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2021 (8) TMI 28 - AT - Income TaxRevision u/s 263 - no source of cash deposited in the saving bank account held by the assessee - sale of agricultural land - HELD THAT - Assessee had given specific reply along with copy of agreement and the details of transactions which took place in the course of sale of agricultural land held by the assessee at Village-Tigriya Sancha Dist. Dewas. AO on perusal of the bank statement, agreement of sale of agricultural land and other submissions and after making due application of mind accepted the submissions made by the assessee and assessed the income vide order dated 12.12.2016 framed u/s 143(2) r.w.s. 148. In the case of Ram Swaroop Bairagi Others 2020 (11) TMI 822 - ITAT INDORE and having dealt similar set of facts, are of the considered view that nexus of cash deposited in the bank account is on account of sale of agricultural land made by the assessee during the year supported by copy of agreement to sale and also find that the ld. AO has made due application of mind and conducted necessary enquiry to examine the issue of cash deposited in the bank and thus the assessment order framed u/s 143(3) r.w.s. 148 dated 12.12.2016 can neither be held as erroneous nor prejudicial to the interest of revenue. We hold that Ld. Pr. CIT wrongly assumed jurisdiction u/s 263 and therefore the impugned order deserves to be quashed. We accordingly restored the assessment order dated 12.12.2016 framed u/s 143(3) r.w.s. 148 of the Act. - Decided in favour of assessee.
Issues Involved:
1. Legality of the order passed by the Principal Commissioner of Income Tax (Pr. CIT) under section 263 of the Income Tax Act, 1961. 2. Whether the order passed by the Assessing Officer (AO) was erroneous and prejudicial to the interest of the revenue. 3. Whether the Pr. CIT provided adequate opportunity to the assessee. 4. Validity of the explanation provided by the assessee regarding the source of cash deposits in the bank account. Detailed Analysis: 1. Legality of the Order Passed by the Pr. CIT under Section 263: The appellant challenged the assumption of jurisdiction under section 263 of the Income Tax Act, 1961 by the Pr. CIT, Ujjain. The appellant argued that the order passed by the Pr. CIT was illegal and bad in law and hence should be set aside. The Tribunal reviewed the provisions of section 263, which allows the Pr. CIT to call for and examine the record of any proceeding under the Act and revise any order passed by the AO if it is considered erroneous and prejudicial to the interests of the revenue. 2. Erroneous and Prejudicial to the Interest of Revenue: The Pr. CIT considered the AO's order erroneous and prejudicial to the interest of the revenue because the AO accepted the assessee's explanation regarding the source of cash deposits without adequate verification. The Pr. CIT noted that the assessee deposited ?32,00,000 in cash, claimed to be from the sale of agricultural land. However, the sale agreement was not notarized, and no registered sale deed was provided. Furthermore, the AO did not examine the purchaser on oath regarding his capacity to buy the land. 3. Adequate Opportunity to the Assessee: The assessee claimed that the Pr. CIT passed the order without giving a proper opportunity to present new evidence. During the proceedings under section 263, the assessee could not provide any new evidence beyond what was already submitted to the AO. The Pr. CIT observed that the AO did not thoroughly verify the documents and explanations provided by the assessee, leading to the conclusion that the AO's order was erroneous and prejudicial to the revenue. 4. Validity of the Explanation Regarding Cash Deposits: The assessee explained that the cash deposits were from the sale proceeds of ancestral agricultural land. The AO had accepted this explanation after examining the bank statements and the sale agreement. The Tribunal noted that the AO had issued notices under sections 143(2) and 142(1) and had asked specific questions regarding the source of the cash deposits. The assessee provided detailed explanations and supporting documents, which the AO found satisfactory. The Tribunal referenced a similar case, Shri Ram Swaroop Bairagi, where the ITAT had quashed the Pr. CIT's order under section 263, finding that the AO had made adequate inquiries and the assessment order was neither erroneous nor prejudicial to the revenue. The Tribunal applied the same principles to the present case, noting that the AO had made due inquiries and applied his mind to the facts and circumstances before accepting the assessee's explanation. Conclusion: The Tribunal concluded that the AO's order was neither erroneous nor prejudicial to the interest of the revenue. The Pr. CIT had wrongly assumed jurisdiction under section 263. Therefore, the Tribunal quashed the Pr. CIT's order and restored the AO's assessment order dated 12.12.2016. The appeal filed by the assessee was allowed.
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