Case Law Details
Santosh Pandey Vs PCIT (ITAT Raipur)
ITAT Raipur held that revisionary jurisdiction under section 263 of the Income Tax Act rightly invoked as there is a gross failure on the part of the A.O to verify the nature and source of the cash deposits.
Facts- The Pr. CIT observed that though the case of the assessee was reopened for verifying nature and source of the cash deposits in his bank account amounting to Rs.15 lacs and Rs.28 lacs, but the A.O had failed to carrying out any verifications and summarily accepted the unsubstantiated explanation of the assessee Accordingly, the Pr. CIT vide his order passed u/s. 263 of the Act dated 18.03.2021 held the order passed u/ss. 143(3)/147 dated 11.12.2018 as erroneous in so far it was prejudicial to the interest of the revenue, and set-aside the assessment order.
Conclusion- Held that as there is a gross failure on the part of the A.O to verify the nature and source of the cash deposits aggregating to Rs.43 lacs, which in itself had formed the very basis for reopening of the assessee’s case u/s.147 of the Act, therefore, the Pr. CIT in exercise of the powers vested with him as per “Explanation 2” of Section 263 of the Act had rightly set-aside his order with a direction to reframe the assessment after carrying out necessary verifications. We, thus, in terms of our aforesaid observations finding no infirmity in the view taken by the Pr. CIT u/s. 263 of the Act, uphold his order.
FULL TEXT OF THE ORDER OF ITAT RAIPUR
1. The present appeal filed by the assessee is directed against the order passed by the Principal Commissioner of Income Tax, Raipur-1(for short ‘Pr. CIT’) u/s. 263 of the Income Tax Act, 1961 (for short ‘the Act’) dated 18.03.2021, which in turn arises from the order passed by the A.O. u/ss. 143(3)/147 of the Act, dated 11.12.2018 for A.Y. 2015-16. The assessee has assailed the impugned order on the following grounds of appeal before us:
“1. Ld. Pr. CIT erred in invoking the provisions of Sec.263 and in setting aside the assessment order for fresh enquiry. Order passed u/s.263 is unsustainable and is passed without properly appreciating the facts and evidences on record. The assessment order is neither erroneous nor prejudicial to the interest of the revenue.
2. The appellant reserves the right to add, amend or modify any of the ground/s of appeal.”
2. The case of the assessee was reopened by the A.O u/s.147 of the Act on the basis of following “reasons to believe”-
“Reasons recorded u/s.147 read with section 142(2), issue of notice U/s.148 of I.T Act, 1961
The assessee did not file the return for the relevant assessment year.
As per the information available in this office, a total cash of Rs.15,00,000/- has been deposited in the saving bank account and Cash Transaction of Rs. 28,00,000/- total of Rs. 43,00,000/- during the F.Y. 2014-15 relevant to A.Y. 2015-16.
The above amounts constitute the part of the total income of the assessee and therefore should have brought under tax net by filing return income for the said assessment year. However, the assessee has not filed the same.
In view of the above, I have reason to believe that the income in the said case, has escaped the assessment for the assessment year 2015-16 amounting to Rs.43,00,000/-under section 147 of I.T.Act,1961. For taxing the said amount, issue of notice u/s.148 is necessary. Accordingly, necessary approval u/s. 151(1) of the 1.T Act may be accorded at your end.
Date : 24.08.2017
Sd/-
Pradeep Kumar Ramteke
Income Tax Officer-2, Ambikapur”
Notice u/s.148 of the Act dated 08.06.2018 was issued to the assessee. In compliance, the assessee filed his return of income declaring an income of Rs.4,74,190/-. Thereafter, the A.O had framed the assessment vide his order passed u/ss. 143(3)/147 of the Act dated 11.12.2018 accepting the assessee’s returned income.
3. The Pr. CIT after culmination of the assessment proceedings called for the assessment records of the assessee. The Pr. CIT observed that though the case of the assessee was reopened for verifying nature and source of the cash deposits in his bank account amounting to Rs.15 lacs and Rs.28 lacs, but the A.O had failed to carrying out any verifications and summarily accepted the unsubstantiated explanation of the assessee Accordingly, the Pr. CIT vide his order passed u/s. 263 of the Act dated 18.03.2021 held the order passed u/ss. 143(3)/147 dated 11.12.2018 as erroneous in so far it was prejudicial to the interest of the revenue, and set-aside the assessment order with a direction to the A.O to re-adjudicate the same afresh after affording an adequate opportunity of being heard to the assessee.
