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2019 (9) TMI 913 - AT - Income TaxRevision u/s 263 - deposits made into the Bank account - HELD THAT - Since the AO while framing the original assessment, had considered the entire material, was satisfied with the above factual aspect and thereafter, estimated the income of the assessee at 10% and made an addition of ₹ 9,50,000/-. AO had taken one possible view where two views are possible. When the PCIT does not agree, the assessment cannot be treated as erroneous in so far as it is prejudicial to the interests of the Revenue, since the view taken by the AO is not unsustainable in law. When an Assessing Officer adopts one of the courses permissible in law which results in loss of revenue or where two views are possible and the Assessing Officer has taken one view with which the PCIT/Commissioner does not agree, the assessment order cannot be treated as erroneous order in so far as it is prejudicial to the interests of the Revenue, unless the view taken by the AO is unsustainable in law. Any and every erroneous order cannot be the subject matter for revision u/s. 263 unless the second requirement of section 263 of the Act being prejudicial to the interests of the Revenue prevails. In this case, there was no material to show as to how the order of the Assessing Officer was erroneous in so far as it would become prejudicial to the interests of the Revenue to invoke the jurisdiction u/s. 263 - Decided in favour of assessee.
Issues Involved:
1. Validity of the order passed by the Principal Commissioner of Income Tax (PCIT) under Section 263 of the Income Tax Act. 2. Examination of cash deposits amounting to ?95,00,000 during the assessment year 2014-15. 3. Examination of gifts received from the assessee's sister and mother amounting to ?60,00,000. Detailed Analysis: 1. Validity of the Order Passed by the PCIT under Section 263: The assessee challenged the order of the PCIT on the grounds that it was "bad and erroneous in law and against the principles of natural justice." The PCIT invoked Section 263 of the Income Tax Act, proposing a revision of the assessment order on the basis that the Assessing Officer (AO) did not properly examine the cash deposits and gifts received. The PCIT observed that the AO neither made any findings nor obtained supporting documents from the assessee while allowing these transactions. Consequently, the PCIT set aside the assessment order for a de novo examination. 2. Examination of Cash Deposits Amounting to ?95,00,000: The PCIT noted that the AO failed to properly examine the cash deposits of ?95,00,000 made by the assessee, which were not disclosed in the return of income. The AO had added back an amount of ?9,50,000 (10% of these receipts) as undisclosed income. The PCIT argued that the entire amount of ?35,00,000 from the sale of laterite and gravel earth should be added back and assessed under Section 69B, with tax levied at 30% under Section 115BBE. The assessee contended that the AO had indeed conducted an inquiry into the cash deposits and had accepted the explanation provided, which included confirmation letters and evidence of sales. The assessee argued that the AO's decision could not be deemed erroneous simply because the PCIT disagreed with it. The Tribunal agreed with the assessee, stating that the AO had taken a permissible view and that the PCIT's disagreement did not make the AO's order erroneous or prejudicial to the interests of the Revenue. 3. Examination of Gifts Received from the Assessee's Sister and Mother Amounting to ?60,00,000: The PCIT also noted that the AO did not properly examine the gifts received from the assessee's sister and mother. The assessee provided evidence during the assessment proceedings, including a confirmation letter from the sister and details of the gifts. The assessee argued that the AO was satisfied with the explanation and that there was no need for further inquiry. The Tribunal found that the AO had indeed made inquiries and examined the evidence provided by the assessee. The Tribunal held that the AO's decision to accept the explanation was within his discretion and that the PCIT's view that further inquiry was needed did not justify invoking Section 263. Conclusion: The Tribunal concluded that the AO had made due inquiries and had taken a permissible view based on the evidence provided. The PCIT's disagreement with the AO's conclusions did not make the assessment order erroneous or prejudicial to the interests of the Revenue. Therefore, the Tribunal quashed the order of the PCIT passed under Section 263 and allowed the appeal filed by the assessee. The appeal was allowed, and the order was pronounced in the open court on 20th September 2019.
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