Case Law Details
Satvir Kaur Vs PCIT (ITAT Amritsar)
ITAT Amritsar held that revisionary order under section 263 of the Income Tax Act unsustainable as AO accepted the deal of sale of agriculture land with a conscious and independent application of mind.
Facts- The case was reopened on the reasons that the assessee had deposited cash of Rs. 60,00,000 in her saving bank account maintained with the Oriental Bank of Commerce during the financial year 2010-11 and that no voluntary return has been filed for the year under consideration. Thus, it was incumbent on the Assessing Officer to examine and inquire into the facts in the light of submissions of the assessee so as to determine the correctness of the claim of the assessee which is the very purpose of assessment. The Pr.CIT noted that absence of enquiry by the AO that goes to the very root of the exercise to determine the correct income assessable to tax and this failure of the Assessing Officer renders the assessment as erroneous and prejudicial to the interest of the revenue.
Conclusion- In the present case, there is a direct nexus between the transaction of sale and the cash deposited in the bank account of the assessee as the transaction of sale of land is registered on 26.04.2010 and the cash was also deposited by the assessee on the same date. Further, the Ld. AO has accepted the deal of sale of agriculture land with a conscious and independent application of mind. Under the facts and circumstances, we hold that the application of provision of section 263 of the Act, on account of difference in opinion of Pr. CIT is invalid and unwarranted.
FULL TEXT OF THE ORDER OF ITAT AMRITSAR
The captioned appeal has been filed by the assessee against the order of the Ld. Pr. Commissioner of Income Tax-1, Amritsar dated 25.03.2021 in respect of Assessment Year 2011-12 challenging therein the revisionary order u/s 263 of the Income Tax Act holding the assessment erroneous on lack of enquiries by the AO without appreciating the facts of the case and that the view taken by the Pr. CIT may be one of the possible view, that is not sufficient for assumption of jurisdiction u/s 263 of the Act.
2. Brief facts of the case are that the assessment has been completed by the erstwhile Income Tax Officer. Ward-3(5), Ferozepur under section 143(3) r.w.s. 147 of the Income Tax Act, 1961 vide order dated 26.12.2018 at an income of Rs. 4,76,150/- against returned income of Rs 3,00,830/- declared in the return of income filed in response to notice u/s148 of the Act on 18.12.2018 after making addition of Rs. 1,75,322/ on account undisclosed interest on savings/deposits. The appellant’s case was reopened after recording reasons and obtaining necessary approval from Pr Commissioner of Income Tax, Bathinda that the assessee had deposited cash of Rs. 60,00,000/- in her savings bank account maintained with the Oriental Bank of Commerce during the financial year 2010-11 and that no return had been filed for the year under consideration under section 139(1) of the Act.
3. That the proposal for revision of assessment, order dated 12.2018 was submitted by the erstwhile Income Tax Officer, Ward 3(5), Zira through the erstwhile Additional Commissioner of Income Tax. Range 3, Ferozepur. On perusal of the proposal and the assessment record, the Pr. CIT observed that the assessment framed in this case was erroneously and prejudicial to the interests of the revenue. Accordingly, a show cause notice which was based on these observations drawn from the perusal of assessment record, is issued to the assessee vide this office DIN fv. Letter No. ITBA/COM/F/1 7/2020- 21/1031266404(1) on 05.03.2021. The relevant contents of the notice are reproduced as under:-
The assessment for the that assessment for the assessment year 2011-12 was completed u/s 143(3) r.w.s. 147 of the Income Tax Act, 1961 by ITO Ward 3(1), Ferozepur on 26.12.2018 at an income of Rs. 4.76.132 against returned income of Rs. 3,00,830/ – after addition of Rs. 1,75,322 on account of interest accrued on savings/deposits no disclosed in ITR. The case was reopened on the reasons that cash of Rs. 60,00,000/ was deposited in a saving hank account during the financial year 2010-12 and that no voluntary return of income for the assessment year 2011-12 has been filed. During the course of assessment proceedings, it was submitted that cash deposits were made out of sale proceeds of agriculture land sold by Sh. Charanjit Singh to whom the land belonging to the assessee’s family was transferred with a condition that he will transfer his land to assessee in turn which has not been happened.
