TMI Blog2023 (12) TMI 137X X X X Extracts X X X X X X X X Extracts X X X X ..... ership of the said bank account and the transactions reflected therein, we find that no further cause of action lies and if any action is warranted, the same is warranted in hands of Mr Raj Kumar and not in the hands of the assessee. In any case, what further enquiries or verification is warranted is not specified by the ld PCIT. Therefore, on this account, the order so passed by the AO cannot be held as erroneous in so far as prejudicial to the interest of the Revenue. Coming to transactions with M/s A.K. Minerals and M/s G.K Laxmi where the assessee has show cash receipts of Rs 5 lacs each against sales made to them and in respect of which, ledger account and a confirmation from these two parties has been filed during the course of assessment proceedings, where the assessee has filed certain confirmations from the aforesaid two parties during the course of assessment proceedings in support of sale transactions and receipt of consideration in cash and the authencity of the said confirmations stood falsified by subsequent confirmations received directly from the same parties even though after the close of the assessment proceedings, the ld PCIT is well within his jurisdiction to ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of information/documentation which has direct nexus with passing of an erroneous assessment order by the AO and if we were to go by the argument of the ld AR, the ld PCIT cannot be expected to wait indefinitely for the AO to initiate proceedings u/s 147 and where the AO sleeps over the matter, allow the expiry of limitation to pass the order u/s 263, thus failing in his supervisory and revisionary duty under Section 263 of the Act. Therefore, the contention advanced by the ld AR that remedial action u/s 147 can be taken in this regard and no basis for exercise of jurisdiction u/s 263 cannot be accepted. Assessee's claim of receipt of cash from various persons was false and was not investigated by the AO and the assessee s claim to have received cash from unnamed persons where no documents are available on assessment records to show that the AO has not made any enquiry or verification - The fact that the sales were effected in initial period during the same financial year and the cash has been received in the subsequent period even though during the demonetization period cannot be a basis strong enough to hold the order so passed by the AO is erroneous in so far as prejudicial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he ld PCIT in this regard in para 5.4 are thus set-aside. Gift received by the assessee from his mother - where the ld PCIT examines the matter and comes to a conclusion that the confirmation so filed is half-baked and incomplete and further, there is no explanation regarding the source of cash gift to the assessee and the AO didn t mount further examination and accepted the said incomplete confirmation on face value, we find that the ld PCIT has rightly exercised his discretion in setting aside the assessment order to examine the matter a fresh after providing reasonable opportunity to the assessee. The findings of the ld PCIT in thus upheld. Unsecured loans - We don t find that the ld PCIT has referred to any tangible piece of information or documentation which warrant examination and investigation across all transactions of unsecured loans which are undertaken by the assessee. Further, where the relevant confirmations from the creditors have been called for and examined by the AO, the latter being satisfied with the same and explanation so furnished by the assessee, merely the fact that the AO has not carried out independent enquiries of these confirmations from the creditors ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the name and style of M/s Toor HP Centre and has filed his return of income declaring total income of Rs. 10,90,270/-. The case of the assessee was selected for scrutiny through CASS and notices u/s 143(2) and 142(1) were issued and assessment was completed u/s 143(3) dated 29.05.2019 wherein assessed income was determined at Rs. 11,52,495/- by making certain disallowances of expenses amounting to Rs. 62,225/- as against the returned income of Rs 10,90,270/-. 3. Subsequently, the assessment records were called for and examined by the ld. Pr. CIT and as per observations of the ld. PCIT, the AO omitted to conduct basic enquiries that were necessary to ascertain the true facts of the case with regard to the reasons for selection of the assessee's case for scrutiny as well as other facts of the case holistically and the various claims made by the assessee to explain the source of cash deposits in his bank account and thereafter, a Show Cause u/s 263 was issued dated 02.03.2022 wherein the ld. Pr. CIT has listed the major omissions on the part of the AO and it was held that in view of the same, the assessment order passed u/s 143(3) was prima facie erroneous in so far as prej ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m time to time. It was further submitted that all the verbal enquiries as raised by the AO were duly answered to his satisfaction and the AO has therefore, formed an opinion after perusal of the evidences submitted and it is, therefore, not a case of no enquiry or non-application of mind by the AO. 8. Regarding various contentions/findings raised by the ld. PCIT in the Show Cause Notice and thereafter confirmed in the final order, it was submitted that the assessee can demonstrate that the necessary enquiries stood conducted during the assessment proceedings. 