TMI Blog2024 (5) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO. A specific inquiry was directed by the AO and the source was found to be satisfactory. While seeking to dislodge the action of AO, no inquiries were made by the CIT in the course of revisional proceedings. CIT without giving any effective opportunity, has decided the issue against the assessee with a degree of finality disregarding the vital facts such as opening balances available in the F.Y. 2016-17 to the tune which was admitted and accepted as closing balance of cash in the preceding A.Y. 2016-17 and also has attained finality. CIT has adjudicated the issue against the assessee without giving any allowance for any cash in hand which, a common person would ordinarily possess having regard to the construct of the Indian society. An amount of Rs. 10 lakh cannot be stated to be highly implausible having regard to the postulations which define Indian socio-eco structure. Business model of the assessee and need of cash for running business was also disregarded by the CIT. We find substantial merits in the ardent defense raised on behalf of the assessee on both counts. Assessee has demonstrated the existence of cash in hand. The relevant facts were placed before the AO which s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder dated 31.03.2023 Assessment order dated 18.11.2021 Assessment Order under section 143(3) of the Income Tax Act, 1961. 2 ITA No.1533/Del/2023 2017-18 Pr.CIT (Central), Delhi-1, order dated 31.03.2023 Assessment order dated 13.11.2020 Assessment Order under section 153A of the Income Tax Act, 1961. 3. ITA No.1534/Del/2023 2018-19 Pr.CIT (Central), Delhi-1, order dated 31.03.2023 Assessment order dated 17.03.2022 Assessment Order under section 143(3) r.w. Section 153A of the Income Tax Act, 1961. 2. The assessee has assailed revisional order passed by the Pr.CIT under Section 263 of the Act on the ground that the assessment order under revision is neither erroneous nor prejudicial to the interest of the Revenue and therefore, the Pr.CIT lacks jurisdiction to invoke powers conferred under Section 263 of the Act in respect of captioned appeals. 3. To begin with, we shall take up the appeal in ITA No.1075/Del/2023 relevant to Assessment Year 2019-20 for adjudication. 4. Briefly stated, the assessee is an individual engaged in the practice of Chartered Accountancy since 1992. A search and seizure operation was conducted in the case of the assessee on 18.09.2018. In the course of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of Sh. Ashok Kumar Tayal for the A.Y. 2019-20 for revision of the assessment order u/s 143(3) of the Income-tax Act, 1961 dated 18.03.2021- reg. The assessee was covered in search and seizure proceedings u/s 132 of the Income-tax Act, 1961 (herein after referred to as the Act') conducted as part of Sh. Ravinder Singh Tongar group on 18.09.2018. During the search, cash amounting to Rs. 10,12,780/- was found at the premise of the assessee. The assessee filed original return of income at Rs. 11,14,140/- on 28.11.2020. Assessment u/s. 143(3) of the Act was completed on 18.03.2021 accepting returned income of the assessee. 2. It is noted from the assessment records that in the return filed by the assessee for A.Y. s 2017-18 to 2019-20 following discrepancies are noted: A.Y Total Income Cash in Hand In original ITR In ITR filed after search In original ITR In ITR filed after search 2017-18 6,65,950/- 6,65,950/- 0 27,79,067/- 2018-19 3,95,750/- 3,95,750/- 1,20,000/- 23,06,667/- 2019-20 NA 11,14,140/- NA 19,95,667/- 3. During the assessment proceedings the explanation for the cash found amounting to Rs 10,12,780/- was provided by the assessee stating that he had cash balanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onary order. Unimpressed, the Pr.CIT passed the order under Section 263 of the Act wherein action of the AO was assailed on two counts; (i) the AO has wrongly accepted the explanation offered by the assessee towards nature and source of cash found in search mainly with reference to opening balances of cash held from earlier years without requisite inquiry as alleged in the show cause notice. The PCIT accordingly directed the AO to include and assess Rs. 10,12,780/- on account of unexplained cash under Section 69A r.w.s 115BBE of the Act in the assessment pursuant to the revisional action; (ii) the AO failed to verify the source of investment in jewellery worth Rs. 58,53,606/- found at the residence and in locker at the time of search. The issue was set aside to the AO for appropriate orders after enquiry. 