While examining the record, it is observed that the copy of registration deed dated 23.04.20 10 for Rs. 31,14,000/- has been filed during the course of assessment proceedings in respect of land measuring 55 knal 7 marla sold by Sh. Charanjit Singh S/o Sh. Shamsher Singh to Smt. Jasbir Knur. That your husband, Sh. Shinder Pal Singh has stated in his statement recorded during the course of assessment proceedings that the land under consideration teas transferred to Sh. Charanjit Singh by them and in turn Sh. Chimmjit Singh had to give some land to them, hut he refused to play his part. It was further stated that the land so transferred to Sh. Charanjit Singh teas sold by you along with Sh. Shinder Pal Singh and deposited the cash in the hank account out of sale consideration received, however, no copy of the said agreement was provided. Moreover, it is observed that the cash of Rs. 60 lakh was deposited which has been stated to be out of the sale proceeds of land but the sale consideration of the land was Rs. 31,14.000/- only. Thus, the source of rest of the amount of Rs. 28,86,000/ has remained unexplained. Further, no evidence in respect of transfer of property to Sh. Charanjit Singh (as stated in the statement by Sh. Shinder Pal Singh) is filed and also no evidence in support of the fact that the sale proceeds were not claimed by Sh. Charanjit Singh (being land on his name) viz. his bank account statement/confirmation in respect of the aforesaid transaction were not filed during the course of assessment proceedings.
In view of the facts discussed above, the assessment framed in this case seems erroneous in so far as it is prejudicial to the interest of the revenue. In this context, I am directed by the worthy Pr. Commissioner of Income Tax-1, Amritsar to request you to show-cause as to why the assessment so framed may not be cancelled to be made afresh as per the provisions of section 263 of the l. T. Act, 1961 after affording reasonable opportunity of being heard.
4. The case was reopened on the reasons that the assessee had deposited cash of Rs. 60,00,000 in her saving bank account maintained with the Oriental Bank of Commerce during the financial year 2010-11 and that no voluntary return has been filed for the year under consideration. Thus, it was incumbent on the Assessing Officer to examine and inquire into the facts in the light of submissions of the assessee so as to determine the correctness of the claim of the assessee which is the very purpose of assessment. The Pr.CIT noted that absence of enquiry by the AO that goes to the very root of the exercise to determine the correct income assessable to tax and this failure of the Assessing Officer renders the assessment as erroneous and prejudicial to the interest of the revenue. The Pr. CIT supplemented its decision on lack of enquiry and incorrect application of mind by the AO with the judgements in the cases of Rampyari Devi Saraogi vs. CIT(SC) 671TR 84; (CIT v. Jawahar Bhatiacharjee [2012] 341 ITR 434 (Gauhati) HC FB and that Arvee International vs. Addl. CIT (ITAT, Mum) 101 ITD 495.
5. The Ld. Counsel submitted that the Ld. Pr. CIT has no valid and justified reason for initiating revisionary proceeding u/s 263 of the act and he challenged the revisionary order u/s 263 of the Income Tax Act holding the assessment erroneous on lack of enquiries by the AO being passed without appreciating the facts of the case and that the view taken by the Pr. CIT may be one of the possible view, that is not sufficient for assumption of jurisdiction u/s 263 of the Act. In support, the Ld. AR filed 2 written synopses which reads as under:
Synopsis-1
“1. At the outset, it is submitted that the assessee is earning income in the form of salary. In addition to this, the assessee is also an agriculturist. During the year under consideration, the assessee was under the impression that the tax applicable on the salary income of the assessee has already been deducted in the form of TDS and agricultural income being in the nature of exempt income, the assessee opted for not filing of Income Tax Return for the year under consideration i.e. A. Y. 2011-12. Further, the bank account maintained by the assessee in Oriental Bank of Commerce is in the joint name of assessee as well as her husband. It is worthwhile to mention here that all the receipts of the assessee as well as her husband including the agricultural income are deposited in the said bank account.
