Case Law Details
Baljeet Yadav Vs PCIT (ITAT Jaipur)
It is evident from the assessment order and impugned order that the assessee’s case was selected for scrutiny under CASS for examination of cash deposits made in the bank during the demonetarization period. It is prima facie not clear whether it was a limited scrutiny case or a detailed scrutiny case with the approval of the competent authority. To our understanding, it was a limited scrutiny case being selected under CASS for examination of cash deposits made in the bank during demonetarization period and, therefore, the authorities below ought to have restricted their examination and enquiries limited for the purpose of cash deposits made by the appellant during the period of demonetarization only. By expanding the scope of scrutiny beyond the issue of cash deposits during demonetarization period, amounts to exceeding the jurisdiction by the ld. PCIT without following the prescribed procedure and the administrative guidelines under the law. After considering the documentary evidences filed by the assessee in compliance to the enquiries caused by the AO and scrutiny of the documents in respect of the cash deposits, the AO has accepted the cash deposits in the bank during the period of demonetarization made by the appellant as duly explained. Thus, the AO to his satisfaction accepted the cash deposits in the bank account of the assessee during the period of demonetarization as explained money in accepting the returned income of the assessee under section 143(3) of the IT Act. In our view, the ld. PCIT was not justified in adversely commenting on the said cash deposits of the assessee and adopting a divergent view where two views are possible that too on the issues of agricultural income and unsecured loans, which were not even parameters of selection of the case for scrutiny under CASS. The case laws relied upon by the ld. PCIT are distinguishable on the peculiar facts of the case.
Respectfully following the Hon’ble Rajasthan High Court in the case of CIT vs. Ganpat Ram Bishnoi (supra), no presumption can be down by the PCIT that the matter has not been enquired into by the AO. Accordingly, we hold that the invocation of jurisdiction by the PCIT is not sustainable. The order passed by the PCIT u/s 263 is hereby set aside.
FULL TEXT OF THE ORDER OF ITAT JAIPUR
This is an appeal filed by the assessee against the order of ld. PCIT, Jaipur-1, Jaipur dated 27.03.2022 for the assessment year 2017-18. The assessee has raised the following grounds of appeal :-
1. In the facts and circumstances of the case the learned Pr. CIT, Jaipur-1, Jaipur has erred in passing the order u/s 263 of the Income Tax Act, 1961 which is void ab-initio deserves to be quashed.
2. In the facts and circumstances of the case the learned Pr. CIT, Jaipur-1, Jaipur has erred in holding that the order passed by learned Assessing Officer u/s 143(3) of the Income Tax Act, 1961 dated 27.12.2019 was erroneous and prejudice to the interest of the revenue.
3. In the facts and circumstances of the case the learned Pr. CIT, Jaipur-1, Jaipur has erred in holding that the unsecured loans taken by the assessee are not genuine and creditworthiness is not proved.
4. In the facts and circumstances of the case the learned Pr. CIT, Jaipur-1, Jaipur has erred in holding that the agriculture income earned by the assessee is not genuine.
5. In the facts and circumstances of the case the learned Pr. CIT, Jaipur-1, Jaipur has erred in holding that the order has been passed by the AO in a routine and casual manner without applying the applicable sections of the Act without bringing any material on record.
6. The assessee craves your indulgence to add amend or alter all or any grounds of appeal before or at the time of hearing.
2. The brief facts of the case are that the assessee appellant’s case was selected under CASS for scrutiny to examine the cash deposits made in the bank during the demonetarization period. The assessee is engaged in the business of readymade garments. During the course of scrutiny, the AO has caused enquiry by way of issuing notice under section 143(2) and notice under section 142(1) of the IT Act, 1961 along with a detailed questionnaire on the issue of cash deposits made by the assessee appellant during the demonetarization period. The AO has mentioned in the assessment order that the assessee has explained that the cash deposits during the demonetarization period were made out of the available cash balance as per the cash book against the retail trading of cash sales towards readymade garments and out of the sale proceeds of the business during the period of demonetarization. Being satisfied with the explanation of the assessee, the AO has accepted the returned income in the assessment proceedings completed under section 143(3) at Rs. 6,34,250/-.
3. The ld. PCIT, in revisionary proceedings under section 263 noted from the assessment record that the AO has accepted the agricultural income of Rs. 5,01,200/- even when the assessee has failed to furnish the details/supporting details in respect of the agricultural income earned. The ld. PCIT has also questioned the issue of unsecured loans amounting to Rs. 2,81,63,419/- wherein fresh unsecured loans amounting to Rs. 19,10,000/- were raised by the assessee in addition to the old unsecured loans amounting to Rs. 2,68,47,290/-. In conclusion, he pointed out that an amount of Rs. 32,26,129/- on account of unsecured loans remained unexplained.
