TMI Blog2022 (10) TMI 1211X X X X Extracts X X X X X X X X Extracts X X X X ..... is erroneous by simply observing that the assessment order is erroneous is not justifiable action. It has to be demonstrated as how it is erroneous, which has caused a prejudice to the revenue CIT totally failed in this area. No hesitation to quash the impugned order. We allow the appeal of the assessee. - Shri Rajpal Yadav, Vice-President (KZ) And Shri Rajesh Kumar, Accountant Member For the assessee : Shri S.K. Tulsiyan, Advocate Mita Rizvi, CA For the Revenue : Shri Sudipta Guha, CIT (DR) ORDER PER RAJPAL YADAV, VICE-PRESIDENT (KZ):- The present appeal is directed at the instance of assessee against the order of ld. Principal Commissioner of Income Tax, Asansol dated 09.03.2021 passed under section 263 of the Income Tax Act, 1961 for assessment year 2017-18. 2. The Registry has pointed out that appeal is time-barred by 47 days. In order to explain the delay, the assessee has filed an application for condonation of delay and also annexed an affidavit of Shri Rabin Tibriwala, Partner of M/s. Bharat Tirtha Rice Mill. The affidavit of the assessee reads as under:- 3. The ld. Counsel for the assessee submitted that there was reconstitu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applied in a rational common sense pragmatic manner. 4. When substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay. 5. There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact he runs a serious risk. 6. It must be grasped that judiciary is respected not on account of its power to legalize injustice on technical grounds but because it is capable of removing injustice and is expected to do so. 7. Similarly, we would like to make reference to authoritative pronouncement of Hon'ble Supreme Court in the case of N.Balakrishnan Vs. M. Krishnamurthy (supra). It reads as under: Rule of limitation are not meant to destroy the right of parties. They are meant to see that parties do not resort to dilatory tactics, but seek their remedy promptly. The object of providing a legal remedy is to repair the damage caused by reason of legal i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capitulate the proposition laid down in other decisions. It is suffice to say that the Hon'ble Courts are unanimous in their approach to propound that whenever the reasons assigned by an applicant for explaining the delay, then such reasons are to be construed with a justice oriented approach. 9. In the light of above, if we examine the facts of the present case, then it would reveal that basically the appeal has been filed after 374 days of the ld. CIT s order but almost one year is attributable to COVID period, i.e. 09.03.2021 upto March, 2022. This appeal has been presented before the Tribunal on 24.06.2022. If credit of number of days allowed by the Hon ble Supreme Court in its order dated September 23, 2021 in Miscellaneous Application No. 665 of 2021 in SMW(C) No. 3 of 2020 regarding cognizance for extension of limitation, then there is no substantial delay at the part of the assessee. Moreover, making the appeal time-barred has not been used by the assessee as a tactics to avoid the litigation with the Revenue because such strategy would not give any benefit to the assessee in this type of litigation. Therefore, we condone the delay and proceed to decide the appeal on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The CASS point in the instant case was that there was abnormal increase in cash deposits during demonetization period as compare to average rate of cash deposit during pre-demonetization period. There was no evidence on record wherefrom it can be presumed that the A.O. had verified the issue properly. In fact it appears that the A.O. had passed the order in a very hepaticand sloppy manner. The assessee's submission in course of assessment was also flimsy. The case would have been barred by limitation on 31.12.2019. As such the A.O. should have been more investigative on the source of abnormal case deposit by the assessee firm during the demonetization period. It emerges from the assessment order that the AO while passing the order had rejected the books of accounts by virtue of section 145(3) of IT Act. Actually, invocation of section 145(3) lies when the A.O. was not satisfied about the correctness or completeness of the account of the assessee. And it was not possible for him to categorize various types of defects which may justify rejection of books of accounts of an assessee on the ground that the account are not complete or correct. Each case had to be considered on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was also incomplete and not supported by any documentary evidence .The assessment order has been passed without making inquiries or verification which should have been made. Clause (a) of explanation 2 of section 263 (1) is attracted in this case. Thereby the order passed by the A.O in the instant case is erroneous so far as prejudicial to the interest of revenue. (6) Hon ble Delhi High Court in the case of GEE VEE Enterprise vs. Addl.CIT reported in 99 ITR 375, 386 (Del) has held that the CIT may consider the order of the Assessing Officer to be erroneous not only if it contain some apparent error of reasoning or of law or of fact on the for in the circumstances of the case and it is an order which simply accepted what the assessee has stated in his return of income on the said issue. It is not necessary for the CIT to make further enquiries before cancelling the assessment order. The Commissioner can regard the order erroneous on the ground that the Assessing Officer should have made further enquiries. (7) Hon ble Karnataka High Court in the case of Thalibai F. Jain vs. ITO 101 ITR 1, 6 (Karn) has held that where no enquiries made by the Assessing Officer on the relev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rn when circumstances would make such an inquiry prudent that the word erroneous in section 263 includes the failure to make such an enquiry. The order becomes erroneous because such an inquiry has not been made and not because there is anything wrong with the crrder if all the facts stated therein are assumed to be correct. 