TMI Blog2019 (3) TMI 1963X X X X Extracts X X X X X X X X Extracts X X X X ..... runakara Rao, AM And Shri Vikas Awasthy, JM For the Assessee : Shri Pramod Shingte. For the Revenue : Shri S.B. Prasad. ORDER PER VIKAS AWASTHY, JM : This appeal by the assessee is directed against the order of Principal Commissioner of Income Tax (Appeals)-I, Nashik dated 30-03-2016 passed under section 263 of the Income-tax Act, 1961 (hereinafter referred to as the Act ). 2. Shri Pramod Shingte appearing on behalf of the assessee submitted that this is second round of litigation before the Tribunal. In the first round, the assessee had approached the Tribunal in ITA No.215/PN/2011 assailing the order of CIT(A) confirming addition of ₹ 41,15,000/- under section 69 in respect of land purch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal audit report is not sustainable. To support his contention, reliance was placed on the judgment of Hon ble Bombay High Court in the case of Ranka Jewellers Vs. Addl.CIT reported as 328 ITR 148. The ld. Authorized Representative finally submitted that at the most it can be a case of inadequate enquiry not lack of enquiry. Even under such circumstances, invoking of provisions of section 263 is bad in law. 3. Shri S.B. Prasad, representing the Department vehemently defended the impugned order. The ld. Departmental Representative submitted that the AO failed to conduct proper enquiry in respect of land transaction despite categoric directions from the Tribunal, therefore, the Pr. CIT was constrained to invoke the provisions of section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee to cross examine the seller whose statement was the basis for the addition in the impugned appeal. Accordingly, we restore the issue to the file of the AO for adjudication of the issue afresh and in accordance with law after giving due opportunity of being heard to the assessee. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purpose. Consequent to the directions of Tribunal, the AO conducted enquiries and again summoned Deepak V. Pingle, one of the sellers of property u/s.131 of the Act. Opportunity was given to the assessee to cross examine Deepak V. Pingle. It was thereafter that the AO passed a assessment order u/s.143(3) r.w.s. 254 accepting returned income, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as under : 9. The order that has been passed by the CIT under s. 263 proceeds on the basis that the AO did not consider the applicability of s. 40A(3) while determining the undisclosed income and hence, the order appears to be erroneous and to be prejudicial to the interests of the Revenue. There is merit in the submission of the assessee that this finding is contrary to the record. The record shows that the AO had applied his mind to the issue of the violation of s. 40A(3) during the course of the assessment proceedings by calling for a special audit on several items including the question as regards cash transactions which fell within the purview of s. 40A(3). Similarly, the Tribunal also proceeded on the basis that the record be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h concession would not be detrimental to the main relief sought by assessee. Be that as it may, now the AO has granted relief to assessee in fresh proceedings, the assessee is at liberty to raise fresh pleas consequent to opportunity of cross-examination of vendor of property, the opportunity that was earlier denied to the assessee. Based on fresh evidence the AO granted relief to the assessee. 8. We find merit in the submissions of the assessee. In the present case, it cannot be said that no enquiry was carried out by the AO, at the most it is a case of inadequate enquiry. Even in that case, the provisions of section 263 cannot be invoked. The Explanation 2(1) to Section 263 inserted by the Finance Act 2015 w.e.f. 01-04-2015 would no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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