Dineshbhai Dahyabhai Patel Vs DCIT (ITAT Ahmedabad)
ITAT Ahmedabad held that the entire proceedings under Section 263 of the Act were initiated and completed by the PCIT within a period of only 12 days without pointing out reason for lack of enquiry unjustified. Accordingly, matter restored back.
Facts- The assessment of the assessee was reopened u/s. 147 and finalized on December 2, 2019, resulting in a revised total income of Rs. 67,06,230/-. This revision included an addition of Rs. 1,56,122/- under section 56(2)(vii) and Rs. 11,43,895/- attributed to short-term capital gains.
During the review of the case records, Principal CIT noted that the cash book for the relevant year reflected multiple cash payments exceeding Rs. 20,000/- to various individuals on the same day, which contravened section 40A(3) of the Act. Principal CIT observed that AO raised the issue of disallowance u/s. 40A(3) during assessment proceedings, but the assessee only provided cash book without sufficient corroborative evidence to substantiate the claims. Principal Commissioner deemed the original assessment order erroneous and prejudicial to the interests of the Revenue under Explanation 2(a) of section 263 of the Act.
Principal CIT held that the assessment order dated December 2, 2019, was erroneous and prejudicial to the interests of the Revenue due to the absence of proper inquiry and verification. The assessment order was therefore set aside, with directions for AO to conduct the required inquiries, verify the issues raised, and conduct the assessment de novo. The assessee has preferred the present appeal against the order passed by Principal CIT u/s 263 of the Act.
