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2020 (3) TMI 1076 - AT - Income TaxRevision u/s 263 - unexplained cash deposited in the bank account of the assessee - HELD THAT - Where the assessing officer has made enquiry and if the Pr. CIT is not satisfied with such enquiry he should make himself enquiry and bring clearly on record as the finding of the assessing officer being erroneous and prejudicial to the interest of revenue. This is not the case in the present case. AO has made necessary enquiry and issue was also scrutinized by the JCIT while passing order u/s 144A of the Act. In our considered view when two officers at different stage examined the issue before setting aside these finding Ld. Pr. CIT ought to have made some enquiry. But Ld. Pr. CIT in the present case set aside the issue to the Assessing Officer which in our considered view is contrary to ratio laid by the judgment of ITO Vs D.G. Housing Projects 2012 (3) TMI 227 - DELHI HIGH COURT is not mandate of law. Hence the direction of Ld. Pr. CIT cannot be affirmed. If it is presumed that the hundis as recovered during the survey proceedings were not genuine in that situation the amount that was reflected on such hundis cannot to be taken as income of the assessee. Therefore the incidence of tax would be on the unexplained cash deposited in the bank account of the assessee. In this case the amount surrendered by the assessee is higher than what it was found to be unexplained cash deposits in its bank account. Therefore there is no infirmity in the order giving set off of the maturity amount. It is however further clarified that we have not expressed our view regarding genuineness of hospital receipts being invested in hundis as surrendered by one of the partner of the assessee firm. Our finding is purely based on the material placed before us. Ld. PCIT has not brought any material suggesting that the amounts so surrendered by the partner of the firm is related to proceed of crime. AO failed to make enquiry in respect of year wise investment - No material is placed by the assessee regarding this issue. In our considered view when there is claim of investment being made out of unrecorded hospital receipts he ought to have made investigation regarding year wise investment. This observation of the Ld. Pr.CIT is sustained. CIT allowing higher depreciation claim of the assessee - We have perused rules and case laws as relied on by the assessee. We do not find any infirmity into the action of the assessing officer for granting depreciation @ 40%. Therefore, this ground of the Pr. CIT is also not sustainable for affirming the action u/s 263 of the Act. AO has allowed expenditure of salary without verifying whether TDS as per provisions of the Income Tax was made or not - It is stated that the details of TDS was duly filed in support of this contention. The assessee drew our attention to paper book pages 115-116 of the paper book and also pages no. 750-764, therefore, it cannot be inferred that the assessing officer was simply allowed as not verified the tax deducted at source. This ground of Pr. CIT is also not sustainable on the facts and material on records. Appeal of the assessee is partly allowed.
Issues Involved:
1. Legality and jurisdiction of the order under Section 263 of the Income Tax Act. 2. Justification for setting aside the order passed under Section 144A. 3. Error in allowing telescoping of undisclosed cash receipts. 4. Error in allowing deduction under Section 35AC. 5. Examination of various items including reduction of surrendered cash receipts, Hundi loans, year-wise investments, angiography receipts, profit and loss for survey period, depreciation on PET CT Scan machine, and TDS on salaries. Detailed Analysis: 1. Legality and Jurisdiction of the Order under Section 263: The appellant challenged the legality of the order dated 30.03.2017 passed by the Pr.CIT-I, Indore, under Section 263 of the Income Tax Act, setting aside the assessment framed under Section 143(3) as erroneous and prejudicial to the interest of the revenue. The appellant argued that the AO had allowed the claims after making due inquiries and forming a reasonable view. The Tribunal noted that the Pr.CIT invoked Section 263 on the grounds of failure of the AO to make necessary inquiries and the order not being as per the provisions of the Act. The Tribunal observed that the AO had indeed conducted inquiries and obtained relevant documents, thus the order could not be deemed erroneous or prejudicial merely because the Pr.CIT held a different opinion. 2. Justification for Setting Aside the Order Passed under Section 144A: The appellant contended that the Pr.CIT set aside the order dated 24/3/2015 passed under Section 144A by the JCIT without pointing out any specific error. The Tribunal found that the JCIT had issued directions after considering the facts and judicial pronouncements. The Pr.CIT’s action of setting aside the order without identifying specific errors was deemed unjustified. 3. Error in Allowing Telescoping of Undisclosed Cash Receipts: The Pr.CIT argued that the AO allowed telescoping of undisclosed receipts of ?6,21,25,115 against Hundi loans without proper verification. The Tribunal noted that the AO had made inquiries and obtained explanations from the assessee. The Tribunal referred to the Supreme Court judgment in Ananthram Veera Singhaiah & Co Vs. CIT, which supported the view that undisclosed income from earlier years could be used for subsequent investments. The Tribunal concluded that the AO’s decision was based on a reasonable view and could not be termed erroneous. 4. Error in Allowing Deduction under Section 35AC: The Pr.CIT contended that the AO allowed the deduction under Section 35AC without verifying the source of funds. The Tribunal observed that the AO had conducted inquiries through a commission and verified the genuineness of the donation. The Tribunal referred to the Bombay High Court judgment in CIT Vs Shah Developers Pvt. Ltd, which allowed deductions for undisclosed income used for eligible investments. The Tribunal concluded that the AO’s decision was justified and the Pr.CIT’s revision was unwarranted. 5. Examination of Various Items: - Reduction of Surrendered Cash Receipts: The Pr.CIT argued that the AO did not independently verify the reduction of surrendered receipts by ?23,76,985 and ?7,470. The Tribunal found that the AO had considered the explanations and documents provided by the assessee. - Hundi Loans: The Pr.CIT contended that the AO did not verify the recovery of Hundi loans. The Tribunal noted that the AO had made inquiries and obtained explanations, and the Pr.CIT did not provide evidence of any error in the AO’s findings. - Year-wise Investments: The Pr.CIT argued that the AO did not examine year-wise investments. The Tribunal agreed that this aspect required further verification and sustained this observation. - Angiography Receipts: The Pr.CIT noted that angiography receipts of ?1,96,900 were not considered. The Tribunal found that the AO had verified the entries and there was no error. - Profit and Loss for Survey Period: The Pr.CIT contended that the AO did not examine the profit and loss account separately for the survey period. The Tribunal found that the AO had considered the overall financials and there was no requirement for separate accounts. - Depreciation on PET CT Scan Machine: The Pr.CIT argued that the AO allowed higher depreciation without verification. The Tribunal found that the AO had allowed the correct rate of depreciation based on judicial precedents. - TDS on Salaries: The Pr.CIT contended that the AO allowed salary expenses without verifying TDS deductions. The Tribunal found that the AO had verified the TDS details and there was no error. Conclusion: The Tribunal concluded that the Pr.CIT’s order under Section 263 was not justified as the AO had made due inquiries and formed a reasonable view. The Tribunal set aside the Pr.CIT’s order except for the observation regarding year-wise investments, which required further verification. The appeal of the assessee was partly allowed.
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