TMI Blog2023 (3) TMI 1372X X X X Extracts X X X X X X X X Extracts X X X X ..... is not justified in setting aside the order of the AO and accordingly we hold that the order of the PCIT u/s. 263 is without jurisdiction and liable to be quashed. Decided in favour of assessee. - ITA No.29/Bang/2023 - - - Dated:- 17-3-2023 - SMT. BEENA PILLAI, JUDICIAL MEMBER AND Ms. PADMAVATHY S, ACCOUNTANT MEMBER For the Appellant : Shri S.V. Ravishankar, Advocate For then Respondent : Shri D.K. Mishra, CIT(DR) (ITAT), Bengaluru. ORDER Per Padmavathy S., Accountant Member This appeal is against the order of The Principal Commissioner of Income Tax [PCIT], Hubli passed u/s. 263 of the act dated 30.3.2022 for the assessment year 2017-18. 2. The assessee raised the following grounds: The order passed by the learned Principal Commissioner of Income Tax, Huballi, passed under section 263 of the Act is so far as it is against the Appellant is opposed to law, weight of evidence, probabilities, facts and circumstances of the Appellant's case. 2. Grounds on Legal Issues: a. The notice issued for initiation of proceedings under section 263 of the Act is bad in law. b. The notice issued for initiation of 263 proceeding does not bear D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment records noticed that the assessee has deposited a sum of Rs.1,10,75,500 in Specified Bank Notes [SBN] during demonetisation period. The PCIT was of the view that the AO has accepted the explanation of cash deposits without proper verification and that the assessee has failed to furnish a satisfactory explanation regarding the source of cash deposited in bank. Accordingly, the PCIT invoked the provisions of section 263 and set aside the order of the AO to make fresh assessment in accordance with law. Aggrieved, the assessee is in appeal before the Tribunal. 5. There is a delay of 234 days in filing the present appeal before the Tribunal. The assessee filed an application for condonation of delay stating that:- i. The order of assessment was selected for revision and submissions were made and an order under section 263 came to be passed on 30.03.2022 by the PCIT, Huballi holding that the order passed under section 143(3) of the act was erroneous and prejudicial to the interest of revenue insofar as no addition has been made on cash deposits during demonetization period. ii. The appellant submits that it received the 263 order by post on 0404.2022 which was acknowledged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be preferred on time. The present counsel has advised the appellant that it has a good case on the merits of the matter and advised that an appeal be preferred and to make a prayer for the condonation of delay before this Honourable Tribunal. In view of the above the appeal could not be preferred on time and the appeal came to be filed on 18.01.2023, though the due date for filing appeal was 29.05.2022, considering the date of order as date of receipt, thereby resulting in delay of 234 days. viii. The appellant prays and submits that the delay in filing this appeal was due to an inadvertent error and due to circumstances beyond the control of the appellant. 6. We heard the rival submissions and perused the materials on record. We notice that the Hon ble Supreme Court, in the case of Collector, Land Acquisition Vs. MST. Katiji Ors, (167 ITR 471) (SC), has explained the principles that need to be kept in mind while considering an application for condonation of delay. The Hon ble Apex Court has emphasized that substantial justice should prevail over technical considerations. The Court has also explained that a litigant does not stand to benefit by lodging the appeal late. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the AO in the said notices have called for furnishing the details pertaining to cash deposits in the specific format as has been prescribed as per the CBDT Circular. The ld AR also drew our attention to the various details submitted by the assessee in response to these notices wherein the assessee has furnished the details of bank statement, cash book, etc. The ld AR also submitted that the assessee has furnished an affidavit before the AO where it is stated that all information regarding the cash deposited into various bank accounts were furnished before the AO. The ld AR submitted that the very basis on which the PCIT has invoked the revision proceedings u/s. 263 i.e. the assessee has not furnished the cash book and necessary documents and that the AO has not verified the said details, is not factually correct since the assessee has furnished all the details which the AO has duly verified. The ld AR in this regard drew our attention to