2022 (6) TMI 523 - AT - Income Tax

Revision u/s 263 - Difference of cash deposited between pre-demonetization period and during demonetization period - difference of opinion - cash actually deposited during demonetization period was not properly examined by the Assessing Officer - HELD THAT - We find that the Hon'ble Delhi High Court in the case of CIT Vs. Anil Kumar 2010 (2) TMI 75 - DELHI HIGH COURT has held that where it was discernible from record that the A.O has applied his mind to the issue in question, the ld. CIT cannot invoke section 263 of the Act merely because he has different opinion.we are of the considered opinion that the assessment order dated 14.12.2019 framed u/s. 143(3) of the Act is neither erroneous nor prejudicial to the interest of the Revenue. Therefore, the assumption of jurisdiction u/s. 263 of the Act by the ld. CIT is bad in law. - Decided in favour of assessee.

Summary

Issues Involved:
1. Assumption of jurisdiction by the PCIT under Section 263 of the Income-tax Act, 1961.
2. Whether the assessment order dated 14.12.2019 was erroneous and prejudicial to the interest of the Revenue.

Issue-wise Detailed Analysis:

1. Assumption of Jurisdiction by the PCIT under Section 263:

The assessee challenged the jurisdiction assumed by the PCIT-10, Delhi under Section 263 of the Income-tax Act, 1961, arguing that the assessment order dated 14.12.2019 framed under Section 143(3) was neither erroneous nor prejudicial to the interest of the Revenue. The counsel for the assessee argued that the Assessing Officer (AO) had raised specific queries regarding the cash deposit after demonetization and had conducted detailed inquiries, for which the assessee provided comprehensive replies with supporting documentary evidence. The PCIT's assumption of jurisdiction was claimed to be bad in law as the AO had duly verified and examined the relevant documents.

2. Erroneous and Prejudicial to the Interest of the Revenue:

The Departmental Representative (DR) supported the PCIT's order, asserting that the assessment order was both erroneous and prejudicial to the interest of the Revenue. The DR argued that merely raising queries does not suffice; the AO must conduct sufficient inquiry.

The tribunal examined the records and found that the AO had indeed raised specific queries via notice dated 02.09.2019 under Section 142(1) of the Act, particularly regarding the cash deposited during the demonetization period. The assessee responded with detailed explanations and documentary evidence. The tribunal noted that the PCIT's observations about the reconciliation of cash entries were factually incorrect, as the AO had raised pertinent queries and received satisfactory responses from the assessee.

The tribunal referred to the Hon'ble Supreme Court's decision in Malabar Industrial Co. Ltd., 243 ITR 83, which stipulates that for the Commissioner to exercise jurisdiction under Section 263, the order must be both erroneous and prejudicial to the Revenue. The tribunal also cited the Hon'ble Delhi High Court's decisions in CIT Vs. Anil Kumar (335 ITR 83) and Vikas Polymer (341 ITR 537), which emphasized that the CIT cannot invoke Section 263 merely because of a different opinion if the AO has applied his mind to the issue.

Further, the tribunal referred to the Hon'ble Bombay High Court's decision in Gabriel India Ltd. (203 ITR 108), which clarified that an order is not erroneous if it is in accordance with the law, even if the Commissioner believes it should have been more elaborate.

Conclusion:

The tribunal concluded that the AO had taken a plausible view after considering various submissions by the assessee. Therefore, the assessment order dated 14.12.2019 was neither erroneous nor prejudicial to the interest of the Revenue. The tribunal held that the PCIT's assumption of jurisdiction under Section 263 was not in accordance with the law and set aside the PCIT's order dated 23.12.2011, restoring the AO's order dated 14.12.2019. The appeal of the assessee was allowed.