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2022 (8) TMI 1073 - AT - Income TaxRevision u/s 263 by CIT - unexplained cash deposits - as per CIT neither assessee nor AO had given any logic/explanation about calculation instead of considering the whole amount of cash deposited in Akola Urban Co-op. Bank Ltd - Non enquiry/investigation by the AO against this cash deposit made Pr.CIT to rethink and proceed under section 263(1) - HELD THAT - We do not found any force in the argument of the assessee that the view taken by the AO was one of the possible views; hence, Pr.CIT cannot exercise his powers under section 263(1) - This argument holds well where a proper verification, enquiry, justification were there in the order of the AO along with evidences and proper submission from the side of assessee. As in this case assessment was framed under section 144 and assessee had not even filed return of income under section 148 of the I.T. Act, there is no possibility of proper verification, enquiry, justification in the order of the AO along with evidences and proper submission from the side of assessee. We are not inclined to interfere in the order of Ld. Pr.CIT. In our opinion, the order of Ld. Pr.CIT (directing AO to re-verify the entries of cash deposit after giving assessee a proper opportunity of being heard) is of two fold, i.e. on the one hand it directs the AO to re-verify the matter to protect the interest of Revenue with proper justification and on the other hand it s an opportunity to the assessee also to substantiate his claim about the source of the cash deposit and its consequences thereafter. - Decided against assessee.
Issues Involved:
1. Validity 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 assessment order passed under Section 144 read with Section 147 was erroneous and prejudicial to the interest of the revenue. 3. Adequacy of the Assessing Officer's (AO) inquiries and verifications during the assessment process. Issue-wise Detailed Analysis: 1. Validity of the Order Passed by Pr.CIT under Section 263: The assessee contended that the order passed by the Pr.CIT under Section 263 was invalid and bad in law due to the lack of reasonable opportunity provided to the appellant for being heard. However, the Tribunal noted that the assessee did not respond to notices issued under Section 263(1) and did not file a return under Section 148 of the Income Tax Act. The Tribunal dismissed the ground raised by the assessee, stating that there was no evidence of the assessee filing an appeal against the assessment order and that the assessee was non-participative before both the AO and Pr.CIT. 2. Erroneous and Prejudicial Nature of the Assessment Order: The Tribunal examined whether the assessment order passed under Section 144 read with Section 147 was erroneous and prejudicial to the interest of the revenue. The AO had added back cash deposits of Rs. 77,10,000/- and Rs. 11,05,000/- without providing a logical explanation for the calculation of Rs. 11,05,000/-. The Pr.CIT proceeded under Section 263(1) due to the non-enquiry and investigation by the AO regarding the cash deposit of Rs. 2.21 Crore. The Tribunal found that the AO's order lacked proper verification, enquiry, and justification, making it erroneous and prejudicial to the interests of the revenue. 3. Adequacy of AO's Inquiries and Verifications: The Tribunal scrutinized the inquiries and verifications conducted by the AO during the assessment process. It was observed that the AO did not conduct necessary inquiries or verification regarding the cash deposits and credits in the assessee's bank accounts. The Tribunal cited several judicial pronouncements, including Malabar Industrial Co. Ltd. v. CIT, Bismillah Trading Co. v. Intelligence Officer, and CIT v. Amitabh Bachchan, to emphasize that an order passed without proper inquiries or verification is erroneous and prejudicial to the interests of the revenue. The Tribunal held that the AO's failure to make necessary inquiries justified the Pr.CIT's exercise of jurisdiction under Section 263. Conclusion: The Tribunal upheld the order of the Pr.CIT, directing the AO to re-verify the entries of cash deposits after giving the assessee a proper opportunity of being heard. The Tribunal found the Pr.CIT's order legally and factually valid, protecting the interests of the revenue while providing the assessee an opportunity to substantiate the source of the cash deposits. Consequently, the appeal filed by the assessee was dismissed. The order was pronounced in the open court on 23rd August 2022.
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