2015 (11) TMI 1206 - AT - Income Tax

Revision u/s 263 - Held that - It is apparent that CIT(Appeals) cannot invoke the jurisdiction u/s 263 of the Act, merely on the ground that no adequate enquiry has been made by the Assessing Officer. In the instant case, the learned Assessing Officer has not only recorded the statement of the father of the assessee, but also satisfied himself that the source of money was duly explained, as he was running a Kirana Shop and money was earned out of his activity of running of that shop. The learned Commissioner of Income-tax in para 6.2 of his order has himself admitted that the learned Assessing Officer had hardly asked 2 to 3 questions from the assessee and assessee s father explained in his statement on the face value and no enquiry was made or the called for recording of the basic details like size, location, Khasra No. of agricultural land, nature of agricultural produce, when the shop was started etc. AO has also examined cash deposit of ₹ 4.70 lakhs from the cash flow statement and after satisfying thereon, has admitted the explanation of the assessee. In our considered opinion, this may be a case of inadequate inquiry, but certainly, it is not a case of lack of enquiry. The learned Assessing Officer has made certain opinion on the basis of enquiry conducted and satisfied himself. Commissioner of Income-tax cannot revise the assessment merely due to the reason that he holds a different opinion on that issue. Respectfully, following the judgement of Hon ble jurisdictional High Court in case of CIT Vs. Sunbeam Auto Ltd. (2009 (9) TMI 633 - Delhi High Court), we hold that the findings of the learned Commissioner of Income-tax (Appeals) in holding the order of the learned Assessing Officer passed under section 143(3) of the Act as erroneous and prejudicial to interest of the Revenue are not correct and bad in law and therefore, we set aside the impugned order of the learned Commissioner of Income-tax (Appeals) passed under section 263 of the Act. - Decided in favour of assessee.

Summary

Issues Involved:
1. Justification of invoking Section 263 by the Commissioner of Income-tax (CIT).
2. Condonation of delay in filing the appeal.
3. Adequacy of the Assessing Officer's (AO) enquiry regarding the sources of certain deposits.

Detailed Analysis:

1. Justification of invoking Section 263 by the Commissioner of Income-tax (CIT):

The primary issue raised by the assessee was whether the CIT was justified in invoking Section 263 on the grounds that the assessment order passed under Section 143(3) was erroneous and prejudicial to the interest of the revenue. The assessee contended that the AO had considered all relevant facts and passed a speaking order based on those facts and the provisions of the law. The CIT, however, argued that the AO had not made any enquiry regarding the Rs. 9,50,000 received as a gift from the assessee's father and had erroneously treated the cash withdrawal of Rs. 4,75,000 as unexplained cash credits. The CIT issued a show-cause notice and, after reviewing the submissions, held that the AO's order was erroneous and prejudicial to the revenue's interest.

2. Condonation of delay in filing the appeal:

The appeal was filed with a delay of 277 days. The assessee submitted an application for condonation of delay, supported by an affidavit from a Chartered Accountant explaining that the delay was due to the order being misplaced among other records. The Tribunal, after considering the rival submissions and the affidavit, concluded that the delay was not mala fide and was genuine and bona fide. It was noted that courts should take a lenient view on the issue of condonation of delay if the reasons are bona fide and not a device for camouflaging ulterior purposes. Citing precedents, the Tribunal condoned the delay in the interest of justice.

3. Adequacy of the Assessing Officer's (AO) enquiry regarding the sources of certain deposits:

The AO had assessed the assessee's return, which included a cash deposit of Rs. 32,72,480 in a savings bank account. The AO had accepted the explanations for part of the deposits but added Rs. 13,67,480 as unexplained income. The CIT found that the AO had not made sufficient enquiries regarding the Rs. 9,50,000 received as a gift and the Rs. 4,75,000 cash withdrawal. The CIT argued that the AO should have conducted independent enquiries into the source of the gift and the veracity of the father's statement. The Tribunal, however, noted that the AO had recorded the father's statement and was satisfied with the explanations provided. The Tribunal referenced the Delhi High Court's judgment in CIT Vs. Sunbeam Auto Ltd., which held that inadequate enquiry does not justify invoking Section 263 if the AO had made some enquiry and formed an opinion. The Tribunal concluded that the AO had conducted an enquiry and formed a reasonable opinion, and thus, the CIT's invocation of Section 263 was not justified.

Conclusion:

The Tribunal allowed the appeal, holding that the CIT was not justified in invoking Section 263, as the AO had made adequate enquiries and formed a reasonable opinion. The delay in filing the appeal was condoned, and the Tribunal set aside the CIT's order under Section 263.