the relevant observations of the AO in the assessment order from which according to the ld AR it is clear that the AO has verified all the details submitted and applied his mind before concluding the assessment u/s.263. The ld AR accordingly subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m other issues, it was necessary for the Assessing Officer to examine the source of cash and SBNs deposited and carry out necessary investigation in accordance with law and CBDT guidelines. The AO should have analysed the bank account and trend of cash receipts and ascertained the cash in hand as on 8.11.2016 after examination of books, specially by obtaining the cash book. The Assessing Officer has not done so. The Assessing Officer has not conducted necessary inquiries and has not made the additions required as per law. The assessee failed to furnish a satisfactory explanation regarding the source of cash deposited in the bank accounts alongwith the necessary evidence and this amount remained unexplained, but no such addition has been made in the assessment order. 4. As discussed above, the assessee society has deposited cash of Rs. 1 10,75 500/- during the demonetisation period in its bank accounts, in SBNs. In such cases. it was for the assessee to establish that the SBNs (Specified Bank Notes) deposited in the bank accounts were out of receipts prior to demonetisation. As the assessee has not established this, an adverse inference is naturally drawn that these SBNs were rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o various periods in a particular format desired by the ITO Ward-1, Nipani which is separately provided. 4. That, we have closing cash balance of Rs. 01,12,08,975/- as on 08.11.2016 at our head office excluding branch at karadga which is opened only on 25.11.2016 and operating from 25.11.2016 only. In this closing cash balance we were having SBN notes of 500 and 1000 totaling Rs.01,10, 75, 500/-. These SBN notes we have deposited into banks on following dates. Sr No. Date Bank name 500 /1000 (SBN) Amount 1 10.11.2016 Axis bank 1000*2500 500*7000 60,00,000 2 11.11.2016 Axis bank 1000*1900 500*4600 42,00,000 3 12.11.2016 Vijaya Bank 1000*53 500*1645 08,75,500 Total 01,10,75,500 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issioner] or Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Assessing Officer 89[or the Transfer Pricing Officer, as the case may be,] is erroneous in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, 90[including, **** Explanation 2. For the purposes of this section, it is hereby declared that an order passed by the Assessing Officer 94[or the Transfer Pricing Officer, as the case may be,] 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 95[Chief Commissioner or Chief Commissioner or 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imposed or that by the application of the relevant statute on an incorrect or incomplete interpretation a lesser tax than what was just has been imposed. 15. In the light of the above judicial pronouncement we will now consider the next contention of the ld AR with regard to whether the AO has perused the various details submitted and has used his mind before accepting the submissions of the assessee while concluding the assessment and that there is no error prejudicial to the interests of the revenue. In this regard our attention was drawn to the cash book furnished before the AO wherein it is noticed that on various dates the break-up of closing balance is given with cash denomination to substantiate that the SBN deposited into the bank account during demonetisation period is supported by meticulous method of maintaining the cash book by the assessee which was duly verified by the AO who has applied his mind before accepting the submissions of the assessee. The contention of the ld AR is supported by the findings given by the AO in the order of assessment which is extracted below:- 8. Unexplained cash deposits made during demonetisation period The data analysis of bank st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2016 4,14,380 76,47,148 14 00,000 15,65,580 22,125 June, 2016 22,125 82,77,769 31,00,000 17,50.000 2,53,058 July, 2016 2,53,058 77,79,507 25,00,000 23,00,000 1,47,357 Aug, 2016 1,47,357 52,36,037 12,00,000 9,00,000 89,229 Sept. 2016 89,229 89,80,041 16,00,000 33,89 500 4 40 071 Oct. 2016 4,40,071 85,31,727 11,00,000 15,00,000 37,01,724 November till 8.11.16 37,01,724 81,92,268 0 0 1 12,08,975 (4) Explain the sources of cash deposit into above bank accounts and also furnish details of SBNs deposited during 09.11.201 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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