3.1. After considering the reply of the assessee, the ld. PCIT has held that the assessment order is erroneous in so far as it was prejudicial to the interest of the revenue for the purpose of section 263 of the Act and liable to be revised under the explanation (2) clause (b) and (a) of section 263 of the Act and accordingly directed the AO to make necessary verification in this regard after affording reasonable opportunity to the assessee.
4. Before us, the ld. Counsel for the assessee has submitted that the observation of the ld. PCIT in as much as the assessment order was passed by the AO in a routine and casual manner without applying the applicable sections of the Act and conducting necessary enquiry, are not in conformity with the facts of the case. He argued that the AO has caused thorough enquiries and has made extensive verification before passing the order. The ld. A/R has referred to the notice issued under section 142(1) of the Act along with annexure (pages 5 to 13 of his written submission). He has submitted that in compliance to as many as 42 queries raised by the AO, the assessee has furnished specific information in respect of unsecured loans and cash deposits made in the bank during the demonetarization period (APB 113-123). It is also explained before the AO that the assessee has filed the details i.e. name, complete address, PAN and confirmation of the depositors in respect of the unsecured loans vis-à-vis all the details regarding cash deposits made in the bank during the demonetarization period along with source of deposits thereof. The ld. A/R has referred to the reply furnished before the AO in respect of the cash deposits during demonetarization period and explained that these deposits in the bank were made out of the cash sales towards retail trading of readymade garments. The ld. A/R further stated that the assessee appellant has filed all the details in respect of unsecured loans and cash deposits in the bank before the ld. PCIT in revisionary proceedings under section 263 of the Act. The ld. Counsel has contended that the AO has passed the assessment order after making proper enquiry and scrutiny of the documents submitted by the assessee in respect of unsecured loans, cash deposits made during demonetarization period, agricultural income etc. which was accepted by the ld. AO to his satisfaction. Thus there cannot be a case for any action under section 263 on the issue of cash deposits during the demonetarization period for which the assessee’s case was selected for scrutiny under CASS. The ld. Counsel has argued that the ld. PCIT was not justified in observing that the assessment order was erroneous, prejudicial to the interest of the revenue and deserves to be quashed, and he prayed that the ld. PCIT’s order passed under section 263 deserves to be quashed.
4.1. The ld. Counsel for the assessee has further argued that since the assessee has furnished complete details of unsecured loans, cash deposits made in the bank during demonetarization period along with supporting documentary evidences to the satisfaction of the AO and duly accepted by the AO while passing the assessment order, thus the AO has adopted one view on an issue having two divergent views and the ld. PCIT was not justified in setting aside the assessment order on this ground. In support, he placed reliance on the following case laws :-
(i) CIT vs. Leisure Wear Exports Ltd. (2011) 202 Taxmann 130 (Mag.)
Where assessment order has been passed by the AO after taking into account assessee’s submissions and documents furnished by him and no material whatsoever has been brought on record by the CIT which showed that there was any discrepancy or falsity in evidences furnished by the assessee, the order of AO cannot be set aside for making deep inquiry only on the presumption and assumption that something new may come out.
(i) CIT vs. Vikas Polymers (2010) 194 Taxman 57 (Del.)
If a query is raised during course of scrutiny by assessment order, which is answered to the satisfaction of Assessing Officer, but neither query nor that order of Assessing Officer calls for interference and revision.
(ii) CIT vs. International Travel House Ltd. (2010) 194 Taxman 324 (Del)
Whether by passing on order u/s 263, Commissioner had really made an effort to cause a routine inquiry with regard to matter that had already been conducted, such approach of Commission was impermissible.
(iii) CIT vs. Anil Kumar Sharma (2010) 194 Taxman 504.
Where Tribunal had arrived at a conclusive finding that though assessment, Assessing Officer, yet record showed that Assessing Officer had applied his mind, once such application of mind, was discernible from record, proceeding under section 263 would not fall into area of Commissioner having a different opinion.
(iv) Commissioner of Income Tax vs. Ganpat Ram Bishnoi, 296 ITR 292 (Raj.).
