Shri Ramakant Sharma Vs. Pr. CIT (ITAT Jaipur)
Where the CIT(A) was already ceased of the matter wherein the matter has been contested before him by the AO, the ld. Pr. CIT does not have the jurisdiction to exercise his powers u/s 263 of the Act on the same matter as per the explicit provisions contained in clause (c) to explanation 1 to section 263 of the Act.
FULL TEXT OF THE ITAT ORDER IS AS FOLLOWS:-
This is an appeal filed by the assessee challenging the order of Ld. Pr. CIT, Alwar dated 29.03.2016 invoking jurisdiction u/s 263 of the Act setting aside the assessment order for AY 2011-12 passed by the Assessing Officer u/s 143(3) of the Act.
2. During the course of hearing, the ld. AR contended that firstly, no show cause has been served on the assessee by the Pr. CIT, Alwar and in absence of the same, the assessee has not been provided an opportunity to represent his case which is also specifically mandated u/s 263 of the Act and the principle of natural justice has been violated. The ld. AR has further contended that the subject matter of the show-cause notice issued by the ld. Pr. CIT has also been the subject matter of appeal filed by the assessee before the ld. CIT(A) and which has been considered and decided upon by him. Hence, it was submitted that in view of clause (c) to the explanation 1 to section 263, the ld. Pr. CIT does not have the power to exercise his jurisdiction u/s 263 in respect of the same matter. It was further contended by the ld. AR that the AO has conducted proper inquiry and verification of cash deposits in his bank accounts after giving a specific show-cause notice dated 18.2.2014 and hence, the requirement of section 263 in terms of the assessment order being erroneous in so far as it is prejudicial to the interest of revenue have not satisfied in the instant case.
3. Per contra, the ld CIT DR drawn our reference to the order of ld Pr. CIT and submitted that the show-cause has been duly issued and served on the assessee. Further, in respect of report of the postal department that the show-cause has been returned unserved, she submitted that the show-cause was initially served on the brother of the assessee and later on, the said fact was deleted and show-cause was returned by the postal department. Regarding exercise of jurisdiction where the ld CIT(A) was ceased of the matter, she submitted that it is for the assessee to raise this objection before the ld Pr. CIT and since, he has failed to appear before him, he cannot be allowed to take this ground before us. Further, she submitted that the ld Pr. CIT has held clearly that for want of adequate enquiry on the part of the AO, he has exercised his jurisdiction under section which is now specifically mandated as per explanation to section 263 of the Act.
4. We have heard the rival contentions and pursued the material available on record.
5. Regarding the first contention raised by the ld. AR regarding non service of the show cause notice issued by the ld. Pr. CIT, the Revenue has submitted a report obtained from the Postal Department which says that the speed post dated 04.03.2016 was returned unserved on the assessee with the remark “incomplete address returned”. In light of the same, the contention raised by the ld. AR seems to be correct that the show-cause notice has not been served on the assessee and the assessee has thus been prevented from representing his case before the ld Pr. CIT.
6. Regarding the second contention raised by the AR that the subject matter of the show-cause notice issued by ld. Pr. CIT was also the subject matter of appeal filed before the ld. CIT(A), we refer to the show cause dated 3rd March, 2016 issued by the ld. Pr. CIT, Alwar which states as under:-
“As per AIR information, the assessee has made cach deposits in its saving bank a/c held with SBBJ. These cash deposits were required to be verified during the course of assessment proceedings. Perusal of assessment record reveals that towards explanation of the source of cash deposits made in the bank account it had been submitted that these cash deposits were made from the cash received from the policy holders against LIC premium. To substantiate its claim the assessee had furnished affidavits from 39 persons as per which it was affirmed by the deponents that they had made cash payments to the assessee against LIC premium in respect of their Insurance policies. The assessee has also submitted a detailed list as obtained from LIC showing the LIC premium deposited in the agency code of the assessee. A careful examination of all the affidavits and the list of premium paid reveals that the details tally only in respect of 06 number of cases and in the residual cases the names and policy numbers mentioned on the affidavits furnished do not find any mention in the list of premium payments as furnished by LIC. Further, in the affidavits of 02 cases namely in the case of of Sh. Shibbi and Sh. Upendra Sharma neither any amount has been written nor policy number has been specified.
Further, the Assessing Officer had issued a letter to the LIC Dholpur requiring to verify the details of premium deposits made by the assessee viz Sh. Ramakant Sharma”. The LIC, Dholpur submitted its reply on 12/02/2004 along with a list containing names of policy holders, amount deposited and the date of deposit. As per this reply the LIC has specifically stated that-
“We confirm that LIC has not been authorized to Mr. Ramakant Sharma for depositing such collection into his personal Bank Account.”
The above factual matrix reveals that these intricate details were not observed by the Assessing Officer and he proceeded to complete the assessment only on the basis of factually incorrect and non-verifiable information produced before him. Under such circumstances it is not clear as to how the AO drew the conclusion regarding the verification of the cash deposits in the bank account. Thus, the Assessing Officer has issued the assessment order without making inquiries or verification which should have been made to ascertain the correct source and nature of the cash deposits in the assessee during the period under consideration.”
7. We now refer to the assessment order passed by the AO under section 143(3) of the Act dated 7.3.2014 wherein the AO has discussed the said issue as under:-
8. We now refer to the order of the ld. CIT(A) dated 25.04.2016 wherein the assessee has challenged the addition of Rs. 1,19,630/- as his undeclared income made by the AO and the relevant finding of the ld. CIT(A) are contained at Para 5.3, 5.4 and 5.5 of his order which are reproduced as under:-
“5.3 I have gone through the assessment order as well as submissions made by the appellant and find that an addition of Rs. 1,19,630/- has been made by the AO on account of unexplained income. During the course of assessment proceedings it was found by the AO that in the cash book there is a deposits of Rs. 1,35,000 in cash on 11.01.2011 and out of this only an amount of Rs. 15,370/- has been deposited in the account of LIC Dholpur in the name of the appellant. In the absence of any explanation, the balance of Rs. 1,19,630/- was treated as unexplained.
5.4 The appellant has stated that a total amount of Rs. 1,12,479/- was deposited in the name of different policy holders- a list of 17 persons along with a certificate from LIC has been filed on record. It is stated that after adding the amount of Rs. 15,370/- which already stands explained, total amount of cash of Rs. 1,27,849/- has been utilized for payment of premium to LIC on account of different customers.
5.5 Having considered the submissions made along with the evidence filed on record. I hold that only an amount of Rs. 7,151/- (1,35,000- 1,27,849) remains unexplained in the hands of the appellant and therefore confirm the same out of the total addition of Rs. 1,19,630/- made by the AO under this head.”
9. In light of above, it is clear that well before the issuance of the show cause notice by the ld Pr. CIT on 3rd of March, 2016, exactly identical issue relating to verifiability of bank deposits was already a subject matter of appeal filed by the assessee before the ld. CIT(A) and the same has been considered and decided in such appeal by the ld CIT(A) vide his order dated 25.4.2016.
10. In light of above, we are of the considered view that where the CIT(A) was already ceased of the matter wherein the matter has been contested before him by the AO, the ld. Pr. CIT does not have the jurisdiction to exercise his powers u/s 263 of the Act on the same matter as per the explicit provisions contained in clause (c) to explanation 1 to section 263 of the Act. We accordingly set aside the impugned order of the ld. Pr. CIT u/s 263 of the Act for want of jurisdiction.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 30/11/2017