4. The assessee being aggrieved with the order passed by the Pr. CIT u/s. 263 of the Act dated 18.03.2021 has carried the matter in appeal before us.
5. At the very outset, we may herein observe that the present appeal involves a delay of 408 days. Our attention was drawn by the Ld. AR to the application that was filed by the assessee seeking condonation of the delay involved in filing of the present appeal a/w. an affidavit that was filed in support thereof. On a perusal of the aforesaid application, it transpires that the delay of 408 days is attributable to two reasons, viz. (i) delay of 379 days (17.05.2021 to 31.05.2022) is stated to be covered by the order of the Hon’ble Supreme Court in Suo-moto writ petition (C) No.3 of 2022 dated 10.01.2022 ; and (ii) delay of 29 days is stated to have crept in due to unawareness of the assessee about his right to prefer an appeal against the order passed by the Pr. CIT u/s.263 of the Act before the Tribunal. For the sake of clarity, the reasons leading to the aforesaid delay in filing of the appeal as stated by the assessee in his “affidavit” are culled out as under:
“THAT the appeal was delayed for the following reasons:-
i) Regarding delay from 17.05.2021(due date) to 31.05.2022 (379 days)
Although the revision order was passed in March, 2021, the time available for filing appeal before Hon’ble ITAT was up to 31.05.2022 for the reason that in suo moto writ petition (C) no. 3 of 2022, vide order dt. 10.01.2022, Hon’ble Supreme Court has directed vide para no. 5 (1 & HI) that in the matter of filing appeal etc., where the limitation expired during the period between 15.03.2020 to 28.02.2022, the aforesaid period shall stand excluded for the purpose of limitation and the period of limitation remaining w.e.f. 01.03.2022 shall stand extended for a period of 90 days.
Therefore, as per the above decision of Hon’ble Supreme Court, the due date of filing appeal before Hon’ble ITAT was 31.05.2022.
ii) Regarding delay from 31.05.2022 to 29.06.2022 (29 days)
The assessee had appointed a counsel for representing her case before the AO during the original assessment proceedings and after completion of assessment, services were not availed from such counsel. Thereafter, whatever compliance were needed, the assessee did on her own and was thus not assisted by any counsel. Even during the set aside assessment proceedings, the assessee was not assisted by any counsel and the compliance was made by the assessee herself. After receiving order u/s 147 r.w.s 263, since demand was raised the assessee appointed new counsel to guide her. The new counsel so approached advised the assessee to file appeal before ITAT against the revision order passed u/s 263 along with a request for condonation of delay. Until this time, the assessee was not aware of procedure relating to appeal.
Therefore, the delay is attributable mainly to the fact that the assessee did not know about the availability of option to file appeal against the revision order.”
6. On a careful perusal of the aforesaid reasons, we find that in so far the delay of 379 days (supra) is concerned the same clearly falls within the extended period of limitation as laid down by the Hon’ble Supreme Court vide its order passed in Suo-moto writ petition (C) No.3 of 2022 dated 10.01.2022. As regards the delay of 29 days (supra), it transpires that the same had occasioned for the reason that the assessee who was not assisted by any counsel upto the stage of the set-aside assessment proceedings, had learnt about her right to prefer an appeal against the order passed by the Pr. CIT u/s. 263 of the Act before the Tribunal only after she had engaged a new counsel to assail the order passed by the A.O u/ss. 143(3)/147 dated 11.12.2018 before the CIT(Appeals). Considering the fact that the assessee was not represented by any counsel during the course of proceedings u/s. 263 of the Act before the Pr. CIT, Raipur, we find substance in her claim that delay in filing of the present appeal had occasioned because of her unawareness about of her right to assail the impugned order before the Tribunal. Be that as it may, as the delay in filing of the present appeal does not smack of any malafide intention or lackadaisical approach on the part of the assessee, but is apparently prompted by a bonafide mistake on her part, therefore, the same merits to be condoned. We, thus, condone the delay involved in filing of the present appeal before us.
