Sanjay Umarshi Dand Vs PCIT (ITAT Nagpur)
The case of Sanjay Umarshi Dand vs. PCIT before ITAT Nagpur revolved around the invocation of Section 263 of the Income Tax Act by the Principal Commissioner of Income Tax (PCIT). The Assessing Officer (AO) had initially reopened the assessment under Section 147 due to high-value transactions (₹2.16 crore) in the assessee’s ICICI Bank account. Since the assessee had not filed a return initially, notices under Sections 148 and 142(1) were issued. The AO estimated income at 2% of total bank credits under Section 144, leading to an assessed income of ₹4.33 lakh. The PCIT, however, deemed this assessment erroneous and prejudicial to revenue, prompting the revision under Section 263.
The PCIT’s order under Section 263 was based on multiple factors. The primary contention was that the AO failed to conduct a thorough inquiry into the sources of bank deposits and arbitrarily estimated income without verification. Additionally, the PCIT noted non-compliance with Section 44AD, as the assessee’s declared income was below the prescribed 8% of turnover. Furthermore, the PCIT argued that unexplained bank deposits warranted further scrutiny, and the AO’s best judgment assessment lacked proper inquiry. As a result, the PCIT directed a reassessment of the issue.
