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TMI Blog2017 (2) TMI 443X X X X Extracts X X X X X X X X Extracts X X X X ..... er passed u/s 263 of the Act. - Decided against assessee - ITA no. 2500/Del/2014 - - - Dated:- 11-11-2016 - SHRI S.V. MEHROTRA : ACCOUNTANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA: JUDICIAL MEMBER For The Appellant : Shri Salil Agarwal Adv. and Shri Shailesh Gupta CA For The Respondent : Shri Ravi Jain CIT(DR). ORDER PER S.V. MEHROTRA, A.M: This is an appeal filed by the department against the order dated 26.03.2014 passed by the Commissioner of Income-tax, Delhi-XI, New Delhi, u/s 263 of the Income-tax Act, 1961, relating to A.Y. 2007-08. 2. Brief facts culminating to the proceedings u/s 263 are that in this case original assessment order was passed u/s 144 of the Income-tax Act dated 18.12.2009 contained at pages 13 14 of the PB. As against the returned income of ₹ 1,11,998/-, the assessment was completed at a total income of ₹ 14,11,848/- after making addition of ₹ 12,99,850/- u/s 68 of the Income-tax Act. The total cash of ₹ 10,99,850/- deposited by the assessee in his saving bank account, maintained with Centurion Bank of Punjab Ltd., East Patel Nagar Market, New Delhi, during the period relevant to assessment year under c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... behalf of the assessee, though relied upon number of judgments, did not even attempt to correlate the deposits in cash in the bank account of the assessee with his business receipts. The onus is upon the assessee to establish that the cash deposited in the bank originated from his turnover of the business . In view of the above referred observations of the Appellate authorities, you are hereby given an opportunity to furnish and produce the following:- 1. Produce sale bills to verify the correctness of sales disclosed for asstt. and verify its nexus with cash deposited in bank a/c. 2. Detailed note 'as to your business activity in past 2 years and subsequent 2 years. Whether facts similar, bank a/c same. If yes, furnish copy of computation, return and bank details. 3. Narration and documentary evidence for credits other than those not taken as business receipts by you, failing which why these may not be treated as unexplained cash deposits as per section 68 of the IT Act. 4. Produce cash book to verify as to whether the entire cash sales were deposited in bank a/c and nothing remained to be deposited. 5. Documentary evidence with name and add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, inter-alia, if there was non-application of mind. He submitted that in the present case two replies were filed, as noted earlier, by the assessee before AO and, after considering them, the AO passed order u/s 143(3)/254. He pointed out that as against the declared income of ₹ 1,11,998/-, the assessee accepted the income at ₹ 1,70,153/-. Ld. counsel further referred to the decision of Hon ble Delhi High Court in the case of ITO Vs. D.G. Housing Projects Ltd. 343 ITR 329 (Del.), wherein it has been held that without recording the findings that the assessment order was erroneous and prejudicial to the interest of revenue, revision of order could not be allowed. He submitted that no query had been raised by Commissioner on the detailed replies filed before him and, therefore, ld. CIT s order was contrary to the law laid down by Hon ble Delhi High Court in the case of D.G. Housing Projects Ltd. (supra). 5. Ld. counsel referred to the decision in the case of Director of Income Tax vs. Jyoti Foundation, 357 ITR 388 and submitted that ld. Commissioner could not merely set aside the matter to AO without recording finding. He submitted that ld. Commissioner has recorded a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure of transactions in the aid account and thereafter pass appropriate orders in accordance with law. The assessee is also directed to place his best evidence before the AO so that matter could be disposed of expeditiously. In the event the assessee does not avail the opportunity provided by the AO or does not establish nexus of his business receipts with the cash deposited in the aforesaid bank account, the addition shall stand confirmed. With these directions, ground nos. 2,4(b) and the remaining portion of ground no. 5 are disposed of. 11. He submitted that assessee offered some additional income which was accepted by AO without carrying out the directions of ITAT. He referred to the assessment order and pointed out that the order is very cryptic. He referred to page 64 of PB, wherein the show cause notice of ld. Commissioner is contained and pointed out that ld. Commissioner primarily issued this notice, because assessee failed to establish nexus of business receipts with the cash deposit in the bank account as was specifically directed by ITAT to be established. He submitted that the observations of ld. Commissioner as regards wholeseller was not material for deciding whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ust be some prima facie materials on record to show that the tax which was offered by the assessee was lawfully excisable on the assessee and, therefore, it was accepted by the AO without any change or alteration . 