2023 (2) TMI 505 - AT - Income Tax

Revision u/s 263 - cash deposits and sources of properties purchased/sold and working of capital gain in respect of properties sold - case was selected under Computer Aided Scrutiny Selection (CASS) for Limited scrutiny for the reason Large Cash deposits in bank account and the assessee has also purchased / sold one or more properties during the year - HELD THAT - AO as per the limited scrutiny inquired every detail and evidences before the AO. He had examined them and had then passed the assessment order u/s.143(3) of the Act. There is no error committed by the AO either on fact or on law. When such is the position, the assessment cannot be held to be erroneous so as to be prejudicial to the interest of the Revenue. PCIT, on the other hand, has not brought out any satisfaction in his order as to why the assessment order should be held erroneous so as to be prejudicial to the interest of the Revenue. This is so because the PCIT has not given any finding regarding the detailed inquiry already completed by the AO which is evident in the assessment order itself. Without giving such finding regarding the entire evidences furnished by the assessee, vis- -vis the sources of income of the assessee, merely pointing out some discrepancies which is also not coming out from the admitted facts of the case, is nothing but an action that the ld. PCIT resorted to passing order u/s.263 only for the purposes of roving enquiry not permissible within the Act. We are of the considered view that the order passed by the ld. PCIT u/s.263 is misplaced in the present facts of this case. It is not a fit case for assumption of revisionary jurisdiction and passing order u/s.263 of the Act which is held to be devoid of any merits. The order of the ld. PCIT is setaside and the appeal of the assessee is allowed.

Summary

Issues:
Assumption of revisionary jurisdiction and passing order u/s.263 of the Income-tax Act, 1961.

Analysis:
The appeal arose from the order of the Principal Commissioner of Income Tax-4, Pune, under section 263 of the Income-tax Act, 1961, for the assessment year 2016-17. The sole grievance of the assessee was the assumption of revisionary jurisdiction and passing order u/s.263 of the Act. The case involved the assessment of the assessee's income, which was declared as Rs.80,000, with scrutiny focusing on large cash deposits and property transactions. The assessee, a farmer with agricultural income, provided detailed explanations and evidence to the Assessing Officer (AO) during the assessment proceedings. The AO accepted the return of income filed by the assessee. However, the Principal Commissioner of Income-tax (PCIT) found discrepancies in the cash deposits, property purchase, and claimed agricultural income, leading to the order u/s.263.

During the hearing, the assessee's representative argued that the assessment order was not erroneous and did not prejudice revenue. The Departmental Representative supported the PCIT's order u/s.263. The Tribunal analyzed the facts and contentions. The assessee's income sources, cash deposits, and property transactions were thoroughly examined during limited scrutiny. The AO verified the details provided by the assessee and passed the assessment order u/s.143(3). The Tribunal emphasized that the PCIT's order lacked justification and was akin to a roving enquiry beyond the scope of section 263. Referring to legal precedents, the Tribunal highlighted that for section 263 to apply, the order must be both erroneous and prejudicial to revenue. In this case, the AO's inquiry was comprehensive, and no errors were found, rendering the PCIT's order baseless.

Ultimately, the Tribunal set aside the PCIT's order u/s.263, ruling in favor of the assessee. The Tribunal emphasized the need for finality in legal proceedings and rejected the PCIT's action as a purposeless roving enquiry. The order was pronounced in favor of the assessee on 23rd December, 2022.