Case Law Details
Mahesh Prasad Singh Vs PCIT (ITAT Raipur)
ITAT Raipur held that revisionary proceedings cannot be termed as illegal or not maintainable when the assessee have not responded and remain non-compliant in explaining his case before the PCIT.
Facts- The case of the assessee was selected for scrutiny and assessment order u/s. 143(3)/147 of the I.T. Act was passed. Thereafter, Pr. CIT noticed that enquiries made about the source of cash deposits/transactions are not completed. On perusal of the assessment order, it was observed by the Pr. CIT that as stated by the assessee before the A.O., the cash deposits are out of the transactions made in the course of his coal purchase and sale and transporting business. On verification, the Pr. CIT observed that, there is nothing on record to confirm the such claim. Under these circumstances, the sum of Rs. 38,10,100/-needed to have been added as his income from undisclosed sources to compute the total income of the assessee for the above assessment year. Accordingly, the Pr. CIT had proposed to revise the order passed u/s.143(3)/147 of the Act by virtue of the power vested u/s.263 of the Act.
Being aggrieved, the present appeal is filed.
Conclusion- Held that order of the Pr. CIT wherein further opportunity was granted to the assessee, to appear before the Ld AO to submit necessary explanations/information for substantial justice, whereas the assessee have not responded and remain non-compliant in explaining his case before the Ld PCIT, cannot be termed as perverse or illegal or not maintainable, therefore, we do not find any infirmity in the view taken by the Pr. CIT, accordingly, hold that the same deserves to be upheld. We order accordingly.
FULL TEXT OF THE ORDER OF ITAT RAIPUR
The captioned appeal is filed by the assessee against the order passed by the Ld. Pr. Commissioner of Income Tax, National Faceless Appeal Centre (NFAC), Delhi, dated 18.03.2023 u/s 263 of the Income Tax Act, 1961 (for short ‘the Act’) for AY 2011-12. The grounds of the appeal raised by the assessee are as under:
“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 & evidences on record. The assessment order is neither erroneous nor prejudicial to the interest of Revenue.
2. The appellant reserves the right to add, amend or modify any of the ground/s of appeal.”
2. At the very outset, the registry has pointed out that the appeal of the assessee is barred by limitation of 520 days. When the Ld. AR of the assessee was confronted with the said aspect, it was submitted by him that out of 520 days, delay of 379 days is covered by the decision of the Hon’ble Apex Court in Suo-motto writ petition (C.) No.3 of 2022, vide order dated 10.01.2022 wherein limitation was extended on account of COVID The remaining delay of 141 days was explained by the assessee that the assessee was not advised by his counsel to file appeal against such revision order before the Tribunal and therefore, no appeal could be filed within the stipulated time period. An affidavit in support thereof was filed by the Ld. AR. It was also submitted by the Ld. AR that the assessee was in bed rest from 15.05.2022 till 20.08.2022 for the reason that his leg bone was injured and he was advised to take rest for 2/3 months. This was one of the reason for delay in filing of the appeal by the assessee which is found to be reasonable for consideration. Therefore, we condone the delay and permit the appeal of the assessee to place for hearing.
3. Brief facts in this case are that the return of income was not filed by the assessee u/s 139(1) of the I.T. Act, 1961 whereas the assessee deposited cash of Rs. 38,10,100/- in his saving bank account during the financial year 2010-11 relevant to the assessment year 2011-12. The case was selected for scrutiny and assessment order was passed u/s. 143(3)/147 of the I.T. Act, 1961 on 14.12.2018, assessing total income at Rs.5,15,300/-. While completing the assessment, the then AO (Erstwhile ITO, Ward-2, Ambikapur) has made observations as under:-
4. After culmination of the assessment proceedings, the Ld. Pr. CIT called for the assessment records. It was observed by the Pr. CIT that the enquiries made about the source of cash deposits/transactions are not completed. On verification of records, it was observed by the Pr. CIT that the assessee declared business income u/s 44AD & u/s 44AE stating deemed income at Rs. 5,14,923/-. On perusal of the statement of computation of income furnished by the assessee along with the copy of ITR, he has declared business income u/s 44AD at Rs.3,07,923/- on gross receipts of Rs. 38,37,522/- and u/s. 44AE at Rs. 2,07,000/- But there is nothing on record to confirm the business and transport activities, if any, of the assessee. On perusal of the assessment order, it was observed by the Pr. CIT that as stated by the assessee before the A.O., the cash deposits are out of the transactions made in the course of his coal purchase and sale and transporting business. On verification, the Ld Pr. CIT observed that, there is nothing on record to confirm the such claim. The assessee has not furnished any satisfactory explanation with documentary evidence in support of the nature and source of cash deposits. Under these circumstances, the sum of Rs. 38,10,100/-needed to have been added as his income from undisclosed sources to compute the total income of the assessee for the above assessment year. On the basis of his aforesaid observation, the Pr. CIT was of the view that there was lapses on the part of the A.O in respect of the issues and points, therein, the order passed by the A.O held to be erroneous in so far it was prejudicial to the interest of the revenue. Accordingly, the Pr. CIT had proposed to revise the order passed u/s.143(3)/147 of the Act by virtue of the power vested u/s.263 of the Act.
5. Aggrieved with the order of the Pr. CIT, the assessee carried the matter in appeal before us.
6. AR for the assessee had filed a written submission pertaining to the contention of the assessee and the same reads as under:
“1. At the time of earlier hearing, the assessee was directed by Hon’ble Bench to provide complete details of deposits in the bank account of assessee as also the evidence in respect of business of coal and transportation. It is with reference to such direction/query of Hon’ble Bench that this submission is being made.
2. Regarding business
i) The assessee is in the business of trading of coal and transportation. Income from trading in coal has been offered in the return u/s 44AD while the income from transportation business has been offered u/s 44AE.
ii) In the computation of income filed with the return (PN 10 of PB) nature of business is mentioned.
iii) In the balance sheet of assessee, placed at PN 11 of PB, secured loans are reflected which includes CC/OD limit and term loan. This balance sheet was filed before the AO. Such loans are related to business entities
iv) With such balance sheet, schedule of fixed assets was also filed, which is at PN 13 of PB wherein truck owned by the assessee is reflected. This supports the contention of assessee of being in transportation business.
v) We are enclosing herewith copy of the ITR of AY 2009/10 & AY 20 12/13 (page no. 01 to 48). On the first page of such ITR reference of trade name was declared in his past and subsequent ITR as also the fact that his accounts were audited u/s 44AB and the name of the auditor and other required details are also mentioned. This evidence signifies that the fact of assessee being in business was already on record of AO.
vi) We are enclosing herewith copy of registration certificate of the three heavy goods vehicles owned by the assessee during the relevant year (page no. 49 to 51) wherein tradename of the assessee appears and the fact that such vehicles were heavy goods vehicles is also evident.
Vii) We are enclosing herewith a copy of the assessment order passed in the case of the assessee for AY 2009/10 (page no. 52 to 58) u/s 143(3) which bears the reference of the assessee being in the business of coal. Therefore, the fact that the assessee was in business was already on the records, much prior to framing of assessment of the year under consideration and passing of the order u/s 263.
3. Regarding details of deposits:-
i) So far as the deposits in the bank account are concerned, either through cheque or in cash, it is submitted that it was on account of sale proceeds of coal and transportation receipts. It is further submitted that both sales and transportation activity was mainly with one entity M/s Steel Power Ltd.
ii) We are enclosing herewith details of cash deposits and other deposits in the bank account (page no. 59). The deposits in the bank account are covered by the turnover declared by the assessee.
4. Request for admission of additional evidence u/r 29 of 1TAT Rules, 1963
The evidence referred to in para no. 2(vi) & 3(ii) above is additional evidence and has been submitted before the Hon’ble Tribunal in pursuance of the directions given by it. The evidence establishes the existence of business of assessee, which was wrongly doubted by the Id. Pr. CIT and substantiates that the deposits in the bank account were commensurate with the turnover declared by the assessee. Since this is a vital evidence, it is most humbly and respectfully submitted that the same may kindly be admitted u/r 29 of ITAT Rules, 1963.”