12. Ld. DR further referred to para 17 of the order of ITAT Delhi Bench F in the case of PVS Multiplex (India) Ltd. in ITA no. 2370/Del/2013 dated 14.8.2015, as reproduced below: In view of above, if we analyse facts and circumstances of the present case, wherein the Assessing Officer conduct the assessment proceeding and passed impugned assessment order accepting the return of income of the assessee we clearly observe that the Assessing Officer has not made inquiry on the issue of interest free advances and proportionate disallowance of interest thereon, on the issue of verification on TDS and on the claim and calculation of the assessee for the purpose of deduction u/s 80IB(7A) of the Act specially on the issue of exclusion of income/receipt on sale of shop and FDR interest. In this situation, we have no hesitation to hold that the order of the AO which is apparently very precise and cryptic, was not passed after due examination and verification of certain o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s only to the interpretation which limits the ratio of the judgment by relying only one sentence in isolation divorced from the entire judgment. An incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being 'erroneous' non-application of mind and omission to follow natural justice is in same category . 15. With reference to this decision ld. DR pointed out that if AO failed to carry out proper scrutiny of facts then order becomes erroneous. 16. Ld. DR further submitted that it is not clear whether reply dated 9.9.2013 was filed by assessee before AO or not because this reply has not at all been referred to by AO in the impugned order. AO has referred to reply dated 4.10.2013 wherein, by referring to para 3, the AO observed that assessee submitted that in order to buy peace and avoid litigation, the assessee agreed for assessment of business income at ₹ 1,70,150/- as against the declared income of ₹ 1,25,250/-. 17. Ld. counsel in his rejoinder submitted that ld. Commissioner cannot direct how AO should write the order. He further pointed out that view taken by AO was plausible view. He further pointe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice u/s 143(2) was issued. He further observed that AR of the assessee had furnished details called for. However, he has not given any specific finding on this issue, with reference to the details filed by assessee. 20. Ld. counsel has pointed out that in the show cause notice, reproduced earlier, the AO had clearly given notice in consonance with the directions issued by Tribunal. Therefore, the assessment order has to be read along with the AO s notice and replies filed by assessee in which assessee gave all the details regarding sale bills etc.. However, this has to be considered in the light of directions of Tribunal which AO had to specifically carry out. He was required to record specific finding qua the directions of Tribunal. There is no finding in the assessment order in respect of Tribunal s directions. 21. Ld. DR has expressed his reservations about the reply dated 9.9.2013 contained from pages 76 to 79 because this reply does not find mention in the assessment order. However, there is no dispute that the reply dated 4.10.2013 contained at pages 60-61 of PB has been taken note by the AO in his order. In this reply in para 2 it was stated as under: The asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s relied on the decision in the case of D. G. Housing Projects Ltd. (supra). In this case, it was, inter-alia , held that lack of enquiry by itself renders the order erroneous and prejudicial to the interests of Revenue. A distinction was drawn between the cases of lack of enquiry and cases when the AO conducts an enquiry but the finding recorded is erroneous and which is also prejudicial to the interests of Revenue. In the present case, since AO has not recorded any specific finding on the directions of Tribunal, therefore, this case falls in the first category of lacks of enquiry. We, therefore, are of the opinion, that this decision is of little assistance to assessee. 23. Ld. counsel also relied on the decision of Hon ble Delhi High Court in the case of CIT vs. DLF Ltd., 350 ITR 555 for the proposition that error of AO should be unsustainable and if the assessment order is otherwise sustainable in law then it cannot be held to be erroneous. We are of the opinion that this decision also is of little assistance to assessee because the observations were made in the context of the facts that AO issued notice and held proceedings on several dates before assessment. The AO had ..... X X X X Extracts X X X X X X X X Extracts X X X X
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