits in to saving bank account with Narmada Malwa Gramin Bank, Dewas, it is humbly submitted that the assessee has deposited total ₹ 19,05,OOO/- in such account. He has deposited ₹ 9,90,000/- .9,25,000/- on 22/05/2008 out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 263 of Income Tax Act,1961. Tara Devi Aggarwal (Smt.) vs. CIT 88fTR 323 (SC). CIT vs. Max India Ltd. 295fTR 282 (SC) CIT vs. Ratlam Coal Ash Co. 171 fTR 141 (MP). CIT vs. Shri Govindram Seksariya Charity Trust 166 ITR 580 (MP) CIT vs. GabrialIndia Ltd. 203ITR 109 (Born). CIT vs. Smt. Minalben S.Parikh 215 fTR 81 (Guj). CIT vs. Sohana Woollen Mills 296ITR 238 (P H). It is therefore prayed your honour that the proceedings may please be dropped. 7. The submissions made by the assessee were not sufficient to satisfy the Ld. PCIT and and thus held that the assessment order dated 22.12.2016 issued u/s 143(3) of the Act as erroneous and prejudicial to the interest of revenue observing as follows :- 3.2 In respect of. the cash amount received of ₹ 19,05,000/- from the father, being the share of the assessee, on sale consideration of agricultural land of ₹ 1 ,39,40,000/-, the assessee did not furnish any details and documents except copy of family partition deed, sale agreement dated 05.01.2008 and death certificate of Shri Ramcharan Das. The assessee also did not file copy of registered deed of such' agricultural land, after a lapse of near ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... action of the amount received on family partition which has been thoroughly examined by the Ld. A.O conducting sufficient enquiry, Ld. PCIT was not justified in exercising his jurisdiction u/s 263 of the Act and the same deserves to be quashed. 10. Per contra Ld. Departmental Representative vehemently argued supporting the order of Ld. PCIT. 11. We have heard rival contentions and perused the records placed before us and carefully gone through the submissions made by the assessee. In all these appeals the common issue is that of challenging the order passed by Ld. PCIT u/s 263 of the Act treating the assessment order(s) as erroneous and prejudicial to the interest of revenue. We observe that Ld. PCIT has referred to transaction of cash deposit of ₹ 19,05,000/- in the saving bank account by the respective assessee(s). In the show cause notice Ld. PCIT has himself referred to the transaction arising out of family partition. Assessee s father Shri Ramcharan Das received sale consideration from sale of agriculture land at ₹ 1,39,40,000/- on 5.1.2008 (copy of sale deed placed at PB pg-22). Family partition deed is dated 21.05.2008. Assessee is having six brothers. Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subject matter of any appeal filed on or before or after the 1st day of June, 1988, the powers of the Principal Commissioner or] Commissioner under this sub-section shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in such appeal. Explanation 2.-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 section 119; or (d) the order has not been passed in accordance with any decision which is prejudicial to the assessee, rendered by the jurisdictional High Court or Supreme Court in the case of the assessee or any other person. (2) No order shall be made under sub-section (1) after the expiry of two years from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the order must be erroneous and prejudicial to the interest of revenue needs to be satisfied. This ratio stands laid down by various Hon'ble Courts. 15. Hon'ble Jurisdictional High Court of Madhya Pradesh in the case of H.H. Maharaja Raja Power Dewas (1983) 15 Taxman 363 in para 10 of this order held that However, the first argument, viz., that an assessment order without compliance with the procedure laid down in section 144B is erroneous but not prejudicial to the interests of the revenue conferring revisional jurisdiction on the Commissioner under section 263(1), has force. Under section 263(1) two pre-requisites must be present before the Commissioner can exercise the revisional jurisdiction conferred on him. First is that the order passed by the ITO must be erroneous. Second is that the error must be such that it is prejudicial to the interests of the revenue. If the order is erroneous but it is not prejudicial to the interests of the revenue, the Commissioner can not exercise the revisional powers under section 263(1) of the Act. There cannot be any prejudice to the revenue on account of the ITO's failure to follow the procedure prescribed under se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee, in absence of any supporting material without making any enquiry, exercise of jurisdiction by Commissioner under section 263(1) was justified - Held, yes 17. Hon ble Gujarat High Court in the case of Smt. Minalben S. Parikh [1995] 215 ITR 81 order pronounced on 17.10.1994 Para 12 From the aforesaid, it can well be said that the well-settled principle in considering the question as to whether an order is prejudicial to the interests of the revenue or not is to address oneself to the question whether the legitimate revenue due to the exchequer has been realised or not or can be realised or not if his orders under consideration are allowed to stand. For arriving at this conclusion, it becomes necessary and relevant to consider whether the income in respect of which tax is to be realised, has been subjected to tax or not or if it is subjected to tax, whether it has been subjected to tax at a rate at which it could yield the maximum revenue in accordance with law or not. If income in question has been taxed and legitimate revenue due in respect of that income had been realised, though as a result of erroneous order having been made in that respect, in our opinion, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oader principle to judge the action of the Commissioner of Income-tax taken under section 263. (i) The Commissioner of Income-tax must record satisfaction that the order of the Assessing Officer is erroneous and prejudicial to the interests of the Revenue. Both the conditions must be fulfilled. (ii) Section 263 cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer and it was only when an order is erroneous that the section will be attracted. (iii) An incorrect assumption of facts or an incorrect application of law will suffice the requirement of order being erroneous. (iv) If the order is passed without application of mind, such order will fall under the category of erroneous order. (v) Every loss of revenue cannot be treated as prejudicial to the interests of the Revenue and if the Assessing Officer has adopted one of the courses permissible under law or where two views are possible and the Assessing Officer has taken one view with which the Commissioner of Income-tax does not agree. If cannot be treated as erroneous order, unless the view taken by the Assessing Officer is unsustainable under law . (vi) If whil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t during the year under assessmen1 We are enclosing herewith copy of family settlement (Partition) memorandum along with copy of sale agreement of agricultural land for your kind perusal. In view of the above submissions, the assessee has proper sources of cash deposits into bank account the same may please be accepted. 14. The agricultural land sold by the father of the assessee is situated at village Jasodgarh, Tehsil and District-Dewas. The road distance of the Jasodgarh fret Dewas is about 15 Kilometers. The Limit of Dewas Nagar Palik Nigam is up to Village- Bilawali and the road distance of Bilawali from Dewas is about 5 Kilometers. As such the 'agricultural land is situated beyond 8 Kilometers from the limit of local Municipal Corporation. As such the land is not a capital assets with the provisions of section 2 (14) (iii) of the Income Tax Act,1961. It is also submitted that the sale deed of agricultural land is presently not available with the assesse The father of 'the assessee had also expired on 19/02/2016. We are enclosing herewith death certificate of father for your kind perusal. The family of the assess is purely an agricultural family and does not e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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