TMI Blog2024 (4) TMI 930X X X X Extracts X X X X X X X X Extracts X X X X ..... n order also falls under the ambit of section 263. When we analyse the facts of the present case in the light of above principles of law, then we are of the firm view that it is a case where the order of AO is erroneous in so far as prejudicial to the interest of revenue. In the present case, certain facts are very strange such as the assessee does not even know the name and contact details of the persons who have deposited cash in his saving bank account. The assessee has also denied about the details of goods purchased for customers and sent to customers. Assessee has shown his inability to provide the details such as invoices of goods, transport bilties etc. Therefore, it is a clear cut case of lack of enquiry. There was complete inaction on the part of the AO and hence, the order of assessment is erroneous in so far as prejudicial to the interest of revenue. In this era of digitalization, where even a vegetable vender is using digital mode of payment, huge cash transaction creates doubt in the mind of a person of common prudence. However, a suspicion, howsoever, is strong, cannot partake the character of evidence and hence, solely on the basis of suspicion, an action cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es in Firozabad Market and the assessee had only charged commission at the rate of Rs. 500/- per lac. The learned PCIT observed that during the course of assessment proceedings, no enquiry was made by the Assessing Officer in respect of the cash deposits. Accordingly, learned PCIT show caused as to why the assessment order could not be declared as erroneous insofar as prejudicial to the interests of Revenue, as the Assessing Officer failed to conduct any enquiry in respect of cash amounting to Rs. 13,39,75,217/- deposited in the bank account of the assessee. 3. In response to the show cause notice, the assessee filed its submission dated 12.03.2021 before the learned PCIT. After considering the submissions of learned counsel of the assessee, learned PCIT held that the order of the Assessing Officer is erroneous and prejudicial to the interests of revenue and hence, he set aside the order of the Assessing Officer in terms of powers vested to learned PCIT under section 263 of the Act. 4. Aggrieved by the order of the learned PCIT-1, Agra, the assessee preferred appeal before us and raised following grounds : 1 Because, the order passed by Ld. Pr. Commissioner of Income Tax, hereinaft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tatute does not provide the manner in which the enquiries are to be conducted by the Ld. Assessing Officer while framing assessment order. Merely because the Ld. Pr. CIT was not satisfied with the manner of enquiry, the assessment order cannot be treated as erroneous or prejudicial to the interest of the revenue unless the view taken by the Ld. Assessing Officer is unsustainable in law. In support, the appellant has filed copy of order of the Hon ble High Court, Allahabad in the case of CIT Vs Bharat Explosive Limited [ ITA No. 182 of 2010 dt. 16.02.2017, which is placed at Judicial Index Paper Book Page No. 10-12. 2. The Ld. Assessing Officer has specifically stated in the assessment order that the case was discussed with Authorized Representative of the assessee from time to time as per guidelines of limited scrutiny. Thus the assessment having been passed after discussion with representative of the assessee and conclusion arrived at by the Ld. Assessing Officer, the provision of Sec. 263 can not be invoked. In support, the appellant has filed copy of order of the Hon ble High Court, Allahabad in the case of CIT Vs Goyal Private Family Specific Trust [(1988) 171 ITR 698 ] , which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nquiries. 7. The learned counsel for the assessee placed reliance on the decision in the case of Malabar Industrial Co. Ltd. vs. CIT, 243 ITR 83 for the proposition that for invoking the powers under section 263, the order of Assessing Officer must be erroneous insofar as prejudicial to the interests of revenue. He contended that twin conditions, i.e., order must be erroneous and prejudicial to the interests of revenue should be satisfied in a given case and then only 263 can be sustainable. 8. Learned counsel for the assessee also relied upon the judgments of ITAT, Mumbai Bench in the cases of The Manjari Stud Farm Pvt. Ltd. vs. ACIT (ITA No. 1106/Mum/2022 dated 09.08.2023 and Small Wonder Industries vs. CIT (ITA No. 2464/Mum/2013 dated 24.02.2017. 