2. During the course of reassessment proceedings u/s 148 of the Act, the assessee filed her return of income wherein, the “Income under head Salaries” was declared at Rs. 4,00,825/- and the total income was declared at Rs. 3,00,830/- after claiming the deduction amounting to Rs. 100,000/-.
3. It is pertinent to mention here that the case of the assessee was selected for reassessment u/s 148 of the Act due to the reason of “cash deposit in the bank account of the assessee amounting to Rs. 60,00,000/- and time deposit of Rs. 30,00,000 during the year under consideration.” The Ld. AO during the course of re-assessment proceedings had verified all the details pertaining to the case of the assessee. Hence, it is evident that the Ld. AO has passed the assessment order only after due verification of the facts and circumstances of the case of the assessee and hence, took a POSSIBLE VIEW of all the facts of the case and only then made additions to the tune of Rs. 1,75,322/- vide his order dated 26.12.2018 passed u/s 143(3) r.w.s. 147 of the Act.
4. It is submitted that the proceedings u/s 263 of the Act has been initiated merely on the basis of DIFFERENCE OF OPINION and, it is humbly submitted that a difference of opinion cannot be taken as a ground to determine the order passed by the Ld. AO as erroneous and prejudicial to the revenue. Reliance in this has been placed on the judgments of various ITA T Bench in the following cases wherein, it has been held that the action of Worthy PCIT u/s 263 of the Act is bad in law where, the Ld. AO has applied his mind during the course of assessment proceedings and has taken a possible view, however is different from the view of the PCIT. The relevant judgments are as under:
“In the present set of cases, as we have already pointed out, the AO asked the assessees to furnish the relevant
Gain, Short Term Capital Gain, exemption u/s 10(36) of the Act, deduction u/s 57 of the Act and unsecured loans and the assessees furnished all the relevant documents which were examined by the AO who has taken a possible view. Therefore, it is our considered view that there was a due application of mind on the part of the AO in all the four cases and adequate and proper enquiries had been conducted by the AO in this regard and, therefore, the impugned orders passed u/s 263 of the Act have no feet to stand on. We are also in agreement with the argument of the Ld. Counsel that in the cases of Sanjay Jain & Sons and Shri Tarun Jain bearing ITA No. 141 /Chd/202 1 and144/Chd/202 1 no show cause notice u/s 263 was issued on account of unsecured loan and hence the Ld. PCIT could not have exercised his jurisdiction to set aside the case on the issues of unsecured loan in these two cases. Accordingly, we hold that the proceedings u/s 263 of the Act were bad in law in all the captioned four appeals and we quash the revisionary proceedings for the reason that the AO had made adequate enquiries is all the four cases and further the Ld. PCIT had not conducted any independent enquiry on his own before coming to an incorrect conclusion that the assessment orders were erroneous as being prejudicial to the interest of the revenue and were liable to be set aside”.
Copy of the judgment is placed at page no. 1-32 of the judgment set.
- DEV RAJ HI TECH MACHINES LTD. vs. DCIT as reported in 83 com 15 (ASRTrib)
Section 69A of the Income-tax Act, 1961 – Unexplained moneys (Surrender of Income, effect of) – Assessment year 2010-11 – Where additional income surrendered by assessee-company in search proceedings was declared as business income and same was accepted by Assessing Officer after considering reply of assessee, revision proceedings initiated under section 263 by Commissioner on basis that such income should be taxed as deemed income under section 69A was not sustainable [In favour of assessee]
Copy of the judgment is placed at page no. 33-48 of the judgment set.
