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2018 (4) TMI 1638 - AT - Income TaxRevision u/s 263 - unexplained cash deposited in the bank account - absence of inquiry OR lack of inquiry - as per CIT-A though assessee has claimed that the deposit in bank account is out of the sale proceeds however the assessee has not produced cash book for verification of the corresponding entries and availability of the cash in the cashbook - Held that - The assessment in the present case was framed under section 143 (3) of the act on 31/12/2007. This itself shows that assessing officer has not looked at the books of accounts which are allegedly produced before AO as per version of the assessee on 26/12/2007. This too is the submission of the assessee before CIT (A) which has not been adjudicated by CIT (A). Mere production of books of accounts does not make the issues before us fall in to the category of inadequate inquiry . If we agree to such an argument then, in all cases where the books of accounts were produced before the AO, then the case would fall outside the purview of section 263 of the act. Further No records of communication by the AO to assessee and reply by assessee to ld AO was shown to us to show on these four issues that the Assessing Officer had applied his mind on any of them. According to us case before us is of lack of inquiry and not absence of any inquiry. All judicial precedents relied up on before us related to absence of adequate inquiry but none of them dealt with the issues of complete lack of inquiry as in case before us. Hence, we do not have any hesitation in upholding action of ld CIT in invoking his jurisdiction u/s 263 - Decided against assessee.
Issues Involved:
1. Jurisdiction under Section 263 of the Income Tax Act. 2. Erroneous and prejudicial assessment orders. 3. Verification of cash deposits. 4. Interest on fixed deposit receipts. 5. Payment to a third party. 6. Verification of bank statements. Issue-Wise Detailed Analysis: 1. Jurisdiction under Section 263 of the Income Tax Act: The primary issue revolves around whether the Commissioner of Income Tax (CIT) correctly assumed jurisdiction under Section 263 of the Income Tax Act. The appellant argued that the CIT erred in law and on facts in assuming jurisdiction under Section 263, claiming that the assessment order passed by the Assessing Officer (AO) was neither erroneous nor prejudicial to the interest of the revenue. The Tribunal examined whether the CIT's action to revise the assessment order was justified. 2. Erroneous and Prejudicial Assessment Orders: The Tribunal considered whether the assessment order was erroneous and prejudicial to the interest of the revenue. The CIT had issued a show cause notice under Section 263, identifying several grounds where the AO allegedly failed to conduct proper verification. The Tribunal noted that for the CIT to assume jurisdiction under Section 263, the assessment order must be both erroneous and prejudicial to the revenue, as established in the case of Malabar Industrial Co Ltd versus CIT. 3. Verification of Cash Deposits: The CIT found that the AO did not verify the source of cash deposits amounting to ?16,55,000 in the assessee's bank account. The assessee claimed these deposits were from sales proceeds, but the cash book was not produced for verification. The Tribunal upheld the CIT's direction for the AO to verify the source of these deposits, noting a lack of inquiry by the AO. 4. Interest on Fixed Deposit Receipts: The CIT identified that the AO did not examine the interest accrued on fixed deposit receipts (FDRs). The assessee argued that the interest was recognized in the subsequent assessment year. However, the CIT held that the AO failed to verify this aspect, making the assessment order erroneous and prejudicial to the revenue. The Tribunal agreed with the CIT's direction for the AO to examine and charge the interest accrued on FDRs. 5. Payment to a Third Party: The CIT noted that the AO did not verify a payment of ?4,00,000 to a third party, Mr. Om Prakash Bhatia. The assessee provided bank statements showing the credit of this amount to Mr. Bhatia's account. However, the Tribunal found no evidence that the AO had verified this transaction during the assessment proceedings. Consequently, the Tribunal upheld the CIT's direction for the AO to make necessary verification. 6. Verification of Bank Statements: The CIT observed that the AO did not verify the bank statements, which lacked narration. The assessee claimed that the books of accounts, including bank statements, were produced before the AO. Nevertheless, the Tribunal found no record of the AO's inquiry into these transactions. The Tribunal upheld the CIT's direction for the AO to verify the entries and transactions in the bank statements. Conclusion: The Tribunal concluded that the AO had not made any inquiry on the four issues raised by the CIT. The Tribunal distinguished between "lack of inquiry" and "inadequate inquiry," finding the case to involve a lack of inquiry. Therefore, the Tribunal upheld the CIT's action under Section 263, dismissing the assessee's appeal. The order was pronounced in the open court on 03/04/2018.
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