7. The assessment order was accordingly set aside with a direction to the AO to make a fresh assessment de novo in terms of revisional order and in accordance with law. 8. Aggrieved, the assessee is in appeal before the Tribunal agitating supervisory jurisdiction usurped by the Pr.CIT under Section 263 of the Act. 9. The ld. counsel for the assessee broadly reiterated its submissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scheme which does not call for maintenance of books. However, the assessee has opted to declare the cash in hand in the return filed under Section 153A of the Act which demonstrates sufficient availability of cash (c) the closing balance of cash in hand in F.Y. 2015-16 relevant to A.Y. 2016-17 was declared by the assessee at Rs. 24,19,867/- in the return filed under Section 153A of the Act. The cash balance so declared was not disturbed either by the AO or by the revisional Commissioner under Section 263 of the Act. Hence, when seen in perspective, the opening balance at the beginning of F.Y. 2016-17 spilled over to subsequent years including F.Y. 2018-19 relevant to A.Y. 2019-20 acquires a degree of acceptability for the purposes of explanation offered towards source of cash found. When seen conjointly with existing cash at the beginning of respective assessment years , the source of cash found in the course of search thus clearly stands explained. The cash balances as statedly reported in the ROI is as tabulated hereunder: Assessment Year Original Return Return filed u/s. 153A Opening Balance Closing Balance Opening Balance Closing Balance 2016-17 - - - 24,19,867.00 2017-18 - - 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... withstand the test of preponderance of probabilities. The ld. CIT-DR thus submitted that a casual and summary inquiry made by the AO does not discharge the quasi judicial responsibilities entrusted upon the AO and such cryptic and nondescript order has been rightly been set aside under s. 263 of the Act. In the absence of any satisfactory explanation offered, the Pr.CIT has rightly given a conclusive directions to the AO to make additions on account of cash found in the course of search with the aid of Section 69A r.w. Section 115BBE of the Act. As regards nonchalant inquiry allegedly carried out by the AO towards source of investment in jewellery. the ld. CIT-DR submitted that the issue has been merely set aside to the file of the AO and it will be open to the assessee to offer explanations towards source of jewellery. 12. We have carefully considered the rival submissions on the maintainability of revisional action in the factual matrix and in the light of jurisprudence available in this regard. The assessee has questioned the rationale for invoking powers under section 263 of the Act and alleged absence of prerequisites for doing so. 13. Section 263 of the Act confers power upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... given by the Pr. CIT to the assessee to raise its defense on the second issue of investment in jewellery. Undisputedly, the revisional order has been passed without confronting the assessee on purported allegations towards lack of inquiry / inadequacy in inquiry regarding source of investment in jewellery by the AO. 15. At this juncture, it may be pertinent to observe that the breach of principles of natural justice can typically happen in two ways; (i) the competent authority passes an order without giving reasonable opportunity to deal with the points raised and facts in issue or; (ii) passes order without revealing the facts itself in the course of the proceedings and comes out with an order adverse to the assessee without any prior notice. The case of the assessee insofar as source of jewellery is concerned, falls in the second category of breach which is far more incomprehensible. The Pr. CIT has outrightly deprived the assessee of his statutory right to make any effective representation to defend his case as contemplated in the provisions of Section 263 of the Act. Noticeably, the requirement of opportunity is not merely implied but expressly enacted in section 263 of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le having regard to the postulations which define Indian socio-eco structure. The business model of the assessee and need of cash for running business was also disregarded by the Pr. CIT. 16. In the backdrop, we find substantial merits in the ardent defense raised on behalf of the assessee on both counts. The assessee has demonstrated the existence of cash in hand. The relevant facts were placed before the AO which suggests the view taken by the Assessing Officer in its quasi judicial capacity to be plausible while framing the assessment. As stated, the assessee has not declared any cash in hand in its return of income filed prior to search since it was not compulsory for the assessee to do so owing to presumptive taxation scheme availed by the assessee. The cash in hand was however declared for different assessment years in the return filed under Section 153A. Pursuant to search, the opening cash in hand for F.Y. 2016-17 declared at Rs. 24.19 lakh has been accepted by the Revenue and has attained finality in the absence of any pending proceedings. This itself gives rise to a somewhat plausible explanation towards cash found. This apart, the assumption of Pr.CIT towards NIL cash in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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