TMI Blog2018 (5) TMI 2109X X X X Extracts X X X X X X X X Extracts X X X X ..... by the AO, in our opinion, shall be deemed to be erroneous in so far as it prejudicial to the interest of the Revenue, if the Pr.CIT would have specifically pointed out that which of inquiries or verification should have been carried out by the AO in this regard and the AO failed to carry out those inquiries and verification as desired by the Pr. Commissioner of Income-tax. Since the Pr.CIT has not suggested the basis of inquiry or verification to be carried out by the AO, the order passed by the AO cannot be deemed to be erroneous in so as far as it is prejudicial to the interest of the Revenue. AO has considered cash deposits as unexplained and considered the same in the case of Shri Ankit V. Parekh and made addition on this account by estimating profit @ 8%. It may also be noted that assessment was reopened for verification of these very deposits, therefore, it was incumbent on the AO to make such enquiry in respect of these issues. In view of these facts and circumstances, we find that the AO has made due enquiries. Since we find that the AO had made enquiries regarding cash deposits in bank account and taken a view and considered for addition and accepted the version of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er section 143(3) read with section 147 of the Act on 29.03.2016 accepting the returned income of ₹ 60,534. The AO and Range Head of Navsari have proposed that the assessment order in this case is erroneous. Therefore, Pr.CIT issued a notice under section 263 on 10.03.2017 fixing hearing for 14.03.2017. However, no one attended on 14.03.2017 and plea was taken by the assessee vide letter dated 14.03.2017 submitted that assessment is not getting time barred by 31.03.2017, hence, hearing be adjourned. In response to which, a letter was issued on 15.03.2017 fixing hearing for 21.03.2017 but one attended, hence, Pr.CIT has passed the order based on show cause issued. The Pr.CIT observed that the cash deposits of ₹ 10,93,460/- with IDBI and ₹ 12,99,800/- with Axis Bank , which the AO added in the case of Ankit Vinod joint holder of bank account with Axis Bank. But, no addition was made in the hands of Ankit Vinod Parekh also. Therefore, this amount of ₹ 12,99,800/- was remained as unexplained and should have been brought to tax in the hands of the assessee or in the hands of Shri Ankit Parekh. Therefore, the AO made grievous error by not making addition only on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts of ₹ 12,99,800/- has been considered. With regard shares of ₹ 50,63,754/- o such shares are held by the assessee, therefore, the observation made by the Pr.CIT in the show cause under section 263 that no addition is made in respect of cash deposits of ₹ 12,99,800/- is incorrect. The assessee had shown bank account with IDBI in his balance sheet filed with the return of income and same represented sales made by the assessee, and is therefore, accounted. Regarding source of acquisition of shares of ₹ 50,63,754/- no such shares are held by the assessee. Further, no details were mentioned in show cause notice under section 263 of the Act. There is no allegation of the Revenue, the assessee has holding shares of particular company. The Pr.CIT has issued notice under section 263 on 10.03.2017 and sought information by 14.03.2017, which was not possible within short time and the assessee was not expected to maintain books of accounts beyond six years under Rule 6F(5) by which the limit was expired on 31.03.2016. Therefore, by placing reliance in the case of CIT v. Minalben S. Parikh 215 ITR 81 (Guj) and CIT v. Gabriel India Ltd. 203 ITR 108(Bom) and Malabar Indu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner has a different opinion in the matter and that only in cases where there is no enquiry, the powers u/s.263 of the Act can be exercised. The Pr.CIT cannot pass an order that further / through enquiry should have been made by the AO. It was contended that Pr.CIT took the basis of CIB/AIR information for passing order under section 263 of the Act, but did not give finding about prejudicial nature of order of the AO. It has been held by the Hon`ble Delhi High Court in the case of Pr. CIT v. Mera Baba Realty Associates Pvt. Ltd. [2017] 99 CCH 235 (Del) that Pr.CIT must be satisfied, after application of mind, the order of the AO was erroneous with reference to material made available to him. No such application of mind by Pr. CIT was evident from impugned order which is under consideration before Tribunal. 6. Per contra, the Ld. CIT (DR) vehemently relied upon the order of Pr.CIT and submitted that Pr.CIT has rightly exercised jurisdiction under section 263 of the Act by directing the AO to make further enquiry. The Ld.CIT (DR) submitted that the case was reopened based on AIR information, but the AO has not made enquiry and simply accepted the explanation of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made on this account is based on wrong foundation. Similarly, we find that the assessee has disclosed bank account with IDBI in her balance sheet filed along with return of income, and same are claimed as cash sales, which have been accepted by the AO after making enquiry, therefore, same cannot be treated as undisclosed. Similarly, with regard to investment in shares, we find that Pr.CIT has not pointed out that which shares are held by the assessee. We also notice that in consequent to proceeding under section 263, an assessment order was passed wherein the AO has not made any addition on account of investment in shares but made some other deposits which are still not clear. Thus, we find that the AO has made enquiry and taken a plausible view after application of mind. Therefore, the order passed by the AO, in our opinion, shall be deemed to be erroneous in so far as it prejudicial to the interest of the Revenue, if the Pr.CIT would have specifically pointed out that which of inquiries or verification should have been carried out by the AO in this regard and the AO failed to carry out those inquiries and verification as desired by the Pr. Commissioner of Income-tax. Since the P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TR 167 (Delhi) [2010] 189 Taxman 436 (Delhi) in which it held that if there is some enquiry by the Assessing Officer in the original proceedings, even if inadequate, that cannot clothe the Commissioner with jurisdiction under section 263 merely because he can form another opinion. At the most the case of the assessee can be regarded to be lack of inquiry in accordance with Commissioner of Income-tax if he has different opinion how to proceed with assessment of the case. 11. In the light of the aforesaid judicial precedents in the present case what has to be seen is whether the AO has made enquiries about cash deposits in bank account and investment in shares. If the answer is affirmative then second question arises whether the acceptance of the claim by the AO was a plausible view or on the facts of the finding on the facts that the said finding of the AO can be termed as sustainable in law. We find that the AO has considered cash deposits of ₹ 12,99,800/- as unexplained and considered the same in the case of Shri Ankit V. Parekh and made addition on this account by estimating profit @ 8%. It may also be noted that assessment was reopened for verification of these very dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vt. Ltd. [I.T.A. No. 705/2017] held that the exercise of jurisdiction cannot be outsourced by the CIT to the AO and therefore, , the CIT cannot direct the AO to provide details of the factors on the basis of which proceedings under section 263 of the Act could have been initiated. 14. Further the Hon`ble Delhi High Court in the case of Pr. CIT v. Airport Metro Express Pvt. Ltd. [I.T.A. No. 705/2017 which laid down for the purpose of exercising jurisdiction under section 263 of the Act , the conclusion that order of the AO is erroneous and prejudicial to the interest of the Revenue had to be preceded by some minimal inquiry. In fact, if the ld. PCIT is of the view to the AO did not undertake any enquiry, it becomes incumbent of the Ld. Pr. CIT to conduct such enquiry. However, We find that no enquiry was undertaken by the Pr. CIT in the instant case. 15. In the light of above facts and legal position, we are of the considered view that the AO had made detailed enquiries and after applying his mind accepted the explanation of the assessee regarding bank deposit and considered the same along with investment which is also plausible view. Therefore, we find that twin conditions we ..... X X X X Extracts X X X X X X X X Extracts X X X X
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