7. It was submitted by the Ld. AR that Ld. AO vide notice 28.09.2018 has specifically queried the assessee pertaining to his business, source of income, bank account, copies of bank statements and also relevant books of accounts, in response the assessee had duly replied to the queries raised by the A.O vide submission dated 13.12.2018. Copies of queries letter and submissions were placed in the paper book by the assessee. No other enquiries were made by the A.O. As per Ld Ar this itself shows that the A.O was satisfied with the submissions of the assessee and therefore, once such issues were raised by the A.O and submissions were made by the assessee, and thereafter, the A.O had arrived at a view on the same, in such circumstances, initiation of revisionary proceedings by invoking provisions of Section 263 by the Pr. CIT are illegal and unjustified and not permitted in law therefore, the order u/s.263 is liable to be set-aside.
8. The Ld. AR further filed certain more information and additional evidences under Rule 29 of the ITAT Rules, 1963 to support its contention that the assessee is deriving income from trading of coal which was been offered u/s.44AD of the Act and also from transport business which was offered u/s.44AE of the Act. It was submitted by the Ld. AR that additional evidences were submitted for establishing the existence of business of the assessee which was wrongly doubted by the Pr. CIT. It was submitted by the Ld. AR that since evidences are vital for adjudicating the issue in hand, therefore, such additional evidences may be admitted under Rule 29 of the ITAT, Rules, 1963.
9. The Ld. DIT-DR on the other hand, has strongly relied on the orders of the lower authorities.
10. We have heard the rival contentions and perused the material available on record. On a perusal of the order u/s.263 of the Act, at Para 3, it was observed by the Pr. CIT that show cause notice was issued to the assessee through ITBA but compliance was made by it. The Ld. Pr. CIT observed that there is no documentary evidence which could explain the nature and source of cash transactions, consequently there is no proper verification made by the A.O in this case, hence, revenue loss was occurred. In absence of any submission by the assessee before the Pr. CIT who had brought on record certain lapses on the part of the A.O to establish that the order of the A.O was erroneous in so far as it was prejudicial to the interest of the revenue, therefore, the same needs to be revised by virtue of power vested u/s.263 of the Act. The Pr. CIT also recorded the satisfaction that I am fully satisfied that the assessment order is erroneous in so far it is prejudicial to the interest of the revenue in view of Explanation 2 of Section 263 of the Act. The A.O is directed to make adequate enquiries with regard to genuineness of the business, source of cash deposits and all credit entries in light of Section 68/69A of the Act. The Pr. CIT on the basis of his aforesaid observations set-aside the issue to the file of the A.O for fresh adjudication after affording adequate opportunity to the assessee.
11. Since, the additional evidence were filed before us for the first time which were neither produced before the A.O nor before the Pr. CIT, therefore, the same needs examination/verification in order to establish their authenticity and On a perusal of the notice issued by the A.O dated 28.09.2018 and written submission filed by the assessee before the A.O dated 13.12.2018, it is clearly emanating that a short reply was submitted by the assessee and was summarily accepted by the Ld AO, thus, verification of the information made by the A.O were not found to be adequate on which the Ld. Pr. CIT has rightly doubted and assumed jurisdiction to initiate revisional proceedings by invoking the provisions of Section 263. The Ld. Pr. CIT had made certain observations, however, without giving any findings on the facts has restored the issue back to the file of the A.O for making proper enquiries and to re-adjudicate the issue in view of the Explanation 2 of Section 263 of the Act. Such order of the Pr. CIT wherein further opportunity was granted to the assessee, to appear before the Ld AO to submit necessary explanations/information for substantial justice, whereas the assessee have not responded and remain non-compliant in explaining his case before the Ld PCIT, cannot be termed as perverse or illegal or not maintainable, therefore, we do not find any infirmity in the view taken by the Pr. CIT, accordingly, hold that the same deserves to be upheld. We order accordingly.
12. In the result, appeal of the assessee is dismissed in terms of our aforesaid observations.
Order pronounced in the open court on 10/10/2023.
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