Revision – Erroneous and prejudicial order – Lack of proper enquiry – Tribunal has found that the AO framed the assessment after due application of mind and holding enquiries into all aspects which according to the CIT, have not been enquired into – This is a finding of fact – No presumption can be drawn that the AO had not applied his mind to various aspects of the matter – Once enquiry in fact has been conducted and the AO has reached a particular conclusion, though reference to such enquiries has not been made in the order of assessment, the invocation of jurisdiction by CIT is not sustainable – Same liable to be set aside.
5. Per contra, the ld. CIT D/R supported the impugned order. The ld. D/R has submitted that the assessee has failed to furnish corroborative documentary evidences in support of the agricultural income before the ld. PCIT, did not file address and confirmation in respect of unsecured loans during the course of scrutiny proceedings before the AO, accordingly, he pleaded that the order of the ld. PCIT be sustained.
6. We have heard the rival contentions, perused the material available on record, assessment order and impugned order and the case laws cited before us. Admittedly, the assessee’s case was selected for scrutiny under CASS for examination of cash deposits made in the bank during demonetarization period. The AO has issued notice under section 142(1) along with the questionnaire by way of annexure raising details of queries in respect of the cash deposits in the bank made by the appellant during demonetarization period. The AO has noted in the assessment order that the assessee has explained the cash deposits made in the bank during demonetarization period as the cash sales out of the retail trading of readymade garments made during the Deepawali period being the festival season and a peak business period when winter wears were also sold. It is evident from the assessment order that the AO being satisfied with the reply of the assessee in respect of the cash deposits made during demonetarization period along with the corroborative documentary evidences vis-à-vis cash sales of the readymade garments has accepted the returned income of the assessee.
6.1. The ld. PCIT although has admitted the fact that the case was selected under CASS for scrutiny of cash deposits made in the bank during demonetarization period, however he has raised queries in respect of agricultural income and unsecured loans shown by the assessee during the assessment year under consideration though these were not the parameters covered under the CASS for scrutiny purposes. It is seen that the ld. A/R has filed detailed documentary evidences in compliance to the queries of the ld. PCIT in respect of agricultural income and unsecured loans during the proceedings under section 263, but the ld. PCIT has failed to appreciate the corroborative documentary evidences in support of the agricultural income in the absence of bills, vouchers in support of sale of agricultural produce and Patwari report on agricultural activity. Similarly, the ld. PCIT was not satisfied with the documentary evidences in respect of unsecured loans primarily for the reason that the confirmation of unsecured loans were not submitted during assessment proceedings and the confirmations submitted during the revisionary proceedings needs further verification in respect of Shri Rao Virendra HUF, Ms. Ruche Jaiman and Shri Shiv K. Jaiman, bank statements were furnished but not for the complete year and in some cases ITRs were not provided.
6.2. It is evident from the assessment order and impugned order that the assessee’s case was selected for scrutiny under CASS for examination of cash deposits made in the bank during the demonetarization period. It is prima facie not clear whether it was a limited scrutiny case or a detailed scrutiny case with the approval of the competent authority. To our understanding, it was a limited scrutiny case being selected under CASS for examination of cash deposits made in the bank during demonetarization period and, therefore, the authorities below ought to have restricted their examination and enquiries limited for the purpose of cash deposits made by the appellant during the period of demonetarization only. By expanding the scope of scrutiny beyond the issue of cash deposits during demonetarization period, amounts to exceeding the jurisdiction by the ld. PCIT without following the prescribed procedure and the administrative guidelines under the law. After considering the documentary evidences filed by the assessee in compliance to the enquiries caused by the AO and scrutiny of the documents in respect of the cash deposits, the AO has accepted the cash deposits in the bank during the period of demonetarization made by the appellant as duly explained. Thus, the AO to his satisfaction accepted the cash deposits in the bank account of the assessee during the period of demonetarization as explained money in accepting the returned income of the assessee under section 143(3) of the IT Act. In our view, the ld. PCIT was not justified in adversely commenting on the said cash deposits of the assessee and adopting a divergent view where two views are possible that too on the issues of agricultural income and unsecured loans, which were not even parameters of selection of the case for scrutiny under CASS. The case laws relied upon by the ld. PCIT are distinguishable on the peculiar facts of the case.
7. Respectfully following the Hon’ble Rajasthan High Court in the case of CIT vs. Ganpat Ram Bishnoi (supra), no presumption can be down by the PCIT that the matter has not been enquired into by the AO. Accordingly, we hold that the invocation of jurisdiction by the PCIT is not sustainable. The order passed by the PCIT u/s 263 is hereby set aside.
8. In the result, appeal of the assessee is allowed.
Order pronounced in the open court on 07/06/2022.
