2020 (11) TMI 822 - AT - Income Tax

Revision u/s 263 - transaction of cash deposit in the saving bank account by the respective assessee(s) - transaction arising out of family partition - CIT while initiating proceedings u/s 263 of the Act mentioned that no details and documents are found on record which could establish that the dates on which the amount was received by the assessee from his father and also the Ld. A.O did not examined the assessee on oath in connection with the veracity of the transaction - HELD THAT - A.O vide his notice dated 3.10.2016 issued u/s 143(2) of the Act enclosed a Annexure and through point No.13, the assessee was required to explain the source of cash deposit in his saving bank account. Along with this reply the assessee enclosed copy of bank pass book, copy of agreement of sale of agriculture land, copy of memorandum of family settlement and copy of death certificate of father Ramcharan Das. On the basis of above details the explanation of the assessee were accepted by the Ld. A.O and the alleged amount being the amount received on family partition, the transaction was treated as explained by the Ld. A.O. All necessary evidences which could explain the source of cash deposits in the bank account by the respective assessee(s) is established and in the family partition deed the name of three assessee(s) named S/Shri Ram Swarrop Bairagi, Sriram Vaishnav and Shailendra Vashav who are in appeal before us are appearing. The nexus of cash deposit is proved with copy of sale deed, partition deed and bank pass book. We therefore in the given facts and circumstances of the case are of the considered view that specific information was called by Ld. A.O about the alleged cash deposits and the assessee has satisfied the Ld. A.O with complete details giving the source of cash deposit in the bank account. Therefore it is neither a case of no enquiry or inadequate enquiry - PCIT has wrongly assumed jurisdiction u/s 263 of the Act and the impugned order deserves to be quashed - Decided in favour of assessee.

Summary

Issues Involved:
1. Legality of the order passed by the Ld. PCIT under section 263 of the Income Tax Act.
2. Whether the order passed by the Ld. Assessing Officer (A.O.) was erroneous and prejudicial to the interest of the revenue.
3. Adequacy of the verification and scrutiny conducted by the Ld. A.O. during the assessment proceedings.

Detailed Analysis:

1. Legality of the Order Passed by the Ld. PCIT Under Section 263:
The appeals questioned the legality of the order passed by the Ld. PCIT under section 263 of the Income Tax Act. The assessees argued that the order was illegal and bad in law, and hence, it should be set aside. They contended that the assessment was framed after due scrutiny and verification of the details, and therefore, the order should not be treated as erroneous and prejudicial to the interest of the revenue.

2. Whether the Order Passed by the Ld. A.O. Was Erroneous and Prejudicial to the Interest of the Revenue:
The Ld. PCIT initiated proceedings under section 263, stating that the assessment order was erroneous and prejudicial to the interest of the revenue. The primary concern was the cash deposits of ?19,05,600/- in the savings bank account of the assessees, which the Ld. PCIT believed were not adequately verified by the Ld. A.O. The Ld. PCIT noted that there were no details or documents on record to establish the dates on which the amounts were received by the assessees from their father. The Ld. A.O. did not examine the assessees on oath regarding the veracity of the transactions.

3. Adequacy of the Verification and Scrutiny Conducted by the Ld. A.O. During the Assessment Proceedings:
The assessees provided documentary evidence, including a family settlement memorandum and an agreement to sell agricultural land, to support their claim that the cash deposits were received from their father as part of a family partition. The Ld. A.O. accepted these documents after scrutiny. The Tribunal observed that the Ld. A.O. had conducted sufficient inquiry by calling for specific details about the cash deposits and receiving a comprehensive reply from the assessees, including bank statements, sale agreements, and family partition agreements. The Tribunal noted that the nexus of cash deposits was established with the provided documents, and the Ld. A.O.'s acceptance of the explanation was justified.

Conclusion:
The Tribunal concluded that the Ld. A.O.'s order was neither erroneous nor prejudicial to the interest of the revenue. It was determined that the Ld. A.O. had conducted adequate inquiries and verification during the assessment proceedings. Consequently, the Ld. PCIT's assumption of jurisdiction under section 263 was deemed incorrect, and the impugned order was quashed. The appeals of the assessees were allowed, and the original assessment orders were restored.