2023 (1) TMI 1117 - AT - Income Tax

Revision u/s 263 - Unexplained cash deposits - as submitted cash deposit made in his savings account was pertaining to cash sales of agricultural products - HELD THAT - From the perusal of the invoices, it is evident that these invoices appear to be mere self-made invoices showing the sale of Mango, chikoo and dry raw coconut. We also find that two invoices issued to the same party on different dates have the same invoice number. This appears to be more than a mere coincidence. Further, apart from the name of the person to whom the assessee alleged to have sold the agricultural products, there is no mention of the address or village/town/city to which that person belongs, even though a huge quantity of aforesaid products has been alleged to have been sold. As regards the reliance placed on 7/12 extracts and land revenue records, we find that the coordinate bench of the Tribunal in Abhijit Subash Gaikwad 2015 (5) TMI 971 - ITAT PUNE held that in absence of fulfilment of fundamental fact that land was used for agriculture, merely mentioning of land as agricultural land in purchase deed or sale deed or even in revenue records cannot establish the case of the assessee that land sold by it was agricultural land. We find that none of the aforesaid aspects have been gone into by the AO while accepting the claim of the assessee that cash deposited is pertaining to cash sales of agricultural products. Apart from the documents, as discussed above, no other evidence has been brought on record by the assessee in support of its claim. Further, it is pertinent to note that the cash deposit of Rs. 15,05,000 was claimed as cash sales of agricultural products only during the reassessment proceedings, and therefore it was all the more important for the AO to have thoroughly examined the fresh claim made by the assessee. Thus, in the present case, it cannot be said that the AO has carried out the enquiry/verification that would have been carried out by a prudent officer. The lack of investigation/enquiry by the AO, particularly when the assessment has been reopened on the very same issue and the information was received in this regard from ITS details (AIR), would render the assessment order amenable to revision under section 263 in the peculiar facts of the present case. Therefore, the assumption of jurisdiction under section 263 of the Act read with Explanation 2 to the said section is upheld. As a result, grounds raised by the assessee for the assessment year 2012 13 are dismissed. As stated earlier, the facts for the assessment year 2015 16 are identical to the assessment year 2012 13 except for variance in figures. Hence, the decision rendered hereinabove for the assessment year 2012 13 shall apply mutatis mutandis to the assessment year 2015-16, and accordingly, the revision order passed by the learned PCIT under section 263 of the Act for the assessment year 2015 16 is upheld. As a result, grounds raised by the assessee for the assessment year 2015 16 are dismissed.

Summary

Issues:
Challenge to order passed under section 263 for assessment years 2012-13 and 2015-16.

Analysis:
1. Grounds for Challenge:
- Assessee disputed invoking section 263 by Principal Commissioner of Income Tax (PCIT) as AO's order was not erroneous or prejudicial to revenue.
- Claimed AO made informed decisions based on available information and jurisdictional pronouncements.
- Alleged PCIT lacked basis for assumption and did not appreciate specific facts regarding agricultural income.
- Contended PCIT erred in assuming jurisdiction under section 263 without proper grounds.

2. Common Grounds in Appeals:
- Both appeals raised similar issues challenging PCIT's jurisdiction under section 263.
- Assessee sought quashing of order passed under section 263 for being unlawful and unwarranted.

3. Factual Background:
- Assessee engaged in share trading and construction businesses.
- Initial assessment revealed unexplained cash deposits in savings account.
- Reassessment initiated under section 147 based on cash deposits.
- AO disallowed part of agricultural income and motor car depreciation.
- PCIT initiated revision proceedings under section 263 due to lack of verification on sources of cash deposit.

4. PCIT's Decision:
- PCIT set aside assessment order as erroneous and prejudicial to revenue.
- Directed AO to conduct thorough verification on sources of cash deposit and agricultural land usage.
- Assessee challenged PCIT's decision in appeals for both assessment years.

5. Court's Analysis:
- Court reviewed invoices and land records provided by assessee.
- Found discrepancies in invoices, raising doubts on authenticity.
- Noted lack of evidence supporting cash deposits as agricultural income.
- Emphasized AO's failure to conduct proper verification despite reopening assessment.
- Upheld PCIT's jurisdiction under section 263 due to lack of adequate inquiry by AO.

6. Decision and Outcome:
- Court dismissed grounds raised by assessee for both assessment years.
- Decision for 2012-13 applied mutatis mutandis to 2015-16.
- Upheld PCIT's revision order for both years, leading to dismissal of appeals.

This detailed analysis highlights the challenges raised by the assessee against the order passed under section 263 for the assessment years 2012-13 and 2015-16, the factual background leading to the revision proceedings, the court's scrutiny of the evidence provided, and the ultimate decision to uphold the PCIT's jurisdiction under section 263 based on the lack of proper verification by the AO.