2023 (4) TMI 883 - AT - Income Tax

Revision u/s 263 by CIT - complete cash deposits in bank account has not been verified during the assessment proceedings - HELD THAT - Admittedly, the case was selected under scrutiny on account of large cash deposits of Rs. 1.91 crores but the AO has not verified the entire cash deposits during the proceedings except the cash deposits in old demonetized currency. Accordingly, we hold that the verification has not been done by the AO during the assessment proceedings with respect to the verification of cash deposits. It is a settled position of law that non-verification of the AO renders the assessment order as erroneous in so far prejudicial to the interest of revenue. In holding so, we draw support and guidance from case of Malabar Industrial Co. Ltd. 2000 (2) TMI 10 - SUPREME COURT - Thus no infirmity in the order framed u/s 263 - Appeal of the assessee is dismissed.

Summary

Issues:
The judgment involves the appeal filed by the Assessee against the order of the Learned Principal Commissioner of Income Tax under section 263 of the Income Tax Act, 1961 for the Assessment Year 2017-18.

Delay in Filing Appeal:
The Assessee filed a condonation petition for a delay of 282 days in filing the appeal, stating that it was inadvertently sent to the Departmental Representative instead of the ITAT office. The delay was condoned by the Tribunal as it was found to be a genuine mistake without any mala-fide intention.

Assessment Order Error:
The Principal Commissioner found the assessment order erroneous due to unverified cash deposits in the Assessee's bank account, which were not considered during the assessment proceedings. The PCIT set aside the assessment order and directed a fresh assessment after proper inquiry and hearing.

Contentions and Decision:
The Assessee argued that the assessment order was not erroneous as the cash deposits were verified during the assessment proceedings. However, the Departmental Representative contended that the large cash deposits were not adequately verified by the Assessing Officer. The Tribunal held that non-verification of significant cash deposits rendered the assessment order erroneous as per legal precedents, and declined to interfere with the decision of the PCIT.

Conclusion:
The Tribunal dismissed the appeal filed by the Assessee, upholding the decision of the Principal Commissioner regarding the erroneous assessment order due to unverified cash deposits. The judgment was pronounced in Ahmedabad on 29/03/2023.