Sh. Jai Parkash Garg Vs PCIT (ITAT Delhi)
Facts-
AO noticed that assessee has deposited cash in the bank on the various dates. The assessee was called upon to explain the source of cash deposit with supporting evidence. In response thereto, the assessee explained that cash was deposited in the bank out of cash available with him out of withdrawal on earlier date, cash sales from the retail business & funds transferred from the OD a/c. Further AO noted that mostly cash was deposited in the bank in the round figure. That case was discussed with the counsel of the assessee who after discussion surrendered an amount of Rs.3,20,000/- subject to no penal action. Therefore, AO noted that to plug the possible leakage in revenue on a/c of cash deposited in the bank, an addition of Rs.3,20,000/- is hereby made subject to no penalty.
The PCIT proceeded to assume jurisdiction u/s 263 of the Act. PCIT observed that there was no enquiry/verification done on the issue of cash deposit of Rs. 43,19,000/- and AO simply accepted the version of the assessee. The PCIT directed that the assessment order is set aside and AO is directed to make the assessment afresh. Being aggrieved, assessee preferred appeal before ITAT.
Conclusion-
Held that post referring the order sheet entry, PCIT contradicted himself by the observation that no enquiry has been done on this issue and the AO simply accepted the version of the assessee. The above line mentions that firstly there is no enquiry and in the same breath it states that AO simply accepted the version of the assessee. There is no whisper as to what was the version of the assessee which according to ld. PCIT was to be further examined. Hence, it is amply clear that ld. PCIT invoked his jurisdiction u/s 263 without any application of mind. As noted by the ld. PCIT himself enquiries were made by the AO and due replies were given by the assessee. After duly considering the replies, AO found that assessee agreed to surrender the amount of Rs.3,20,000/- and the same was added. There is no whisper by the ld. PCIT as to why the explanation accepted by the AO is not acceptable or wrong.
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal by the assessee is directed against the order of ld. PCIT, Karnal, dated 12.01.2016 and pertaining to Assessment Year 2011-12.
2. The grounds of appeal read as under:
“1. That on the facts and in the circumstances of the case learned CIT erred in setting aside the assessment order dated 26.09.2013 and directing fro making assessment afresh.
2. That the AO has rightly and in detail made enquiries and investigated the explanations furnished by the aa from time to time and the learned CIT has not applied his mind to consider the same and wrongly directed for making a fresh assessment.
3. That the learned CIT ignored the explanations on record furnished by the aa and wrongly observed the facts and erred in directing for making an assessment afresh.
4. That the order of learned CIT is lacking conjunction of prejudicial to the interest of revenue and erroneous in law as such order of the learned CIT is wrong and bad in law.”
3. In this case, in the assessment order, Assessing Officer noted that assessee has derived his income from salary and retail business of handloom goods u/s 44AD of the Income Tax Act, 1961. The Assessing Officer observed that during the year it is noticed that assessee has deposited cash in the bank on the various dates. The assessee was called upon to explain the source of cash deposit with supporting evidence. In response thereto, the assessee explained that cash was deposited in the bank out of cash available with him out of withdrawal on earlier date, cash sales from the retail business & funds transferred from the OD a/c. For the cash available out of withdrawn amount, the assessee did not elaborate the purpose of the withdrawal & further its non-utilization. Further AO noted that mostly cash was deposited in the bank in the round figure. That there are possibilities of revenue leakages. That the assessee was confronted about these facts. That case was discussed with the counsel of the assessee who after discussion surrendered an amount of Rs.3,20,000/- subject to no penal action. Therefore, AO noted that to plug the possible leakage in revenue on a/c of cash deposited in the bank, an addition of Rs.3,20,000/- is hereby made subject to no penalty.
4. Upon the aforesaid Assessment Order, ld. PCIT proceeded to assume jurisdiction u/s 263 of the Act. He noted that the said case was selected in CASS for verifying the source of cash deposits of Rs.43,19,000/-. However, he noted that no question has been asked on this issue. Thereafter, ld. PCIT observed that vide order sheet entry dated 10.04.2013 and 02.05.2013, the assessee was asked by the AO to explain the source of cash deposits, which were above Rs.10 Lacs, made in the saving bank account and further asked the assessee to appear before the AO on 2.5,2013 & 9.5.2013 alongwith the details relating to source of cash deposits.
5. The ld. PCIT noted that during assessment proceedings, on 25.04.2013. The assessee furnished his reply alongwith statement of Bank account bearing A/c No. 675010100011394 with Bank of India, Karnal. The ld. PCIT further noted that the assessee further submitted that vide his reply dated 26.09.2013 narration of credit/debit entries exceeding Rs. 10,000/- as appearing in the bank account.
6. Thereafter, the ld. PCIT observed that from the perusal of the record, it is seen that no enquiry/verification has been done on this issue and AO simply accepted the version of the assessee. The ld. PCIT further observed as under:
“Further, it is also noticed that the assessee had made FDRs with Bank of India, Karnal on which the assessee had received interest of Rs.90,347/- during the year under consideration. It is also noticed that the assessee had given advances to following persons, but no interest has been charged:
