2023 (9) TMI 831 - AT - Income Tax

Revision u/s 263 - source of cash deposited in the Bank account - undisclosed interest on savings/deposits - appellant s case was reopened after recording reasons and obtaining necessary approval from PCIT that the assessee had deposited cash in her savings bank account maintained with the Oriental Bank of Commerce during the financial year 2010-11 and that no return had been filed for the year under consideration u/s 139(1) - HELD THAT - In the present case, all the facts have been independently verified by the Ld. AO. Thus, there appears to be merely a change of the opinion of the Ld. Pr. CIT in observing that there was incorrect application of mind by the AO by not carrying proper enquiry in the case of the assessee, and thus, a Show-Cause Notice was issued u/s. 263 to the assessee on account of difference of opinion is bad in law. There is a direct nexus between the transaction of sale and the cash deposited in the bank account of the assessee as the transaction of sale of land is registered on 26.04.2010 and the cash was also deposited by the assessee on the same date. AO has accepted the deal of sale of agriculture land with a conscious and independent application of mind. Under the facts and circumstances, we hold that the application of provision of section 263 of the Act, on account of difference in opinion of Pr. CIT is invalid and unwarranted. The impugned order u/s. 263 of the Act is quashed. Decided in favour of assessee.

Summary

Issues Involved:
1. Validity of the revisionary order under section 263 of the Income Tax Act.
2. Examination and inquiry by the Assessing Officer (AO) during the assessment proceedings.
3. Difference of opinion between the AO and the Principal Commissioner of Income Tax (Pr. CIT).

Summary:

Issue 1: Validity of the Revisionary Order under Section 263 of the Income Tax Act

The assessee challenged the revisionary order under section 263 of the Income Tax Act, arguing that the assessment was not erroneous and that the view taken by the Pr. CIT was merely one of the possible views, which is insufficient for assuming jurisdiction under section 263. The Pr. CIT had issued a show-cause notice based on observations that the assessment was prejudicial to the interests of the revenue due to lack of proper inquiries by the AO.

Issue 2: Examination and Inquiry by the Assessing Officer (AO) During the Assessment Proceedings

The AO had completed the assessment under section 143(3) read with section 147, adding Rs. 1,75,322 to the returned income. The case was reopened because the assessee had deposited Rs. 60,00,000 in cash in her bank account and had not filed a return for the relevant year. During the reassessment, the AO verified the details, including the sale deed of agricultural land and statements from the assessee's husband. The AO concluded that the cash deposits were from the sale proceeds of the land, thus accepting the assessee's explanation.

Issue 3: Difference of Opinion Between the AO and the Principal Commissioner of Income Tax (Pr. CIT)

The Pr. CIT argued that the AO failed to make proper inquiries, which rendered the assessment erroneous and prejudicial to the revenue. However, the assessee contended that the AO had conducted adequate inquiries and had taken a possible view. The Tribunal noted that the AO had verified all relevant documents and consciously accepted the assessee's explanation. The Tribunal cited several judgments, including those of the ITAT and the Supreme Court, to support the view that a difference of opinion does not justify revision under section 263.

Conclusion:

The Tribunal found that the AO had made adequate inquiries and had taken a possible view based on the available evidence. The Pr. CIT's revisionary proceedings were based on a difference of opinion, which is not a valid ground for invoking section 263. Therefore, the Tribunal quashed the revisionary order under section 263, holding it to be bad in law, and allowed the appeal of the assessee.