7. Adverting to the merits of the case, it transpires that the case of the assessee was reopened for bringing to tax the cash deposits of Rs.15 lacs and Rs.18 lacs in the assessee’s bank account during the year under consideration, which the AO was of the belief was the assessee’s income that had escaped assessment. As observed by the Pr. CIT and, rightly so, though the case of the assessee was reopened for the reason to bring within the tax net the cash deposits aggregating to Rs.43 lacs which had escaped assessmenr, but the A.O without carrying out necessary verifications had accepted the assessee’s returned income as such. For the sake of clarity, the observations of the A.O in his order passed u/ss. 143(3)/147 of the Act dated 11.12.2018 are culled out as under:
Nothing is discernible from the order of the A.O which would reveal that any verification as regards the “nature” and “source” of the aforesaid cash deposits of Rs.15 lacs and Rs.28 lacs was carried out by him while framing the assessment. Interestingly, Shri R.B Doshi, the Ld. Authorized Representative (for short ‘AR’) in the course of hearing of the appeal had submitted that no cash deposit aggregating to Rs.28 lac (supra) was made by the assessee in his bank account. It was submitted by the Ld. AR that as the case of the assessee was in itself reopened on the basis of misconceived and wrong facts, therefore, assessment framed u/ss. 143(3)/147 of the Act could not be sustained and was liable to be struck down on the said count itself. Carrying his contention further, it was submitted by the Ld. AR that now when the assessment framed u/ss. 143(3)/147 of the Act was in itself invalid and non-est, therefore, the same could not have been revised by the Pr. CIT u/s.263 of the Act.
8. Per contra, the Ld. Departmental Representative (for short ‘DR’) relied on the orders of the lower authorities. It was averred by the Ld. DR that as the A.O had pathetically failed to carry out any verification as regard the cash deposits of Rs.15 lacs and Rs.28 lacs made in the assessee’s bank account during the year under consideration, which in fact had formed the very basis for initiating proceedings u/s 147 of the Act, therefore, the Pr. CIT had rightly stepped in and revised the order in exercise of powers vested with him u/s. 263 of the Act.
9. We have given a thoughtful consideration and are unable to persuade ourselves to concur with the contentions advanced by the Ld. AR. As observed by us hereinabove, nothing discernible from the record which would reveal that the A.O while framing the assessment had carried out any verification as regards the nature and source of cash deposits of Rs.15 lacs and Rs.28 lacs in the assessee’s bank account. Strangely, though the case of the assessee was reopened to bring to tax the unexplained cash deposits aggregating to Rs.43 lacs, which the AO at the stage of such reopening was of the belief had escaped assessment, but he had thereafter while framing the assessment blatantly failed to call for the requisite details and make necessary enquiries as regards the nature and source of the aforementioned cash deposits and had summarily accepted the returned income of the assessee. In fact, the claim of the Ld. AR that the assessee had never made any cash deposit of Rs.28 lacs (supra) in his bank account further strengthens the case of the department. If the claim of the Ld. AR is correct, then we are unable to fathom as to what verification about the cash deposits aggregating to Rs. 43 lacs (supra) had been carried out by the A.O while framing the assessment. It is not the case of the A.O that the assessee had never made any cash deposits of Rs.28 lacs (out of 43 lacs in his bank account). Carrying the contention of the Ld. AR further, i.e. the assessee had during the year under consideration not made any cash deposit of Rs.28 lac (supra) in his bank account, we are unable to comprehend that if that be so, then on what basis it was observed by the A.O in his assessment order that he had verified the nature and source of the cash deposits aggregating to Rs.43 lacs (supra) in the assessee’s bank account.
10. Be that as it may, we are of the considered view that as there is a gross failure on the part of the A.O to verify the nature and source of the cash deposits aggregating to Rs.43 lacs, which in itself had formed the very basis for reopening of the assessee’s case u/s.147 of the Act, therefore, the Pr. CIT in exercise of the powers vested with him as per “Explanation 2” of Section 263 of the Act had rightly set-aside his order with a direction to reframe the assessment after carrying out necessary verifications. We, thus, in terms of our aforesaid observations finding no infirmity in the view taken by the Pr. CIT u/s. 263 of the Act, uphold his order.
11. In the result, appeal of the assessee is dismissed in terms of our aforesaid observations.
Order pronounced in open court on 03rd day of August, 2023.
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