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TMI Blog2021 (12) TMI 979X X X X Extracts X X X X X X X X Extracts X X X X ..... has reached on wrong conclusion to the effect that cash deposit of 11,65,300/- has been reflected in return of income, which is not sustainable in law, hence order passed by the assessing officer is erroneous. AO has made addition of 18,989/-, (vide para 6 of assessment order) being opening balance in bank account no.36612082001, instead of making addition to the tune of 11,65,300/- being cash deposited by the assessee during the assessment year under consideration, thus, assessing officer framed the assessment order with incorrect assumption of facts and without application of mind, therefore, order passed by the assessing officer is prejudicial to the interest of revenue. Just to discuss the issue in the assessment order is not enough, it is to be seen whether assessing officer has applied his mind or not. The order u/s 263 of the IT Act, is valid even if one of the several items dealt with therein is found prejudicial to the interest of revenue. Further, it is also important to mention here that the provisions of Section 263 can be invoked even where full facts are disclosed but the AO has not examined these details as per correct provisions of law. In support of this propositi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee. 4. The main grievance raised by the assessee in this appeal, which is to be adjudicated, is that order of the assessing officer is neither erroneous nor prejudicial to the interest of Revenue, therefore ld. PCIT has wrongly exercised his jurisdiction under section 263 of the Act. 5. Succinct facts are that in this case, the assessee filed his return of income on 29.10.2007, declaring total income to the tune of ₹ 4,65,310/-. The case was re-opened u/s 148 of the Act and the assessment u/s 143(3) was passed on 13.02.2015 determining total income of ₹ 5,17,970/-. The Assessing Officer and the Range head i.e. Jt. CIT, Vapi Range, Vapi have proposed that the assessment order in assessee`s case is erroneous as well prejudicial to the interest of revenue and therefore, the same should be revised u/s 263 of the Act. Therefore, Ld PCIT issued a notice u/s 263 of the Act, dated 23.02.2017, which is reproduced below: "Sub: Notice u/s 263 of the IT Act, 1961 in your case for AY 2007-08-reg. Please refer to above, 2. In this case, the assessee filed his return of income on 29.10.2007 declaring total income of ₹ 4,65,310/-. The case was re-opened u/s 148 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are, therefore, required to show-cause as to why the said assessment order be not revised by invoking the provisions of 263 of IT Act, 1961.The hearing in your case is being fixed on 06.03.2017 at 11.00 AM. Please note that the required details should be submitted after numbering the documents enclosed and indexing the same in the forwarding/covering letter. 6. Please note that the required details should be submitted after numbering the documents enclosed and indexing the same in the forwarding/covering letter. You can attend the hearing either personally or through your duly authorized representative or can file written submissions on or before the stipulated date and time of hearing." 6. In response, assessee submitted that deposits in the said bank account have been earned by him from transport activity and the income from which has already been offered for tax and assessed as per the order dated 13.02.2015. The entire content of assessee's reply is reproduced hereunder: "From:- Shri Bhupendra Manilal Patel, C/o.Rajvi Enterprises, Plot No.297/3 2nd Phase GIDC, Vapi,396195 Sub: Reply to your notice u/s 263 of the IT Act, 1961 for the A.Y 2007-08. Ref:- Your notic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... given by the assessee on 21.03.2017 should also be obtained by the AO for the entire period of life of the said bank account i.e. from the date of opening to date/the date of closure of the account whichever is later and examine whether the deposits made in these two bank accounts have been accounted for in the form of income returned by the assessee for the respective assessment years or not." 8. Therefore in view of the above factual matrix, ld PCIT held that assessment order dated 13.02.2015, u/s 143(3) of the Act, has been passed by the Assessing Officer without making any inquiries whatsoever in respect of the issues as mentioned hereinabove, Therefore, Ld PCIT set aside the assessment order and directed the assessing officer to frame fresh assessment order. 9. Aggrieved by the order of Ld. PCIT, assessee is in appeal before us. 10. Learned Counsel for the assessee submits before us written submission. In the written submission, Learned Counsel contended that assessing officer did sufficient enquiry during reassessment proceedings and assessee submitted required documents and evidence, therefore order passed by the Assessing Officer is neither erroneous nor prejudicial to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f cash and cheque in the saving bank account no.07371000041778 (previously a/c. no.36612082001) maintained with the then Centurian Bank, Vapi and now merged with HDFC Bank. Ans:- After consideration with my Accountant/CA, I have come to the conclusion that the deposits in the said account i.e. a/c. no.07371000041778 (previously a/c. no.36612082001) maintained with the then Centurian Bank, Vapi and now merged with HDFC Bank are out of undisclosed sources of income and hence not disclosed to the department in the returns of income filed so far. The total of the year-wise deposits is as under: Sl. No. F.Y. A.Y. Total deposits (Rs.) 1 2006-07 2007-08 24,16,606/- 2 2007-08 2008-09 29,84,157/- 3 2008-09 2009-10 3,37,986/- 4 2009-10 2010-11 286.37 5 2010-11 2011-12 203.81 6 2011-12 2012-13 53,533.13 7 2012-13 2013-14 42,252.18 8 2013-14 2014-15 2968 9 2014-15 2015-16 22,000 10 2015-16 2016-17 923 Total 58,60,915/- I wish to accept that I want to file returns for all these years and pay the taxes due along with interest as applicable. And it is requested that I may be allowed to file these returns and my ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to further investigate the facts stated in the return when circumstances would make such an inquiry prudent that the word 'erroneous' in the section 263 includes the failure to make such an inquiry becomes erroneous because such an inquiry has not been made and not because there is anything wrong with the order if all the facts stated therein are assumed to be correct. Hence, going by the facts narrated above, the language of the provisions of Section 263 and the interpretation placed on these provisions by the various courts, the order of the AO falls within the category of being an order which is erroneous as well as prejudicial to the interest of the revenue. 17. The same view has also been held by the Hon'ble Supreme Court in the case of Malabar Industrial Company Ltd vs. CIT 243 ITR 83 (SC).The relevant portion of this judgment which supports the contention of ld PCIT is reproduced as under: "An incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being erroneous. In the same category fall orders passed without applying the principles of natural justice or without application of mind." It is worthwhile to mention he ..... X X X X Extracts X X X X X X X X Extracts X X X X
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