Sikka Infrastructure Pvt Ltd Vs ACIT (ITAT Delhi)
Summary: ITAT Delhi allowed the appeal of Sikka Infrastructure Pvt Ltd and quashed the PCIT’s revisionary order under section 263 of the Income-tax Act, 1961 for A.Y. 2017-18. The assessee’s assessment had been reopened on information concerning cash deposits during the demonetisation period. The Assessing Officer examined the issue and, after considering the assessee’s explanation, audited balance sheet and other documents, accepted the return in the reassessment order dated 30.03.2022. The PCIT subsequently held that adequate inquiry had not been made into the source of Rs. 1.95 crore and directed its addition under section 68, along with invocation of section 115BBE.
The Tribunal found that the AO had reopened the assessment specifically in relation to the cash deposits during demonetisation and had conducted enquiries on that precise issue. The amount of Rs. 2.35 crore questioned by the PCIT as “imprest to staff” was reflected in the balance sheet under “Advances Recoverable (in Cash or Kind)” and in the schedule of imprest/staff advances. According to the Tribunal, mere classification under a different accounting head could not make the source unexplained when the amount was recorded in the audited books.
Relying on Malabar Industrial Co. Ltd., 243 ITR 83 (SC), the Tribunal reiterated that Section 263 requires the assessment order to be both erroneous and prejudicial to the interests of the Revenue. It also relied upon CIT Vs Sunbeam Auto Ltd., 332 ITR 167 (Delhi HC), for the distinction between “lack of inquiry” and “inadequate inquiry”. Where an inquiry has in fact been conducted, revision cannot be invoked merely because the Commissioner considers that further inquiry should have been undertaken.
