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TMI Blog2024 (7) TMI 1433X X X X Extracts X X X X X X X X Extracts X X X X ..... cords and noted that the AO prima-facie completed the assessment without making due verification and inquiries which were warranted in the facts and circumstances of the case. He observed from the verification of the record that the assessee during the demonetization period has deposited cash to the extent of Rs. 19,11,20,840/- which is inclusive of Specified Bank Notes (SBN) amounting to Rs. 18,84,20,100/-. He observed that during the period of 09.11.2015 to 31.12.2015 of the earlier year, meagre cash of Rs. 35,86,050/- only was deposited in the bank account which is very less as compared to the cash deposited during the demonetization period. He noted that the AO during the assessment proceedings has failed to verify the source of substantial cash deposited into the bank account during the demonetization period with documentary evidence. He, therefore, was of the view that the assessment order passed u/s. 143(3) of the Act on 26.12.2019 by the ACIT, Central Circle-1, Nashik is erroneous in so far as it is prejudicial to the interest of the Revenue because the assessment was made without making inquiries or verification which should have been made. 4. He, therefore, issued a show ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se. 2. The learned PCIT ought to have appreciated that in the course of the asst, proceedings u/s 143(3), the A.O. had made detailed enquiries vide notice dated 06.12.2019 in respect of the entire cash deposits during demonetization period and the explanation furnished by the assessee was accepted by the A.O. after application of mind thereto and hence, there was no reason to resort to the provisions of section 263 in the present case. 3. The learned PCIT failed to appreciate that the view taken by the A.O. after carrying out detailed verification and after application of mind to the submissions made by the assessee, was certainly a possible view and therefore, the revision order passed u/s 263 on the above facts was not justified in law. 4. The appellant craves, leave to add, alter, amend and delete any of the above grounds of appeal." 7. The assessee has also taken the following additional ground : "The assessee submits that in this case, the revision proceedings u/s 263 were initiated on the basis of recommendation proposal for revision forwarded by A.O. through Addl. CIT and thus, the said revision proceedings were not initiated by the Pr. CIT suo-moto by calling for a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of pay in slips used for the purpose." 11. Referring to the notice issued u/s. 142(1) dated 19.10.2019 along with the annexure, copy of which is placed at pages 26 to 29 of the paper book, he submitted that the AO in the said questionnaire has again asked to specify the nature of cash deposit in the bank account in the given proforma such as total cash deposited during financial year 2015-16, total cash deposited during the period from 01-04-2015 to 08.11.2015 and 09.11.2015 to 31.12.2015 and for the same period for the financial year 2016-17. He has also asked the month wise cash held and deposits for financial years 2015-16 and 2016-17 (i.e. April to December of said years). Referring to page 30 of the paper book, the ld. Counsel for the assessee submitted that the assessee vide letter dated 19.11.2019 has submitted the details. Referring to page 34 to 40 of the paper book, the ld. Counsel for the assessee submitted that the AO vide another notice issued u/s. 142(1) dated 06.12.2019 has also asked to submit the monthly VAT returns, details of cash deposited during 08.11.2016 to 30.12.2016, cash balance at the end of every month till the month of December, 2016 in the prescrib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isions, the ld. Counsel for the assessee submitted that where the AO had conducted enquiries regarding the source of cash deposits made during demonetization period and taken a view, the Pr.CIT was not justified in invoking the revision power u/s. 263 by merely directing the AO to carry out enquiries afresh without himself conducting further enquiries to show that the view taken by the AO on merits was erroneous : 1. V. L. Jewellers v. PCIT [ITA No. 836/ Delhi/ 20221 dated 24.03.2023. 2. Premii Valji & Sons v. PCIT [ITANo. 125/Rajkot/20221 dated 09.09.2022. 3. CIT v. Gabrial India Ltd. [203 ITR 108 (Bom)(HC) 15. Referring to the following decisions, he submitted that where the revision proceedings u/s. 263 were initiated at the instance of proposal for 263 action forwarded by the successor AO and not suo moto initiated by the Pr.CIT, then the revision order u/s. 263 is not sustainable in law: 1. Premraj Bhanraj Bafna v. PCIT [ITA No. 317/PUNE/ 2020 dated 21.10.2022. 