9. Firstly, regarding the contention of the ld. PCIT in relation to bank account No.65078774798, that the said account pertains to Mr. Raj Kumar, Village Dakhla and the bank statement furnished by the assessee is also incomplete and AO has failed to make any further enquiries or investigations about the ownership of the said account and about the transactions therein, it was submitted that necessary query in this regard was duly raised by the AO vide notice dated 10.05.2019 and in response thereto, the assessee has submitted vide his submissions dated 24.05.2019 that the account does not belong to the assessee and as a proof o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch owing to the grave necessity of the population of the country for basic necessities, use of demonetized currency for purchase of fuel was allowed by the Government to avoid bringing the economy to a complete standstill. It was submitted that the AO has verified the appellant s purchase which is from a duly authorized source and Government Company i.e. HPCL and daily sale register has been duly submitted and verified by the AO and reduction of one asset i.e. stock of oil and increase of other assets i.e. cash is a basic enquiry already conducted by the AO to verify the source of cash deposit. It was, accordingly, submitted that where the enquiry already stood conducted by the AO, ld. PCIT s contention for further enquiry is against the intent of Section 263 as this is not a case of no enquiry. 13. Regarding the contention of the ld. PCIT that the Board s Instruction dated 09.08.2019 vide which verification checklist for assistance of AO s for OCM cases and framing of assessment in demonetization related cases was provided and which has not been followed by the AO, it was submitted that the said finding of ld. PCIT is mechanical in nature without appreciation of the facts in the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er detailed perusal and verification thereof, certain additions have been made. It was, accordingly, submitted that where the AO has made additional enquiries, beyond the scope of the assessment, the contention of the ld. PCIT that further enquiry was not made by the AO cannot be sustained. It was, accordingly, submitted that the AO has passed the assessment order after taking into consideration all the relevant documents and evidences submitted during the course of assessment proceedings and it is, therefore, not a case of no enquiry. 18. Further reliance was placed on the Hon'ble Supreme Court decision in the case of CIT Vs Nuclear Power Corporation of India Ltd. 138 taxmann.com 332, ITAT Chandigarh Bench in the case of Krypton Datamatics Ltd. Vs DCIT Patiala 65 taxmann.com 324, Hon'ble Allahabad High Court in case of CIT Vs Krishna Caphox 60 taxmann.com 243 for the proposition that where an enquiry has been made by the AO and which has been considered inadequate by the Commissioner, the same cannot lead to the order passed by the AO as erroneous and prejudicial to the interests of the Revenue. 19. It was further submitted that where on a perusal of evidence and explanati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to carry out requisite enquiries and verification and in this regard, our reference was drawn to para 5 to 5.10 of the impugned order, which read as under : 24. Further, our reference was drawn to the findings of the ld. Pr. CIT which are contained at para 6 and para 9 of the impugned order, which reads as under: 6. In view of the discussion above, the assessment order passed u/s 143(3) of the Act dated 29.05.2019 is prima-facie erroneous in so far as it is prejudicial to the interest of revenue, as the order has been passed without making requisite enquiries or verification which should have been made. There is thus failure on the part of the Assessing Officer in making the requisite enquires and verification. It is such failure which calls for revision of the assessment order u/s. 263 of the Act. The assessee, in his written submissions, has inter alia mentioned that the justification assumed by your good office under section 263 of the Act is bad in law as you are placing reliance on Explanation 2 of Section 263 of the Act to allege that enquiries have not been made in the subject case . The said contention of the assessee is found to be devoid of any force, as it is amply evide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment order so passed by the AO has been rightly held to be erroneous in so far as prejudicial to the interest of the Revenue and thus, there is no basis in various contentions so raised by the ld AR and the same deserve to be dismissed and the order of the ld PCIT be upheld. 