Revisionary Jurisdiction U/s 263 Can't Be Invoked If AO Has Formed Plausible View After Carrying Out Necessary Enquiry: Chandigarh ITAT
Pankaj Bajpai
29 March 2024 10:00 AM IST
Finding that the assessee has carried out seasonal trade in hosiery items duly supported by documentary evidence, which was duly examined by the AO accepting the said transactions and resultant profit has been brought to tax, the Chandigarh ITAT held that the PCIT cannot be permitted to invoke his jurisdiction u/s 263 merely because he believes that there is certain deficiency in...
Finding that the assessee has carried out seasonal trade in hosiery items duly supported by documentary evidence, which was duly examined by the AO accepting the said transactions and resultant profit has been brought to tax, the Chandigarh ITAT held that the PCIT cannot be permitted to invoke his jurisdiction u/s 263 merely because he believes that there is certain deficiency in the documentation so maintained and furnished by the assessee.
The Bench of Aakash Deep Jain (Vice President) and Vikram Singh Yadav (Accountant Member) observed that “where the AO has carried out the necessary enquiry and investigation, and formed a reasonable view and passed a speaking order, in order to disturb the findings of the AO and more so, holding the assessment order as erroneous in so far as prejudicial to the interest of Revenue, certain minimum inquiries ought to have been conducted by the PCIT which apparently has not happened in the instant case”. (Para 18)
As per the brief facts of the case, the assessee filed its return declaring total income of Rs. 3,44,820/- which was selected for complete scrutiny and notice under section 143(2) and 142(1) along with questionnaire were issued. Thereafter taking into consideration the submission filed by the assessee, the return of income was accepted. The assessment records were thereafter examined by the Pr. CIT and he was of the prima facie view that the order so passed by the AO was erroneous in so far as prejudicial to the interest of the Revenue and a show cause under section 263(1) was issued and thereafter taking into consideration the submission filed by the assessee but not founding the same acceptable, the order so passed by the AO was set aside for passing a fresh order in accordance with law after providing sufficient opportunity of hearing to the assessee.
The PCIT has issued the show-cause u/s 263 stating that the assessee has deposited cash amounting to Rs 38.37 lacs in old currency notes during the period of demonization and during the course of assessment proceedings, the assessee was asked to explain the source of cash deposit and in response, the assessee submitted that the source of cash deposit was out of the sale proceeds from trading in knitted cloth. Thereafter, the PCIT has stated that to substantiate the claim of cash sales, no supporting documentation has been furnished by the assessee and further, other than the period of demonization, no cash was deposited in the bank account and basis the same, the show-cause was issued by the PCIT.
The Bench found that the AO has recorded the fact that the sales were made in cash and copy of cash book detailing the individual sales and relates particulars are forming part of the assessment record.
The Bench also found that the matter relating to purchases and sales and the source of cash deposit has been duly enquired into by the AO, necessary enquiries have been made and basis examination thereof, the source of cash deposit as arising out of sale proceeds has been accepted by the AO and in respect of which, the assessee has disclosed profit and paid taxes thereon.
Basis same material and documentation available as part of the assessment records, the PCIT has recorded certain findings which are more in the nature of apprehension and suspicion in terms of mode and manner of conduct of the business by the assessee, added the Bench.
Further, the Bench noted that no fresh material has come to the notice of the PCIT and basis re-appreciation of the same material, he has arrived at a different finding.
The Bench went on to explain that merely stating that detailed and deep enquiries are required in the instant case will result in taking away a vested right of the assessee in terms of completed assessment where it has already gone through the rigorous examination by the AO and the same cannot be sustained in the eyes of law even drawing support from the explanation 2(a) to Section 263, unless it is pointed out as to which enquiry or verification was not made by the AO before passing the assessment order.
Therefore, while observing that where the matter relating to source of cash deposit during the demonization period has been duly examined by the AO and there is due application of mind, the ITAT concluded that there is no justifiable basis to invoke the revisionary jurisdiction u/s 263, and allowed the appeal of assessee.
Counsel for Appellant/ Assessee: Sudhir Sehgal
Counsel for Respondent/ Revenue: Kusum
Case Title: Manuj Jain HUF verses Pr. CIT
Case Number: ITA NO. 392/Chd/2022
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