2. Alfa Laval Lund AB v. PCIT [(2022) 215 TTJ 814 (PUNE). 3. KBB Nuts Pvt. Ltd. v. PCIT [(2021) 35 NYPTTJ 801 (Asr). 4. Shantai Exim Ltd. v. CIT [(2016) 178 TTJ 451 (Ahd). 16. The Ld. counsel for the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 407 (Pune -Trib.)[07-03-2022] 11. Hon'ble ITAT Pune in the case of Jalgaon People's Co-op Bank Ltd. Vs. PCIT-2, Nashik [2021] 127 Taxmann.com 243 (Pune - Trib.)/(2021) 188 ITD 608 (Pune - Trib.)[22-02-2021]." 19. We have considered the rival arguments made by both the sides, perused the orders of the Assessing Officer and the CIT(A) and the Paper Book filed on behalf of the assessee. We have also considered the various decisions cited by both the sides. We find the ld. Pr.CIT in the instant case invoking the power conferred u/s. 263 of the I.T. Act, 1961 held that the order passed by the AO is erroneous in so far as it is prejudicial to the interest of the Revenue since the AO passed the order without verifying the source of substantial cash deposited into the bank account during the demonetization period with documentary evidence. It is the submission of the ld. Counsel for the assessee that the AO during the course of assessment proceedings has issued various notices and questionnaires on various dates asking the assessee to explain the source of such cash deposits including the cash balance at the end of every month till the month of December, 2016 in the given form, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sep-15 Oct-15 November till 08.11.2015 vii. Analysis of month wise cash sales and cash deposits from 01.04.2016 to 08.11.2016 Monthwise Opening cash in hand Cash sales Cash deposited in Bank Cash withdrawal from the bank Closing cash on hand April-16 May-16 June-16 July-16 Aug-16 Sep-16 Oct-16 November till 08.11.2016 viii. Please explain the reason for mounting cash in hand in F.Y. 2016-17 till 08.11.2016. VISHNU PRASAD H ACIT CIRCLE-1, NASHIK" 20. Similarly, we find the AO vide annexure to notice u/s. 142(1) dated 06.12.2019 has asked the assessee to give the details in the following proforma : "Kindly refer to the above 1. During the year, it is seen that you have taken unsecured loan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i. Cash deposit made between 9th Nov to 31st Dec 2016 ii. Please specify the nature of cash deposit (i.e. out of loan received, repayment of loan, gift, sale or advance for sale of land or any other capital asset, cash received for services rendered, other exempt income, cash in hand or any other) iii. Whether stock register maintained. If yes, please provide monthwise stock position. iv. Details of cash deposits in Bank: Sl No Description Amount 1(a) Total cash deposit in Bank in F.Y. 2015-16 (b) Total cash deposit in Bank from 01.04.2015 to 08.11.2015 (c) Total cash deposit in Bank from 09.11.2015 to 31.12.2015 2(a) Total cash deposit in Bank in F.Y. 2016-17 (b) Total cash deposit in Bank from 01.04.2016 to 08.11.2016 (c) Total cash deposit in Bank from 09.11.2016 to 31.12.2016 3(a) Percentage increase between 2(a) & 1(a) (b) Percentage increase between 2(b) & 1(b) (c) Percentage increase between 2(c) & 1(c) v. Details of Cash Sales Sl No Description Amount 1(a) Total cash sales in F.Y. 2015-16 (b) Total cash sales from 01.04.2015 to 08.11.2015 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 17-18 Subject - Reply to Notice No. ITBA/AST/F/142(1)/2019-20/1021826432(1), Dated 06.12.2019. With referred to your annexed questionnaire, we are submitting the following details along with the reply : viii. Reason for mounting cash in hand in F.Y.2016-17 till 08.11.2016. The Assessee Firm is having cash balance of Rs. 16,33,30,867/- as on 08.11.2016. The said cash balance is attributable towards cash sates recorded in the books of accounts. I wish to submit that a survey action u/s. 133A has been conducted on 09.08.2016 in the case of the Assessee Firm. I decided to increase Sales to off-set higher Income tax payout due to Survey action. Accordingly, sales have increased in the post survey period leading to high amount of Cash in hand as on 08.11.2016. In this respect I wish to state that the sale is genuine and the same is recorded in the books of accounts. The VAT on such Sales have also been paid. I wish to further submit that Purchases have also increased in sync with Sales. Thus, the Sales recorded is genuine and the cash amount as on 08.11.2016 is sourced out of Cash Sales. In support of the above facts, I am producing Purchase Invoices, Sales Invoices and Stock rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied his mind and has accepted the submissions made by the assessee. Therefore, it can be safely concluded that the present case is not a case of no enquiry or lack of enquiry. The AO in the instant case has made due enquiries which is expected of him and after receiving the replies from the assessee from time to time, has accepted the source of such cash deposits in the bank account during the demonetization period. 