26. We have heard the rival contentions and purused the material available on record. The ld PCIT has referred to specific instances and/or transactions reflected in the assessee s return of income and accompanying financial statements, other documents/submissions filed during the course of assessment proceedings as well as certain specific documents available on record at the time of his examination of the assessment records to reach a conclusion that the assessment order so passed by the Assessing officer is erroneous in so far as prejudicial to the interest of the Revenue. It would therefore be relevant to refer to these specific findings of the ld PCIT and submissions so made by the ld AR before us. 27. Firstly, the ld. PCIT has referred to the assessee s return of income wherein it was disclosed that an amount of Rs 4 lacs was deposited during the demonetization period in a bank account maintained with SBI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings and subsequent confirmations received directly from these persons, which were called for by the AO towards the end of the assessment proceedings but have been received after the close of the assessment proceedings wherein they have denied making any cash payment to the assessee. The ld PCIT has held that the confirmations given by the assessee during the course of assessment proceedings which is on a plain paper, undated and doesn t bear any PAN details and signed by Shri Suresh Kumar though it was a case of proprietorship concern of M/s A K Minerals of Shri Krishan Kant Goyal is absolutely false and the AO has accepted the bald assertion on face value. Similar findings have been recorded by the ld PCIT regarding M/s G.K. Laxmi. In this regard, it has been submitted by the ld AR that the ld. PCIT has raised a conjecture that documents are falsified by relying on two information reports which were sent by the AO to take further necessary action in the case of M/s A.K. Minerals and M/s G.K. Laxmi. It was submitted that, it is evident from record that the said information was passed on by the AO to ITO, Ward-1(1), Nangal on 29.05.2019 after the conclusion of the assessment procee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the ld PCIT under Section 263 of the Act finds that the assessment order is prejudicial to the interest of the Revenue, he can review the assessment, at the same time, the Assessing Officer, under section 147 and 148 of the Act can reopen assessment on account of income having escaped assessment. The re is however a fine distinction which is maintained between the two sections in terms of power to review and power to reassess and the AO doesn t have power to review his own order and such power is enshrined under section 263 of the Act and bestowed on the ld PCIT which cannot be ceded to the AO. Thus where an Assessing Officer comes to a wrong conclusion based on assumption of incorrect facts, resort to Section 263 of the Act is available and should be resorted to. But initiation of reassessment proceedings in such cases will be invalid on the ground of change of opinion. 32. In the instant case, it is an admitted position that the matter was enquired into by the AO during the assessment proceedings and answered by the assessee by way of providing the ledger account and the confirmations from the two parties and thereafter the Assessing Officer does not make any addition in the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d AR that at para 5.3 of the impugned order, the ld. PCIT has already stated his comments with respect to recovery from debtors but has again repeated the same figure to create further conjecture at Sr.No. 1 i.e. cash received from debtors which stood verified as explained earlier. It was further submitted that with respect to the retail cash sale, ld. PCIT has failed to appreciate the fact that the assessee is running a Petrol Pump which owing to the grave necessity of the population of the country for basic necessities, use of demonetized currency for purchase of fuel was allowed by the Government to avoid bringing the economy to a complete stand still. It was submitted that the AO has verified the appellant s purchase which is from a duly authorized source and Government Company i.e. HPCL and daily sale register has been duly submitted and verified by the AO and reduction of one asset i.e. stock of oil and increase of other assets i.e. cash is a basic enquiry already conducted by the AO to verify the source of cash deposit. It was submitted that where the enquiry already stands conducted by the AO, ld. PCIT s contention for further enquiry is against the intent of Section 263 as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he subsequent period even though during the demonetization period cannot be a basis strong enough to hold the order so passed by the AO is erroneous in so far as prejudicial to the interest of Revenue in absence of any adverse findings regarding availability of requisite stock and the sales so effected by the assessee which are both reported to tax. Where the AO felt satisfied with the documentation and explanation so submitted by the assessee, basis review of the same documentation, the ld PCIT may arrive at a different opinion, however, the same cannot lead to a situation of holding the order so passed as erroneous in so far as prejudicial to the interest of the Revenue. The only caveat here is that the documentation so submitted during the course of assessment proceedings shouldn t stand falsified by subsequent information/documentation as we have seen in case of M/s A.K Minerals and M/s G.K. Minerals and which is not a case as far as these transactions are concerned. Therefore, the findings of the ld PCIT in para 5.2 of the impugned order as regards transactions with Shri Bhupinder Singh, Shri Bindri, Shri Ajmer Singh and M/s Gurleen Traders are hereby set-aside. 39. Now coming ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly enquired into by the AO and the findings of the ld PCIT that no enquiry has been conducted by the AO is not borne out of the records and the same thus deserve to be set-aside. Further, there is no adverse finding recorded by the ld PCIT regarding availability of stock of petroleum products and corresponding sales reported by the assessee and where the stock and sales have been accepted, realization of sale proceeds in cash which is permissible under law cannot be held against the assessee or to hold that the assessment order is erroneous in so far as prejudicial to the interest of Revenue. Therefore, the findings of the ld PCIT regarding cash receipts from retail sale in para 5.3 is hereby set- aside. 40. Coming to the findings of the ld. PCIT that the Board s Instruction dated 09.08.2019 vide which verification checklist for assistance of AO s for OCM cases and framing of assessment in demonetization related cases was provided and which has not been followed by the AO, it was submitted by the ld AR that the assessment proceedings already stood concluded on 29.05.2019 well before the issuance of the CBDT Instructions and therefore, the AO cannot be expected to comply with the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing aside the assessment order to examine the matter a fresh after providing reasonable opportunity to the assessee. The findings of the ld PCIT in para 5.5 are thus upheld. 42. Now, coming to the findings of the ld. PCIT regarding unsecured loans, it has been stated by the ld PCIT that as per questionnaire dated 9.5.2019 issued by the AO, only generic information has been called regarding the unsecured loans by the AO whereby the AO has called for the confirmation from the persons where unsecured loan amount was outstanding above Rs one lacs as on 31.03.2017 as well as copy of ITR and computation of income and in response, the assessee has submitted confirmation from Shri Baldish Singh Toor, Smt Ramneek Toor and Shri Raj Kumar on a plain paper without mention of the address, PAN details, I TR Details and source of loan. It has been stated by the ld PCIT that the AO has not verified the same and the identity, creditworthiness and genuineness of the transaction thus remained unverified. It has been further stated by the ld PCIT that remaining unsecured loans also remain totally uninvestigated by the AO. On similar lines, the ld. PCIT has stated that the confirmation in relation to f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the demonetization period but one cannot lose sight of the fact that it was again a case of complete scrutiny and not a case of limited scrutiny. On perusal of records, the ld PCIT has also stated that the case of the assessee was selected for complete scrutiny through CASS, primarily for the reason of high value receipts of cash shown from third parties in response data and cash deposits during the demonetization period and these were just the two scenarios of the scheme adopted under the CASS at the given point in time to flag the cases that needed to be picked up for scrutiny and the A.O. was under an obligation to verify the facts of the case holistically. We are therefore unable to accede to the contention so advanced by the ld AR that it was a case of limited scrutiny and not complete scrutiny and are in complete agreement with the following findings of the ld PCIT in para 6 of the impugned order where he has held as under: The assessee's contention that the Scope of assessment was clearly laid out as this is a case of Complete Scrutiny to verify deposit during demonetization period is also bereft of any strength, as the assessee's case was selected for complet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned by the AO, the latter being satisfied with the same and explanation so furnished by the assessee, merely the fact that the AO has not carried out independent enquiries of these confirmations from the creditors cannot be a basis to hold the order as erroneous in so far as prejudicial to the interest of Revenue. The ld PCIT has not pointed out any deficiency or inaccuracy in the confirmations so filed by the creditors unlike some of the other cases as we have noted above and in absence thereof, the order so passed by the AO in this regard cannot be held as erroneous in so far as prejudicial to the interest of Revenue and the findings of the ld PCIT in this regard at para 5.8 and 5.9 of the impugned order are hereby set-aside. 47. Now, coming to specific instances highlighted by the ld PCIT in 5.7 of the impugned order, the ld PCIT has referred to the confirmations from Shri Baldish Singh Toor, Smt Ramneek Toor and Shri Raj Kumar which have been submitted on a plain paper without mention of the address, PAN details, ITR Details and source of loan. It has been stated by the ld PCIT that the AO has not verified the same and the identity, creditworthiness and genuineness of the trans ..... X X X X Extracts X X X X X X X X Extracts X X X X
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