- COMMISSIONER OF INCOME TAX VS. NIRA V MODI as reported in 77 Taxmann.com 15(SC)
Section 68 read with section 263, of the Income-tax Act, 1961 – Cash credit (Gift) -Assessment years 2007-08 and 2008-09 – Assessee received certain amount as gifts from his father and sister who were non-residents in India – Assessing Officer after making detailed enquiries, took a view that assessee had duly proved identity, source and creditworthiness of donors – Commissioner, however, passed a revisional order under section 263 directing Assessing Officer to enquire into capacity of donors and to decide about genuineness of gifts afresh – It was noted that Commissioner in his order of revision, did not indicate any doubt in respect of genuineness of evidence produced by assessee – Moreover, satisfaction of Assessing Officer on basis of documents produced was not shown to be erroneous – High Court by impugned order held that it was a case where a view had been taken by Assessing Officer after making proper enquiry and, thus. Tribunal was justified in setting aside impugned revisional order – Whether Special Leave Petition filed against impugned order was to be dismissed – Held, yes [Para 21 fin favour of assessee]
Copy of the judgment is placed at page no. 49-50 of the judgment set.
5. Further, it is also submitted that there is an independent and proper application of mind on all the requisite documents by the ld. AO. The same is evident from para 3 of the assessment order, wherein, it has been clearly mentioned as under:
“In compliance to the notices issued Sh. Shinder Pal Singh, husband of the assessee attended the assessment proceedings and furnished the requisite information! explanation and necessary documentary evidences. The copy of the reasons recorded for issue of notice u!s 148 was also supplied to the assessee. ”
It is submitted that Sh. Shinder Pal Singh i.e. husband of the assessee appeared on behalf of the assessee and submitted the requisite details, the same is evident from the copy of the order sheet which is placed in the paper book at page no. 15-17. On the said order sheet, vide entry dated 20.09.2018 it has been written “Sh. Shinder Pal Singh husband of assessee furnished bank statement, ITR & Proof of cash deposits”. And, thereafter on 26.12.2018, it has been mentioned in the order sheet “present Sh. Shinder Pal Singh husband of the assessee and his statement recorded and placed on record. He furnished the photocopies registries from which the amount was deposited in their bank account”. Hence, all these facts duly explains that each and every issue of the case of the assessee stands examined by the Ld. AO and the Worthy PCIT has not come up with any new finding and therefore, the revision proceedings u/s 263 of the Act are bad in law and deserves to be quashed. Reliance in this regard has been placed on the following judgments:
- CIT vs. Anil Kumar Sharma as reported in 335 ITR 83 (Del, HC)
“In view of the above discussion, it is apparent that the Tribunal arrived at a conclusive finding that, though the assessment order does not patently indicate that the issue in question had been considered by the Assessing Officer, the record showed that the Assessing Officer had applied his mind. Once such application of mind is discernable from the record, the proceedings under Section 263 would fell into the area of the Commissioner having a different opinion. We are of the view that the findings of facts arrived at by the Tribunal do not warrant interference of this Court. That being the position, the present case would not be one of Jack of inquiry” and, even if the inquiry was termed as inadequate, following the decision in M/s Sunbeam Auto Ltd (supra), “that would not by itself give occasion to the Commissioner to pass orders under Section 263 of the said Act, merely because he has a different opinion in the matter.” No substantial question of law arises for our consideration. Consequently, the appeal is dismissed”.
