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2023 (6) TMI 613 - AT - Income TaxRevision u/s 263 - unexplained cash deposited during demonetization - as argued reasons for initiating the complete scrutiny under Computer Aided Scrutiny Selection ( CASS ) by AO was Large Cash Deposits during Demonetization - HELD THAT - The assessee filed details of notes for different denomination giving details as required by the AO - The entire cash deposits into Axis Bank account were directly made by the Debtors of the assessee and the details of cash deposits from 11 parties were furnished before the AO. We also note that the assessee has explained the questionnaire issued by the AO. After the reply of the assessee dated 28.12.2019, the AO did not ask further questions which clearly shows that the AO was satisfied with the reply submitted by the assessee and passed the assessment order. AO is an investigation officer and thereafter he is an adjudicating officer. We note from the paper books filed by the assessee that the AO has issued notice u/s. 142(1) for investigating the matter which were subject matter of issues selected for scrutiny under CASS and from the submissions by the assessee, the AO was satisfied. When the AO has formed one possible view, then the ld. Pr. CIT cannot exercise jurisdiction u/s. 263 of the Act. The order passed by the AO is not erroneous prejudicial to the interests of the revenue. CIT is not correct in observing that the A.O. did not conduct proper enquiry on the issues before completion of assessment. Decided in favour of assessee.
Issues Involved:
1. Condonation of delay in filing the appeal. 2. Validity of the Principal Commissioner of Income Tax (Pr.CIT) assuming jurisdiction under section 263 of the Income Tax Act, 1961. 3. Examination of cash deposits during demonetization. 4. Application of Section 68 of the Income Tax Act, 1961. 5. Adequacy of the Assessing Officer's (AO) inquiries and the assessment order's validity. Condonation of Delay: The assessee filed an appeal with a delay of 286 days, attributing the delay to an oversight by the accountant who missed the email notification of the order under section 263. The Tribunal, referencing the Supreme Court judgment in Collector, Land Acquisition vs. Mst. Katiji & Ors., found sufficient and reasonable cause for the delay and condoned it. Validity of Pr.CIT's Jurisdiction under Section 263: The assessee contested the Pr.CIT's jurisdiction under section 263, arguing that the scrutiny was initiated under CASS for "Large Cash Deposits during Demonetization" and that the AO had thoroughly examined all necessary information. The Tribunal noted that the AO had issued notices and received replies, indicating that proper inquiries were made. It was held that the Pr.CIT cannot substitute his judgment for that of the AO if the AO has taken a plausible view. Examination of Cash Deposits During Demonetization: The AO had scrutinized the details of cash deposits during demonetization, including the identity and transactions of the trade debtors who deposited the cash. The Tribunal found that the AO had conducted necessary inquiries and verified the transactions, concluding that the deposits were genuine and not unexplained. Application of Section 68: The Pr.CIT alleged that the AO failed to add the cash deposits as unexplained cash credits under section 68. The Tribunal held that the AO had verified the identity, creditworthiness, and genuineness of the transactions, and thus, the application of section 68 was not warranted. The Tribunal emphasized that the AO's view was plausible and should not be overridden by the Pr.CIT. Adequacy of AO's Inquiries and Assessment Order Validity: The Tribunal observed that the AO had issued detailed questionnaires and received comprehensive replies from the assessee. The AO's decision not to make further disallowances was based on satisfactory explanations provided by the assessee. The Tribunal concluded that the AO's assessment was neither erroneous nor prejudicial to the interests of the revenue, and thus, the Pr.CIT's order under section 263 was set aside. Conclusion: The Tribunal allowed the appeal, setting aside the Pr.CIT's order and affirming the AO's assessment. The judgment emphasized the importance of proper inquiries and the AO's discretion in forming a plausible view during assessments.
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