Vineetsingh Gulabsingh Rore Vs PCIT (ITAT Ahmedabad)
AO failed to make adequate enquiries regarding large cash deposits during the demonetisation- PCIT’s 263 Order Upheld
In Vineetsingh Gulabsingh Rore v. PCIT, Ahmedabad-1 (ITA No. 868/Ahd/2023; AY 2017-18), the ITAT Ahmedabad Bench dealt with a challenge to a revisionary order passed under Section 263, along with a substantial delay of 543 days in filing the appeal.
The assessee explained the delay on the ground of wrong legal advice by his earlier consultant, who had not advised filing an appeal against the Section 263 order, believing it to have no immediate financial implication. This explanation was supported by affidavits of both the assessee and the consultant. Relying on settled judicial principles that wrong legal advice constitutes “sufficient cause”, and following coordinate bench precedents, the Tribunal condoned the entire delay.
On merits, however, the Tribunal upheld the PCIT’s revisionary action. The PCIT had revised the original assessment on the ground that the Assessing Officer failed to make adequate enquiries regarding large cash deposits during the demonetisation period, allegedly explained as redeposit of earlier withdrawals. The Tribunal found that:
- The assessee did not produce a cash book during assessment to substantiate the explanation.
- Mere furnishing of bank statements was insufficient to establish that withdrawals remained unutilised and were redeposited.
- The AO had accepted the explanation without proper verification, making the order erroneous and prejudicial to the interests of the Revenue.
The Tribunal also rejected the contention that the PCIT exceeded jurisdiction by directing examination of property investment, holding that such directions were only to verify utilisation of cash withdrawals, not to initiate a new issue.
Outcome:
