TMI Blog2023 (4) TMI 807X X X X Extracts X X X X X X X X Extracts X X X X ..... ing stock also. Thus Assessing Officer s order cannot be termed as erroneous as well as prejudicial to the interest of the revenue and therefore, jurisdictional condition as prescribed by statute for invoking revisional jurisdiction is absent and therefore, we are inclined to quash the impugned order of the ld. PCIT. Appeal of the assessee is allowed. - ITA No. 119/SRT/2022 - - - Dated:- 17-4-2023 - Shri Pawan Singh, JM And Dr. A. L. Saini, AM For the Assessee : Shri Hiren M. Diwan, C.A For the Respondent : Shri Ravinder Sindhu, CIT-D.R ORDER PER DR. A. L. SAINI, AM: By way of this appeal, the assessee has challenged the correctness of the order passed by the Learned Principal Commissioner of Income Tax-Valsad (in short ld. PCIT ] dated 30.03.2022 under section 263 of the Income Tax Act, 1961 (hereinafter referred to as the Act ) for assessment year 2017-18. 2. Grounds of appeal raised by the assessee are as follows: 1) The learned Principal Commissioner of Income Tax-Valsad (hereinafter referred to as the ld. PCIT has erred in and on facts in setting aside the original assessment order made by the ld. A.O and directing him to frame the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 019 and total income was determined at Rs.3,11,330/-. 3. One of the reasons for selection of case for scrutiny assessment is abnormal increase in cash deposits during demonetization period as compared to pre-demonetization period. On perusal of the assessment record it was observed that the order is passed without making inquiries and verification which should have been made. Further the order is passed allowing relief without making inquiry into the claim. The Assessing Officer has not even gone through the return of income filed by the assessee. For example during the demonetization the Government of India has started one scheme known as PMGKDS 2016 in which cash could have been deposited. As for this scheme following conditions were there 5. Subscription and Mode of investment in the Bonds Ledger Account- (a) The deposits shall be accepted at all the Authorised Banks. (b) The deposits shall be made in multiples of rupees one hundred. (c) The deposit by a declarant shall not be less than twenty-five per cent of the undisclosed income declared under sub-section (1) of section 199C of the Taxation and investment Regime for Pradhan Mantri Garib Kal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igher side, whereas no such trend is seen in the corresponding period of immediate preceding year. Similarly, cash sales for the October, 2016 has been shown at Rs.22,46,640/- and other receipts from debtors have been shown at Rs.13,50,783/-. As such, the cash sales and other receipts from debtors have been increased abnormally in comparison to cash sales of October 2015. It is noticed that the assessee has not explained the exact reason for abnormal increase in cash sales during this particular period with supporting documentary evidence. On verification of case records, it is seen that only extract of ledger accounts and copy of bills have been placed on records by AO. No third party verification is carried out. The AO has failed to investigate the genuineness of sales and cash claimed to have received from the debtors. The AO has not examined the issue of abnormal increase in sales during pre-demonetization period as per the instruction/SOP issued by the CBDT from time to time and thereby the AO did not do the due diligence to corroborate and cross verify the details provided by the assessee or vital documentary evidence relating to preceding financial year to prove the genuinen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g to Section 68 of the I.T. Act where any sum is found credited in the books of an assessee maintained for any previous year and the assessee offers no explanation about the nature and source of the same are not satisfactory in the opinion of AO, the sum so credited may be charged to income tax as the income of the assessee of that previous year. For the reference the Taxation Laws Act 2016 amendment in the Section 115BBE for A.Y 2017-18 w.e.f 01.04.2017 is reproduced as under: To sum up the total tax in the cases covered u/s 115BBE is worked out as under: 1. Tax on income u/s 115BBE 60% 2. Surcharge 25% of such tax 3. In case where income not included in return filed u/s 139 penalty u/s 271AAC 10% of such tax. a) The amount of Income Tax calculated on the income referred to in Sections 68, 69, 69A to 69D at the rate of 60% (plus surcharge @ 25% on such tax and cess, as applicable). Thus effectively the rate comes to 77.25% if such income is reflected in the Return of Income furnished u/s 139. It may be noted that if such income is not reflected in the Return of Income furnished u/s 139, then penalty of 10% on tax payable u/s 115BBE shall be imposed u/s 27 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oresaid issues. 7. Aggrieved by the order of Ld. PCIT, the assessee is in appeal before us. 8. Shri Hiren M. Diwan, Learned Counsel for the assessee, at the outset submitted that in assessee s case, the Assessing Officer made adequate inquiries, in respect of issues raised by ld PCIT, by issuing notice u/s 142(1) of the Act. In response to above notice u/s 142(1) of the Act, the assessee has submitted his reply vide letter dated 06.05.2019, which is placed at paper book pages 1 to 4. Besides, the Assessing Officer has discussed the issue raised by ld PCIT, in the assessment order itself, therefore ld Counsel contended that Assessing Officer made deep enquiry about the issue raised by ld PCIT in his revision order. In addition to this, Ld. Counsel also submitted audited balance-sheet and the profit and loss for A.Y 2017-18, which is placed at paper book pages 17-28. The assessee also submitted copy of specimen sales bills, which is placed at Paper Book pages 29-30. Based on these documents and evidences, the Ld. Counsel contended that Assessing Officer has made adequate inquiries during the assessment proceedings. 