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2016 (8) TMI 806 - AT - Income TaxPower of CIT to invoke revision proceedings under section 263 - undisclosed cash deposits - Held that - We notice that the assessing officer has taken up the case of the assessee for scrutiny upon receipt of AIR information about the cash deposits made into the bank account of the assessee as well as the proper purchased by him. Hence the during the course of assessment proceedings the AO has asked specific queries with regard to the above said items. The assessee vide his letter dated 25-11-2011 has furnished his replies. The copy of the reply letter is placed at pages 8 to 12 of the paper book. A perusal of the same would show that the assessee has explained the details and sources for purchase of properties as well as the opening balance of cash. At page 18 of the paper book the assessee has also furnished the personal Capital account and Personal Balance Sheet. We notice that the Personal Balance Sheet discloses a cash balance of 12, 72, 745/- as on 31.3.2008. At page 14 of the paper book the assessee has furnished the Balance Sheet of M/s SPG 20, 262/-. We notice that the Ld CIT has compared the cash balance available in the books of SPG 11.00 lakhs was paid in the immediately preceding year. The assessee has also furnished cash flow statement copies of bank statement of all banks. He has also stated that the payment for purchase of property was given through bank accounts. Thus we notice that the assessee has specifically explained that his share in the property was 50% and has also explained the sources for making investment. Thus we notice that the assessee has given proper explanations to the assessing officer with regard to the impugned queries. The assessing officer has also discussed about the submissions made by the assessee in the assessment order and has accepted the same. Hence the AO did not make any addition with regard to these items. Hence the assessing officer has taken possible view in respect of all the issues and hence the impugned assessment order cannot be termed as erroneous so far as it is prejudicial to the interests of the revenue. Accordingly we set aside the revision order passed by the Ld CIT. - Decided in favour of assessee.
Issues Involved:
1. Validity of the revision order passed by the learned CIT. 2. Verification of opening cash balance. 3. Verification of cash deposits. 4. Verification of the source of investment in immovable property. Detailed Analysis: 1. Validity of the Revision Order Passed by the Learned CIT: The assessee challenged the revision order dated 26.3.2014 passed by the learned CIT-21, Mumbai, relating to A.Y. 2009-10. The CIT revised the assessment order under section 263 of the Act, citing that the assessment order was erroneous and prejudicial to the interests of the revenue. 2. Verification of Opening Cash Balance: The CIT observed discrepancies in the cash balances: the cash balance as on 31.03.2008 was ?20,262, whereas the opening cash balance for the period 01.04.2008 to 31.03.2009 was ?12,72,745. The assessee clarified that the cash balance of ?20,262 pertained to his proprietorship concern SPG & Co., while the ?12,72,745 was his personal cash balance. The assessee provided a detailed explanation and supporting documents, including past income tax returns, to justify the opening cash balance. The AO accepted these explanations during the original assessment. 3. Verification of Cash Deposits: The CIT questioned the verification of cash deposits amounting to ?22,96,337. The assessee explained that these deposits were sourced from the opening cash balance of ?12,72,745 and overlapping transactions between different bank accounts (ICICI Bank, Bank of India, and Janakalyan Sahakari Bank). The AO had reviewed the detailed cash summary and explanations provided by the assessee and found them satisfactory. 4. Verification of the Source of Investment in Immovable Property: The CIT noted the need to verify the source of investment in an immovable property jointly purchased by the assessee and his wife for ?34,68,600. The assessee clarified that his share was ?17,34,300, and his wife, independently assessed for her income, was responsible for her share. The assessee provided evidence, including bank statements, loan details, and the agreement for the property purchase. The AO verified these details and accepted the explanations. Tribunal’s Findings: The Tribunal analyzed the facts and legal principles, referencing the case of Grasim Industries Ltd. v CIT and the Supreme Court's judgment in Malabar Industrial Co. Ltd. v. CIT. It found that the AO had conducted proper inquiries and accepted the explanations provided by the assessee, which were supported by documentary evidence. The Tribunal noted that the CIT had misdirected himself by comparing the cash balances of the business and personal accounts, which are inherently separate. It also highlighted that the AO had raised specific queries, received satisfactory explanations, and verified the relevant documents during the original assessment. The Tribunal concluded that the assessment order could not be termed erroneous or prejudicial to the interests of the revenue, as the AO had taken a plausible view after due verification. Consequently, the Tribunal set aside the revision order passed by the CIT. Conclusion: The appeal filed by the assessee was allowed, and the revision order passed by the learned CIT was set aside. The Tribunal pronounced this order on 20.7.2016.
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