Copy of the judgment is placed at page no. 76-78 of the judgment set.”
synopsis -2
“1. In continuation to our submission filed earlier on legal grounds as well as merits of the case, we are hereby submitting our further submission in the case of the assessee as under:
a. It is submitted that the assessee is an individual, who has been earning income from salary.
b. For the relevant assessment year, the case of the assessee was reopened u/s 148 of The Income Tax Act, 1961 (‘the Act’) after recording the reasons for reopening the case of the assessee u/s 148 of the Act. The reasons recorded u/s 148 of the Act states as under:
“4. As per the information available on ITS detail with the Income Tax Department, the assessee has deposited Rs. 60,00,000/- in cash in Oriental Bank of Commerce and time deposit of Rs. 30,00,000/- during the financial year 2010-11 during the financial year 2010-11 relevant to the assessment year 2011- 12. The assessee has also got the salary of Rs. 3,72,646/- in the year. ”
c. Thereafter, during the course of reassessment proceedings, a notice u/s 142(1) of the Act was issued to the assessee on 06.07.2018. Thereafter, Sh. Shinder Pal Singh (husband of the assessee) attended the proceedings in the case of the assessee and filed various documents as evident from the copy of the order sheet placed in the paper book at page no. 15-17. It is submitted that during the course of assessment proceedings, the assessee filed various documents in the form of bank statement of the assessee (Page no. 8-9 of the paper book), copy of the sale deed of the agriculture land dated 26.04.2010 (Copy placed in the paper book at page no. 10- 12). In addition to this, statement of the Sh. Shinder Pal Singh husband of the assessee was also recorded, the copy of the said statement dated 26.12.2018 is placed in the paper book at page no. 13-14. Hence, after having a complete consideration of all such documents, the Ld. AO concluded the case of the assessee and framed assessment order u/s 143(3) r.w.s. 147 of the Act dated 26.12.2018. In the said assessment order, the Ld. AO made additions to the tune of Rs. 1,75,322/- which were only on account of income from other sources in the form of interest income which was not disclosed in the return of income filed by the assessee and hence, assessed the total income of the assessee at Rs. 4,76,150/-.
d. Hence, it is submitted that the AO was conscious of all the facts of the case of the assessee and the Ld. AO has consciously accepted that there is a sale of agriculture land by the assessee. that other than the income disclosed by the assessee in her return of income and out of sale of agriculture land, there is no other source of income in the hands of the assessee and the deposit of cash in the bank account of the assessee is only out of the sale consideration of agriculture land.
e. It is submitted that all the facts of the case of the assessee have been independently verified by the Ld. AO but, there is merely a change of the opinion of the Ld. Pr. CIT in the case of the assessee and only on account of such difference of opinion, a Show-Cause Notice (‘SCN’) dated 05.03.202 1 was issued u/s 263 of the Act to the assessee.
f. It is pertinent to mention here that the SCN dated 05.03.202 1 was issued to the assessee (Copy placed at page no. 18-19 of the paper book) after getting proposal for revision of assessment from Income Tax Officer, Ward-3(5), Zira as evident from order u/s 263 of the Act. Relevant page 21 of the paper Thereafter, order dated 25.03.202 1 was passed u/s 263 of the Act, wherein, the case of the assessee was selected for revision proceedings.
2. It is submitted that we have already filed our submissions on legal grounds and merits on 28.02.2023. However, it is submitted that the concerned issue of the assessee is otherwise covered by the judgment of Hon’ble Jaipur Bench of ITAT in the case of Sh. Pappu Ram Saran in ITA No. 1303/JP/2018 which has been followed in the case of Jagir Singh by the Hon’ble Chandigarh Bench of ITAT in ITA No. 331/CHD/2019. And, also there is a recent judgment of Chandigarh Bench in the case of Sh. Sukhwinder Singh in ITA No. 930/CHD/2018 in which the same judgments of ‘Om Plantation’ have been followed.
3. In the case of Pappu Ram Saran in ITA No. 1303/JP/2018, the appeal of the assessee was allowed on the basis that there is a direct nexus between the transaction of sale and deposit in bank account of the assessee. The finding has been given in para 6 of the judgment. Further, in the case of Sh. Jagir Singh in ITA No. 331/CHD/2019, wherein, the finding has been given in para 20 of the judgment after following the judgment of Jaipur Bench in the case of ‘Sh. Pappu Ram Saran.’
