2023 (12) TMI 698 - AT - Income Tax

Revision u/s 263 - unexplained cash deposit - original assessment order passed u/s. 144 challenged - HELD THAT - A perusal of the order of the ld. Pr.CIT shows that the ld. Pr.CIT in his order has categorically mentioned that he has restored the matter to the AO to have a second look at the issue and draw appropriate conclusions. The requirement under the provisions of Section 263 of the Act is prejudicial and erroneous order . The ld. Pr.CIT has not shown how the original assessment order passed u/s. 144 of the Act was erroneous or prejudicial to the interest of revenue for the purpose of relooking at the issue. Therefore, the provisions of Section 263 of the Act cannot be invoked. Consequently, the order u/s. 263 of the Act passed by the ld. Pr.CIT stands quashed. Appeal of the assessee is allowed.

Summary

Issues Involved:
1. Condonation of delay in filing the appeal.
2. Merits of the assessment order u/s 144 and subsequent order u/s 263.

Condonation of Delay:
The appeal filed by the assessee was delayed by 199 days due to the medical treatment of the assessee's father and wife. The assessee, being a trader in a remote area, was not well-versed in taxation issues. The necessary affidavit for condonation was filed, and no serious objection was raised by the CIT-DR. Consequently, the delay was condoned, and the appeal was disposed of on merits.

Merits of the Assessment Order u/s 144 and Subsequent Order u/s 263:
The original assessment order was completed u/s 144 on 30.12.2019, estimating the income at 8% of the cash deposited in the assessee's bank account. The assessee had opted for the Vivad Se Vishwas Scheme, 2020, and Form No. 5 was issued on 29.11.2021. However, a show-cause notice u/s 263 was issued on 25.01.2022, and an order u/s 263 was passed on 18.03.2022. The Pr.CIT directed a re-examination of the cash deposits and the corresponding business transactions.

The Pr.CIT noted discrepancies in the cash deposits and the declared sales and purchases. The actual cash deposit was Rs. 1,47,72,650/-, not Rs. 2,95,45,300/-. The Pr.CIT did not find anything specifically wrong with the AO's findings but restored the issue to the AO for a second look, which was deemed impermissible under Section 263.

The Tribunal concluded that the Pr.CIT had not demonstrated how the original assessment order was erroneous or prejudicial to the interest of revenue, thus invalidating the invocation of Section 263. Consequently, the order u/s 263 was quashed.

Conclusion:
The appeal of the assessee was allowed, and the order u/s 263 passed by the Pr.CIT was quashed.

Order Pronounced:
The order was dictated and pronounced in the open court on 09/10/2023.