10. Further to this it is noticed that there is no appeal right available to the Revenue from the order of assessment passed by Assessing Officer and i.e. why revisionary powers have been given to the Commissioner and such power were held to be of wide amplitude by the Hon ble Supreme Court in the case of CIT v. Shree Manjunathesware Packing Products Camphor Works [1998] 231 ITR 53/96 Taxman 1. Therefore, normally when Assessing Officer has not made any enquiry on a particular issue, then such order in view of the above detailed discussion has to be construed as erroneous and prejudicial to the interest of Revenue and therefore, the impugned assessment order is erroneous and prejudicial to the interest of Revenue as Assessing Officer has failed to make any enquiry. 11. Having regard to the facts and circumstances of the case and in the light of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utilised amount was deposited in the Bank and a re-conciliation has been put up before the ld. Assessing Officer, which was accepted by the ld. Assessing Officer. 16. On the other hand, ld. CIT(DR) relied upon the order of ld. CIT. 17. We have heard the ld. Representatives and with their assistance gone through the record carefully. Before we embark upon an enquiry on the facts and issues agitated before us to find out whether the action u/s 263 of the Act, deserves to be taken against the assessee or not, it is pertinent to take note of this section. It reads as under:- 263(1) The 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 is erroneous in so far as it is prejudicial to the interest 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, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment. [Explanation.- For the removal of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oceedings under this Act. For calling of the record and examination, the learned Commissioner was not required to show any reason. It is a part of his administrative control to call for the records and examine them. The second feature would come when he will judge an order passed by an Assessing Officer on culmination of any proceedings or during the pendency of those proceedings. On an analysis of the record and of the order passed by the Assessing Officer, he formed an opinion that such an order is erroneous in so far as it is prejudicial to the interests of the Revenue. By this stage the learned Commissioner was not required the assistance of the assessee. Thereafter the third stage would come. The learned Commissioner would issue a show cause notice pointing out the reasons for the formation of his belief that action u/s 263 is required on a particular order of the Assessing Officer. At this stage the opportunity to the assessee would be given. The learned Commissioner has to conduct an inquiry as he may deem fit. After hearing the assessee, he will pass the order. This is the 4th compartment of this section. The learned Commissioner may annul the order of the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. (ix) If the AO has made enquiries during the course of assessment proceedings on the relevant issues and the assessee has given detailed explanation by a letter in writing and the AO allows the claim on being satisfied with the explanation of the assessee, the decision of the AO cannot be held to be erroneous simply because in his order he does not make an elaborate discussion in that regard. 19. In the light of above, let us examine the facts of the present case. A perusal of paper book pages no. 1 to 9 would reveal that the assessee has submitted the complete details during the assessment proceedings. The ld. Assessing Officer has raised specific query about the cash deposit during demonetisation and assessee has explained it. The query raised by the ld. Assessing Officer as well as explanation of the assessee read as under:- 7. Cash deposit for demonetization period (9t h November to 30t h December) is reported as per STF reporting-whether the cash deposit has been made from disclosed sources. Please furnish the details of cash deposited during the FY 2016-17 in each of the bank account in following manners: (a) Please provide the bank statement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Currency 13,15,300 0 87,36,000 Cash deposit for demonetization. For your kind information for cash deposit, I do hereby enclose an annexure for your perusal as follows:- Cash withdrawn from Bank (CC A/c.) Cash deposited in Bank(CC A/c.) Date Amount(Rs.) Remarks Date Amount(Rs.) 19.10.2016 18,00,000 From CC 10.11.2016 10,00,000 20.10.2016 18,00,000 From CC 11.11.2016 9,00,000 21.10.2016 18,50,000 From CC 08.11.2016 10,00,000 24.10.2016 18,00,000 From CC 12.11.2016 20,00,000 25.10.2016 18,00,000 From CC 13.11.2016 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... withdrawn from its cash credit [A/c no. 0541008700004281] and current account [A/c no. 6070002100000448] during October, 2016. However, with the sudden declaration of the demonetization scheme from 08/11/2016, vide which currencies of Rs.1,000/- Rs.500/- notes were scrapped, the assessee was unable to make payment to the farmers as they refused to accept the defunct currency and under such circumstances, the assessee had no other option but to redeposit the cash aggregating to Rs.97,36,000/- out of the cash withdrawal of Rs. 1,35,10,000/- to its bank account. It was further clarified that such cash deposits were not related to any sale. 20. Apart from the above details, the assessee has filed copy of the bank statements on pages no. 27 to 72. A perusal of the above would indicate that total withdrawals are Rs.1,35,10,000/- out of that Rs.97,36,000/- stands deposited almost in the same period. When this fact was brought to the notice of ld. Assessing Officer, he was satisfied about the alleged deposit. 21. We have perused the impugned order. The ld. CIT has assigned eight paragraphs in his finding. However, perusal of these eight paragraphs, we find that paragraphs no. 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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