4. In addition to this, in the recent judgment of the Hon’ble Chandigarh Bench in the case of Sukhwinder Singh in ITA No. 930/CHD/2018, the judgment of ‘Om Plantation’ has been followed and finding has been given in para 10.4 of the judgment and thereby, allowing the appeal of the assessee.
5. Hence, likewise in the above cases, in the case of the assessee also, there is a direct and clear nexus between the transaction of sale and the cash deposited in the bank account of the assessee as the transaction of sale is registered on 26.04.2010 the cash is also deposited by the assessee on same date. Further, the Ld. AO has accepted the deal of sale of land and that the land is an agriculture land after a conscious and independent application of mind. Hence, in all such circumstances, the application of provision of section 263 of the Act only on account of difference in opinion of Pr. CIT is invalid and uncalled for.”
6. Per contra, the Ld DR although supported the impugned order, however, he has not filed any rebuttal to the contention raised by the counsel, that the observation of ld. Pr.CIT could be one of the possible, and application of section 263 is invalid.
7. We have heard rival contentions, perused the material on record, impugned order, written submission and case law cited before us. It is seen that during the course of assessment proceedings, the assessee has filed documents required by the AO, in the form of bank statement of the assessee (APB, Pgs. 8-9), copy of the sale deed of the agriculture land dated 26.04.2010 (APB, Pgs.10- 12) to explain the disputed cash deposit in its bank account as above. Further, the AO has recorded the statement of Shinder Pal Singh husband of the assessee on 26.12.2018 (APB, Pgs.13-14). Thus, after having considered, all such documents, the Ld. AO framed assessment order u/s 143(3) r.w.s. 147 of the Act dated on 26.12.2018.
8. It is evident from the Assessment Order that the AO has consciously accepted the fact of a sale of agriculture land by the assessee, as source of income, other than the income disclosed by the assessee in her return of income for the disputed cash deposit in the bank account of the assessee. Meaning thereby that the source of cash deposit in the appellant bank account was out of sale consideration of agriculture land, and it has been duly accepted by the AO after verification of the documentary evidences filed before him as above. In our view, in the present case, all the facts have been independently verified by the Ld. AO. Thus, there appears to be merely a change of the opinion of the Ld. Pr. CIT in observing that there was incorrect application of mind by the AO by not carrying proper enquiry in the case of the assessee, and thus, a Show-Cause Notice (‘SCN’) dated 03.2021 was issued u/s 263 of the Act to the assessee (APB, Pgs.18- 19), on account of difference of opinion is bad in law.
9. In the case of Sh. Pappu Ram Saran (Supra) in ITA No. 1303/JP/2018, the ITAT Jaipur Bench has allowed appeal of the assessee by observing that there was a direct nexus between the transaction of sale and deposit in bank account of the assessee vide para 6 of the judgment. Further, in the case of Sh. Jagir Singh (Supra) in ITA No. 331/CHD/2019, the Chandigarh Tribunal has rendered similar decision vide para 20 of the judgment after following the judgment of Jaipur Bench in the case of ‘Sh. Pappu Ram Saran (Supra).
10. In the present case, there is a direct nexus between the transaction of sale and the cash deposited in the bank account of the assessee as the transaction of sale of land is registered on 26.04.2010 and the cash was also deposited by the assessee on the same date. Further, the Ld. AO has accepted the deal of sale of agriculture land with a conscious and independent application of mind. Under the facts and circumstances, we hold that the application of provision of section 263 of the Act, on account of difference in opinion of Pr. CIT is invalid and unwarranted.
11. In the above view, we accept the grievance of the assessee as Accordingly, the revision proceedings u/s 263 of the Act are held to be bad in law and as such, the impugned order u/s 263 of the Act is quashed.
12. In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 29.05.2023
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