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2021 (8) TMI 750 - AT - Income TaxRevision u/s 263 - unexplained cash deposit entries in bank account - reopening of assessment u/s 147 - HELD THAT - As provision of banking book s evidence 1891, it is clear that once certified documents were given by the Branch Manager/Chief Manager of the Bank while discharging its duty in pursuance to the notice issued by any authority, then the said information is admissible in the eyes of law and no further corroboration is required. In our considered opinion, AO had made adequate inquiry u/s 148 before passing the said order. We have gone through the order passed by the PCIT and we found that the PCIT had failed to bring one record the material/evidence which shows that the assessee had deposited the cash in her bank account. From the perusal of the various letters written by the bank to the revenue, it is abundantly clear that no cash was deposited by the assessee in her bank account. These documents and other correspondence clearly shows that the AO had made sufficient enquiry to find out whether the cash was deposited in the bank account of the assessee or not. After due satisfaction, that no cash was deposited in assessee s bank account, the assessment order was passed without making any addition. The bank was not in possession of any document like cash book, vouchers, signed vouchers of debit and credit and journal for the dates i.e. from 30.06.2010 to 10.07.2010. In the absence of these documents it cannot be assumed that any cash was deposited by the assessee either in her own account or in the account of Saradjyot singh or the amount was debited and credited in her account. In our view the whole order of the PCIT is premised on conjectures and surmises without any cogent reliable evidence. The bank had written various letters confirming that no cash was deposited in the account of the assessee at any point of time relevant to issue in hand. Therefore the invocation of power u/s 263, was without any basis. The observation on the PCIT that the documents furnished by the Bank in response to the notice of AO were not required to be corroborated with the statement of the Chief Manager for the reason that the documents issued under the Bankers Book Evidence Act 1891 are admissible in law - whole case of reopening was hinges on, the cash deposit in the bank account of the assessee, the above said fact was denied by the bank in the documents submitted to the assessing officer in response to the notice issued by the assessing officer to the bank. Pr. CIT cannot be permitted to blow hot and cold, on the one hand, the Pr. CIT is holding that order of AO was erroneous as documents issued by the Bank were required to be corroborated Chief Manager and on the other hand Himself is not making enquiry/ examining the officials of the Bank to ascertain the true facts by denying the summoning of the officials of the Bank on the request of the assessee. In our considered opinion the Principle CIT had failed to bring on record any piece of evidence or documents which shows that the cash was deposited in the account of the assessee on the date mentioned in the reasons for reopening of the assessment. Once the certified copy of the cash book, bank account, vouchers and other documents were produced before the AO and PCIT, which clearly shows that no cash was deposited in the Bank account than, in our view, the finding recorded by the Pr. CIT, was not correct as the same was not borne out of the record. PCIT had failed to establish the fulfillment of twin conditions as mentioned herein above before invoking the jurisdiction u/s 263 of the Income Tax Act. Pr. CIT has failed to bring on record how the order passed by the Assessing Officer was prejudicial to the interest of the Revenue and further how it was erroneous. Note sheet of the assessment proceeding of AO clearly shows enough evidence of making the inquiries from the assessee as well as from the Bank and examination of the other relevant documents.The order passed by the Assessing Officer though was short, however elobrate enquiries were made by him before writing the order and dropping the proceedings under section 148, as sufficient material was brought on record , which shows that no cash was deposited in the Bank account - AO had examined complete record of the Bank, the cash book, the Bank statement of the assessee as well as that of Sh. Saradjot Singh and thereafter AO had chosen not to make any addition on account of above said amount. In the light of the above and respectively following the decision in the Matter of C.I.T. Vs. Gabriel India Ltd. 1993 (4) TMI 55 - BOMBAY HIGH COURT we are of the opinion that the proceeding u/s 263 of the Act at the level of Pr. CIT were not called for and accordingly the action initiated u/s 263 was without any merit and accordingly we quash the same.Appeal of the assessee is allowed.
Issues Involved:
1. Jurisdiction of the Principal Commissioner of Income Tax (PCIT) under Section 263 of the Income Tax Act, 1961. 2. Legality of the direction to make an addition under Section 69A. 3. Validity of the assessment order under Sections 143(3)/147. 4. Examination of the factual correctness of the alleged cash deposit. 5. Principles of natural justice and procedural fairness. Issue-wise Detailed Analysis: 1. Jurisdiction of the Principal Commissioner of Income Tax (PCIT) under Section 263 of the Income Tax Act, 1961: The appellant contended that the PCIT erred in assuming jurisdiction under Section 263, arguing that the assessment order was neither erroneous nor prejudicial to the interest of the revenue. The tribunal noted that for the PCIT to invoke Section 263, both conditions (the order being erroneous and prejudicial to the revenue) must be satisfied. The tribunal cited the Supreme Court's decision in Malabar Industrial Co. Ltd. v. CIT, emphasizing that an order cannot be deemed erroneous if it is a permissible view in law. The tribunal concluded that the PCIT failed to demonstrate how the assessment order was erroneous and prejudicial to the revenue, thereby invalidating the jurisdiction under Section 263. 2. Legality of the Direction to Make an Addition under Section 69A: The PCIT directed the Assessing Officer (AO) to add ?4.5 crores under Section 69A, alleging it was unexplained money. The appellant provided evidence, including bank statements and letters from bank officials, confirming no cash deposit of ?4.5 crores. The tribunal found that the AO had conducted sufficient inquiries and obtained certified documents from the bank under the Bankers Evidence Act, 1891, which confirmed no cash deposit. The tribunal held that the PCIT's direction was based on assumptions and lacked evidence, thereby invalidating the addition under Section 69A. 3. Validity of the Assessment Order under Sections 143(3)/147: The appellant argued that the assessment order was valid as the AO made all necessary inquiries and verifications. The tribunal reviewed the assessment proceedings and found that the AO issued notices, obtained bank statements, and verified the transactions. The tribunal cited precedents, including CIT v. Gabriel India Ltd., emphasizing that an assessment order cannot be deemed erroneous if the AO conducted adequate inquiries. The tribunal concluded that the assessment order was valid and not erroneous. 4. Examination of the Factual Correctness of the Alleged Cash Deposit: The appellant provided multiple letters from bank officials confirming no cash deposit of ?4.5 crores. The tribunal noted that the AO obtained certified documents from the bank, which confirmed no cash deposit. The tribunal found that the PCIT's conclusion of cash deposit was based on assumptions without corroborative evidence. The tribunal emphasized that the certified documents from the bank were admissible evidence under the Bankers Evidence Act, 1891, and no further corroboration was required. The tribunal held that the PCIT failed to provide any evidence of cash deposit, thereby invalidating the PCIT's conclusion. 5. Principles of Natural Justice and Procedural Fairness: The appellant argued that the PCIT violated principles of natural justice by not allowing the cross-examination of bank officials and not considering the appellant's submissions. The tribunal noted that the PCIT denied the appellant's request to examine bank officials, which was essential for a fair hearing. The tribunal emphasized that the PCIT cannot deny procedural fairness and then base conclusions on unverified assumptions. The tribunal held that the PCIT's actions violated principles of natural justice, thereby invalidating the order under Section 263. Conclusion: The tribunal concluded that the PCIT failed to demonstrate how the assessment order was erroneous and prejudicial to the revenue. The tribunal found that the AO conducted adequate inquiries and obtained certified documents confirming no cash deposit. The tribunal held that the PCIT's direction under Section 263 was based on assumptions without corroborative evidence and violated principles of natural justice. Accordingly, the tribunal quashed the PCIT's order under Section 263 and allowed the appellant's appeal.
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