9. Shri Diwan, also pleaded that the issue under considerati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is jurisdictional in its nature, and does not refer to the judgment of the Assessing Officer in fixing the amount of valuation of the property. Similarly, 'erroneous judgment' means 'one rendered according to course and practice of Court, but contrary to law, upon mistaken view of law, or upon erroneous application of legal principles. The Hon ble High Court also held that from the definitions it is clear that an order cannot be termed as erroneous unless it is not in accordance with law. If an assessing officer acting in accordance with law makes a certain assessment, the same cannot be branded as erroneous by the Commissioner simply because, according to him, the order should have been written more elaborately. This section does not visualize a case of substitution of the judgment of the Commissioner for that of the ITO, who passed the order, unless the decision is held to be erroneous. Cases may be visualized where the ITO while making an assessment examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and determines the income either by accepting the accounts or by making some estimate himself. The Commissioner, on per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ettled that when exercise of statutory power is dependent upon the existence of certain objective facts, the authority before exercising such power must have materials on record to satisfy it in that regard. If the action of the authority is challenged before the Court, it would be open to the Courts to examine whether the relevant objectives were available from the records called for and examined by such authority. The decision of the ITO could not be held to be 'erroneous' simply because in his order he did not make an elaborate discussion in that regard. Moreover, the Commissioner himself, even after initiating proceedings for revision and hearing the assessee, could not say that the allowance of the claim of the assessee was erroneous, he simply asked the ITO to re-examine the matter, which was not permissible. 17. Again adverting to the facts of the present case. As recorded above during the assessment the assessing officer examined the issue in depth as recorded in para -2 (supra). The assessing officer noted that assessee has made cash deposited of Rs.77.00 lakhs in HDFC bank during demonetization period. Show cause notice to explain the deposit of cash was issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er made addition of 10% of the total cash deposit during the month of October and November 2016. On the basis of aforesaid factual discussions and on the basis of details called for by Assessing Officer, we find that the Assessing Officer after calling the details of cash deposit, while making addition of 10% of cash deposit of Rs. 77.00 lacs, being income component, which is a reasonable addition. The addition made by assessing officer is plausible and legally sustainable view, which cannot be branded as erroneous. 18. The coordinate bench of Rajkot Tribunal in Premji Valji Sons in ITA NO. 125/Rjt) 2022, while considering the appeal against the order under section 263, wherein the assessment order was revised by ld PCIT on the similar issue of deposits of cash during demonetization period held that when the assessing officer made inquiries and after considering the material accepted the genuineness of the claim of the assessee, the assessment order is not erroneous. However, the appeal in hand is on better footing, as the assessing officer has made addition of 10% of such deposits to tax the profitability as if such transaction was a result of inflated sales. 19. The H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judicial to the interests of the revenue unless the view adopted by assessing officer permissible in law. Once the assessing 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 assessing officer is unsustainable in law. In our view the observation of Ld. PCIT held that Assessing Officer passed assessment order without making proper inquiries and verifications and cash sales were not made in accordance with law as per Instruction of Central Board of Direct Taxes Circular No.4/2017 dated 03.03.2017, or the source of cash deposits remained unexplained, is not correct. In the result, the grounds of appeal raised by the assessee is allowed. 22. In the result, the appeal of the assessee is allowed. 10. Thus, Ld. Counsel contended that the issue raised by Ld. PCIT is squarely covered in favour of assessee therefore the order of Ld.PCIT may be quashed. 11. On the other hand, Learned CIT-DR for the Revenue submitted that assessee has not explained his source of cash deposit during the demonetization scheme and assessee has also not submitted the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Officer under section 142(1) is reproduced below for ready reference: 16. In response to above notice u/s 142(1) of the Act, the assessee has submitted his reply vide letter dated 06.05.2019, which is placed at paper book pages 1 to 4. From these facts, it is abundantly clear that assessing officer made adequate enquiry during the assessment proceedings. 17. We note that during the assessment year under consideration i.e. A.Y. 2017-18, the assessee has shown gross profit @ 17.54% in comparison to gross profit shown in the preceding year A.Y. 2016-17 @ 13.29%, and for A.Y. 2015- 16 @12%. Therefore on account of increased sales, the assessee has shown his increased gross profit @ 17.54% and therefore disclosed additional income earned during the assessment year under consideration and hence Assessing Officer has examined this issue and applied his mind and then after allowed the claim of the assessee. Therefore, Assessing Officer after examining the increase in the gross profit of assessee and after taking into account that the assessee had disclosed an amount of Rs.12,50,000/- in the PMGKY,2016, and allowed the claim of assessee. 18. We note that Hon ble Apex Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X
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