9. Lastly, the counsel for the assessee has drawn attention of the Bench to the order of assessment for assessment year 2014-15 and argued that in that year also, the assessment u/s. 143(3) was framed and no addition qua the cash deposits from customers has been made. 10. On the other hand, learned CIT/DR has raised a preliminary objection stating that the present appeal is not maintainable because fresh assessment in compliance to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the [Joint] Commissioner under section 144A; (ii) an order made by the [Joint] Commissioner in exercise of the powers or in the performance of the functions of an Assessing Officer conferred on, or assigned to, him under the orders or directions issued by the Board or by the [Principal Chief Commissioner or] Chief Commissioner or [Principal Director General or] Director General or [Principal Commissioner or] Commissioner authorised by the Board in this behalf under section 120; (b) record [shall include and shall be deemed always to have included] all records relating to any proceeding under this Act available at the time of examination by the [Principal Commissioner or] Commissioner; (c) where any order referred to in this sub-section and passed by the Assessing Officer had been the subject matter of any appeal [filed on or before or after the 1st day of June, 198824], the powers of the [Principal Commissioner or] Commissioner under this sub-section shall extend 25[and shall be deemed always to have extended] to such matters as had not been considered and decided in such appeal.] [Explanation 2. For the purposes of this section, it is hereby declared that ar. order passed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such is a case of lack of enquiry and the order of the AO can be termed as erroneous. 17. While acting as an adjudicator, if the AO took some view which is contrary to law or the AO failed to consider the provisions of law of income tax, then also such an order is erroneous. 18. If the assessment proceedings are erroneously conducted and the revenue is suffering loss then such an order falls under the ambit of the provisions of section 263. Similarly, if the AO failed to consider the provisions of Income-tax or formed a view which is contrary to law, then such an order also falls under the ambit of section 263. 19. When we analyse the facts of the present case in the light of above principles of law, then we are of the firm view that it is a case where the order of AO is erroneous in so far as prejudicial to the interest of revenue. 20. In the present case, certain facts are very strange such as the assessee does not even know the name and contact details of the persons who have deposited cash in his saving bank account. The assessee has also denied about the details of goods purchased for customers and sent to customers. The AR of assessee has shown his inability to provide the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roneous. In the same category fall orders passed without applying the principles of natural justice or without application of mind. The scheme of the Act is to levy and collect tax in accordance with the provisions of the Act and this task is entrusted to the Revenue. If due to an erroneous order of the Income-tax Officer, the Revenue is losing tax lawfully payable by a person, it will certainly be prejudicial to the interests of the Revenue. The phrase prejudicial to the interests of the Revenue has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interests of the Revenue. For example, when an Income-tax Officer adopted one of the courses permissible in law and it has resulted in loss of Revenue ; or where two views are possible and the Income-tax 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 Income-tax Officer is unsustainable in law. 23. There is no quarrel on the proposition of law as propoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to which, the order of AO is prejudicial to the interest of revenue. Therefore, the case law of Manjari Stud Farm Pvt. Ltd. Vs. ACIT (supra) is of no help to the assessee. 25. The last case law, which is relied upon by the counsel of the assessee was Small Wonder Industries vs. CIT (ITA No. 2464/Mum/2013. In that case also, the issue was of correctness of the claim of the assessee vis-a-vis deduction under section 80IB. In that case, the Assessing Officer has made elaborate discussion in respect of deduction under section 80IB as well as disallowance of interest u/s. 36(1)(iii) of the Act. In this case, the coordinate Bench in para 2.4 has categorically observed that the assessment was framed after thorough enquiries and due deliberations on the issues therein and in this backdrop, the coordinate Bench held that it may be a case of inadequate enquiry, but cannot be a case of lack of enquiry and hence, the action u/s. 263 was not sustainable. The facts of the present case are completely different because here it is a case of lack of enquiry. Therefore, this case is also of no help to the assessee. 26. So far as the contention of the assessee that for the assessment year 2014-15, th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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