2022 (3) TMI 611 - AT - Income Tax

Revision u/s 263 by CIT - Unexplained bank deposits - As per CIT complete lack of inquiry at the end of the Assessing officer as he had failed to inquire into the source of deposits in bank account - HELD THAT - As gone through the bank statement of the assessee which have been filed in support of the contention that most of the deposits had been made on the same day of withdrawals from the bank account. We find that the contention of the Ld. AR that except for the months of June to August 2010, where there was a gap, most of the deposits found in the bank account were after making the withdrawals on the same day. This leads credence to the contention of the Ld. AR that deposits in the bank were made from the withdrawals from the Post office account and the account with State Bank of India. Of course, there is no bar in depositing or withdrawing the amount unless and until some foul pay has brought on record, which is not the case here. Although the Assessing officer might not have written it in as many sentences and phases about the documents he had verified during the course of assessment proceedings for the purpose of reaching the conclusion that the bank deposits were indeed out of withdrawals from the bank, there is no prescribed format for writing an assessment order and a perusal of the assessment order would show that the Assessing officer has duly mentioned that the required documents were examined and that the daughter of the assessee M/s. Renu Sahni has explained that the Time Deposits made by her father were from renewal of FDRs already made from the retirement benefits. So, in our considered opinion, the Assessing officer did conduct proper inquires, as warranted on the facts of this case, and we do not agree with the contention of the Ld. CIT DR that there was any lack of inquiry by the Assessing officer. PCIT, without making further inquiry on his own account, has simply stated in the impugned order that the Assessing officer was required to make more inquiries. PCIT has not pointed out as to what further inquiry was the Assessing officer required to make and as to how without those inquires the order of the Assessing officer was erroneous in so far as prejudicial to the interest of the Revenue. Thus exercise of revisional jurisdiction by the Ld. PCIT is without any justification. - Decided in favour of assessee.

Summary

Issues:
1. Revisionary powers under section 263 of the Income Tax Act.
2. Condonation of delay in filing appeal.
3. Lack of inquiry by the Assessing officer.
4. Invocation of Explanation 2 to section 263 of the Act.

Revisionary Powers under Section 263:
The appeal was filed against an order passed by the Ld. Principal Commissioner of Income Tax (Appeals) for the assessment year 2011-12. The Ld. PCIT had canceled the assessment and directed a fresh order, leading to the assessee challenging this action. The Ld. AR argued that the assessment proceedings were conducted appropriately, and the returned income was accepted after due examination. The Ld. CIT DR, on the other hand, emphasized the lack of inquiry by the Assessing officer and supported the revision proceedings. The Tribunal analyzed the facts, including the source of deposits and withdrawals, and concluded that the Assessing officer had conducted proper inquiries, contrary to the CIT DR's claims. The Tribunal referred to legal precedents highlighting the distinction between 'lack of inquiry' and 'inadequate inquiry,' emphasizing that the Commissioner cannot pass orders solely based on a different opinion.

Condonation of Delay:
The delay of 147 days in filing the appeal was attributed to the serious illness and subsequent demise of the assessee's wife, coupled with COVID-19 lockdowns and the advanced age of the assessee. The Tribunal, after considering the circumstances, condoned the delay and admitted the appeal for hearing, noting that the delay did not benefit the assessee and was due to valid reasons beyond their control.

Lack of Inquiry by the Assessing Officer:
The Ld. CIT DR argued that there was a lack of inquiry by the Assessing officer regarding the source of deposits. However, the Tribunal found that most deposits were made on the same day as withdrawals, supporting the contention that the funds were legitimately used for fresh Fixed Deposits. The Tribunal highlighted that the Assessing officer had examined the necessary documents and accepted the explanation provided by the assessee's daughter. Legal precedents were cited to emphasize that the order of the Assessing officer cannot be considered erroneous solely based on a different opinion by the Commissioner.

Invocation of Explanation 2 to Section 263:
The Tribunal addressed the invocation of Explanation 2 to section 263 of the Act, emphasizing that the Commissioner must conduct an inquiry to establish the erroneous nature of the assessment order. Legal precedents were cited to support the view that the Commissioner must show inadequacy in the Assessing officer's inquiry before passing revisionary orders. The Tribunal concluded that the revisional jurisdiction exercised by the Ld. PCIT lacked justification as it attempted to reassess evidence under the guise of revisional jurisdiction, ultimately setting aside the order passed under section 263 and allowing the appeal of the assessee.

In conclusion, the Tribunal allowed the appeal of the assessee, emphasizing the importance of proper inquiries, adherence to legal precedents, and the necessity for the Commissioner to establish inadequacy in the Assessing officer's inquiry before passing revisionary orders.