2021 (3) TMI 1331 - AT - Income Tax

Revision u/s 263 - Unexplained cash deposit - difference between Lack of enquiry and inadequate enquiry - HELD THAT - It is for the Assessing Officer to decide the extent of enquiry to be made as it is his satisfaction as what is required under law. Reliance is placed on the decision of CIT v. Sunbeam Auto Ltd. 2009 (9) TMI 633 - DELHI HIGH COURT wherein held that if there was any inquiry, even inadequate, that would not by itself, give occasion to the Commissioner to pass order u/s 263 of the Act, merely because the Commissioner has a different opinion in the matter and that only in cases where there is no enquiry, the power u/s 263 of the Act can be exercised. The ld. PCIT cannot pass the order u/s 263 of the Act on the ground that further/thorough enquiry should have been made by Assessing Officer. If A.O. adopts one of the possible courses available in the scheme of the I.T. Act which results in any loss of revenue or when two views are possible and the A.O. adopts one of them with which the C.I.T. does not agree, then it would not be an order prejudicial to the interest of revenue for invoking the jurisdiction u/s. 263 - See MALABAR INDUSTRIAL CO. 2000 (2) TMI 10 - SUPREME COURT The order of the Ld. PCIT was definitely outside the purview of section 263 of the Act. As noted above, the exercise aimed at ascertaining the correct income of the assessee has been fulfilled by the Assessing Officer by exercising his quasi-judicial functions vis-a-vis passing the assessment order u/s.143(3) r.w.s 147 of the Act. Therefore, certainly it is not a case wherein adequate enquiries at the assessment stage were not carried out or assessment was made in haste. However, what is an opinion formed as a result of these enquiries and verification of the materials is something which is in exclusive domain of the Assessing Officer, and even if Ld. Pr. Commissioner does not agree with the results of such enquiries, the resultant order cannot be subjected to revision proceedings. - Decided in favour of assessee.

Summary

Issues Involved:
1. Condonation of delay in filing the appeal.
2. Validity of the reassessment proceedings under section 147 of the Income Tax Act.
3. Legitimacy of the Principal Commissioner of Income Tax's (PCIT) order under section 263 of the Income Tax Act.

Detailed Analysis:

1. Condonation of Delay in Filing the Appeal:
The appeal filed by the assessee for Assessment Year 2007-08 was barred by limitation by 208 days. The assessee moved a petition requesting the Bench to condone the delay, explaining that the delay was due to the wrong advice of their Tax Professional. The Tribunal, considering the reasons given, opined that the assessee was under a bona fide belief that the impugned order was not appealable before the Tribunal. Upon realizing the mistake, the assessee immediately filed the appeal. The Tribunal condoned the delay in the interest of justice and admitted the appeal for hearing.

2. Validity of the Reassessment Proceedings under Section 147:
The assessee contended that the reassessment proceedings initiated by the Assessing Officer (AO) under section 147 were not valid. During the reassessment proceedings, the AO had asked the assessee to furnish details of a cash deposit of ?16,00,000. The assessee submitted the required details and explanations, which were examined by the AO. The Tribunal noted that the AO had conducted an inquiry and examined the cash deposit during the reassessment proceedings. The AO's decision to accept the assessee's explanation was based on the documents and explanations provided. Therefore, the reassessment order passed under section 143(3) read with section 147 was not erroneous.

3. Legitimacy of the PCIT's Order under Section 263:
The PCIT exercised jurisdiction under section 263, claiming that the AO's order was erroneous and prejudicial to the interest of revenue due to inadequate inquiry into the cash deposit of ?16,00,000. The Tribunal noted that the AO had indeed conducted an inquiry and examined the details provided by the assessee. The Tribunal emphasized that the mere possibility of gathering more material does not make the concluded assessment erroneous as long as the AO acted judiciously. The Tribunal cited several precedents, including the Hon'ble Gujarat High Court's decision in Amit Corporation, which held that an assessment order could not be reopened for further inquiries if the AO had access to all records and framed the assessment after due consideration.

The Tribunal also referred to the Hon'ble Delhi High Court's decision in Sunbeam Auto Ltd., which held that an order could not be revised under section 263 merely because the Commissioner had a different opinion. The Tribunal concluded that the AO's order was neither erroneous nor prejudicial to the interest of revenue, and the PCIT's order under section 263 was quashed.

Conclusion:
The Tribunal allowed the appeal filed by the assessee, quashing the PCIT's order under section 263. The Tribunal held that the reassessment proceedings were valid and the AO had conducted an adequate inquiry into the cash deposit of ?16,00,000. The PCIT's attempt to revise the AO's order was not justified, as the AO had acted judiciously and the assessment was not erroneous.