25. We find the Hon'ble Bombay High Court in the case of CIT Vs. Gabrial India Ltd. (1993) 203 ITR 180 (Bom.) has observed as under : "14. We, therefore, hold that in order to exercise power under sub-section (1) of section 263 of the Act there must be material before the Commissioner to consider that the order passed by the Income-tax Officer was erroneous in so far as it is prejudicial to the interests of the Revenue. We have already held what is erroneous. It must be an order which is not in accordance with the law or which has been passed by the Income-tax Officer without making any enquiry in undue haste. We have also held as to what is prejudicial to the interests of the Revenue. An order can be said to be prejudicial to the interests of the Revenue if it is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n regard to the nature of the expenditure incurred by the assessee. The assessee had given detailed explanation in that regard by a letter in writing. All these are part of the record of the case. Evidently, the claim was allowed by the Income-tax Officer on being satisfied with the explanation of the assessee. Such decision of the Income-tax Officer cannot be held to be "erroneous" simply because in his order he did not make an elaborate discussion in that regard. Moreover, in the instant case, the Commissioner himself, even after initiating proceedings for revision and hearing the assessee, could not say that the allowance of the claim of the assessee was erroneous and that the expenditure was not revenue expenditure but an expenditure of capital nature. He simply asked the Income-tax Officer to re-examine the matter. That, in our opinion, is not permissible. Further inquiry and/or fresh determination can be directed by the Commissioner only after coming to the conclusion that the earlier finding of the Income-tax Officer was erroneous and prejudicial to the interests of the Revenue. Without doing so, he does not get the power to set aside the assessment. In the instant case, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to hold that the order of the Assessing Officer, who had conducted enquiries and had acted as an investigator, is erroneous, without CIT conducting verification/inquiry. The order of the Assessing Officer may be or may not be wrong. CIT cannot direct reconsideration on this ground but only when the order is erroneous. An order of remit cannot be passed by the CIT to ask the Assessing Officer to decide whether the order was erroneous. This is not permissible. An order is not erroneous, unless the CIT hold and records reasons why it is erroneous. An order will not become erroneous because on remit, the Assessing Officer may decide that the order is erroneous. Therefore CIT must after recording reasons hold that the order is erroneous. The jurisdictional precondition stipulated is that the CIT must come to the conclusion that the order is erroneous and is unsustainable in law. We may notice that the material which the CIT can rely includes not only the record as it stands at the time when the order in question-was passed by the Assessing Officer but also the record as it stands at the time of examination by the CIT [see CIT vs. Shree Manjunathesware Packing Products, 231 ITR 53 (SC)] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Revenue but cannot be termed as erroneous in view of the various notices issued by him calling for various details from the assessee to substantiate the source of such huge cash deposits during the demonetization period. Further, the Pr.CIT in the instant case, despite having all the material, has not examined the details himself and came to a definite conclusion but has merely set-aside the matter to the file of the AO for afresh assessment. The various decisions relied on by the ld. Counsel for the assessee in the case law compilation support his case to the proposition that where the AO had conducted enquiries regarding the source of cash deposits made during the demonetization period and has taken a possible view, the Pr.CIT was not justified in invoking the revision powers u/s. 263 of the Act by merely directing the AO to carry out enquiries afresh without himself conducting further enquiries. So far as the various decisions relied on by the ld. DR are concerned, these are all distinguishable and not applicable to the facts of the present case. Since the AO in the instant case has made detailed enquiries regarding the source of cash deposits made during the demonetization ..... X X X X Extracts X X X X X X X X Extracts X X X X
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