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TMI Blog2022 (7) TMI 992X X X X Extracts X X X X X X X X Extracts X X X X ..... the same was added. There is no whisper by the ld. PCIT as to why the explanation accepted by the AO is not acceptable or wrong. In the paper book submitted before us, it has been submitted that AO has issued several notices to the assessee. We note that AO has made comprehensive enquiry regarding various aspects. The observation of ld. PCIT that no enquiry was done by the AO is absolutely not sustainable as a proper enquiry has been done. Moreover, the amendment in this regard is not applicable in this assessment year - observation that AO accepted the reply without further enquiry has no substance as to what further enquiries was required is also not stated by ld. PCIT. There is no mention by ld. PCIT what was wrong in the explanation given by assessee and what more enquiries were required. It is a classic case of ld. PCIT directing for roving enquiries totally unsustainable in law. This is further amplified by the second notice by ld. PCIT dated 02.11.2015 after initial notice on 16.09.2015, which was issued after issue of notice about cash deposit. The said notice has already been reproduced by us hereinabove. Though the said notice is said to be in continuation of earlier n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s called upon to explain the source of cash deposit with supporting evidence. In response thereto, the assessee explained that cash was deposited in the bank out of cash available with him out of withdrawal on earlier date, cash sales from the retail business funds transferred from the OD a/c. For the cash available out of withdrawn amount, the assessee did not elaborate the purpose of the withdrawal further its non-utilization. Further AO noted that mostly cash was deposited in the bank in the round figure. That there are possibilities of revenue leakages. That the assessee was confronted about these facts. That case was discussed with the counsel of the assessee who after discussion surrendered an amount of Rs.3,20,000/- subject to no penal action. Therefore, AO noted that to plug the possible leakage in revenue on a/c of cash deposited in the bank, an addition of Rs.3,20,000/- is hereby made subject to no penalty. 4. Upon the aforesaid Assessment Order, ld. PCIT proceeded to assume jurisdiction u/s 263 of the Act. He noted that the said case was selected in CASS for verifying the source of cash deposits of Rs.43,19,000/-. However, he noted that no question has been asked ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0,000/- (on 27.01.2011),. Rs.3,00,000/- (on 31.01.2011) and Rs.80,000/- (on 10.03.2011) by making cash deposit on the same day, for which, the AO had not raised any question about the source of deposit. 8. The ld. PCIT thereafter referred to another notice issued. He did not mention as to what was in the said notice. However, ld. Counsel of the assessee has submitted a copy of the same in the paper book before us. The same reads as under: This is in continuation to the show cause notice dated 14/1609-2015 vide this office letter F. No. 2385 in respect of the subject cited above in your case. 2. In this regard, you are hereby required to provide information apart from the information sought by this office letter as stated above on the issues mentioned below:- (a) Provide the evidence in support of the sales of Rs. 15,61,000/- admitted during the assessment proceedings. (b) Provide the evidence in support of the purchases made against the sales of Rs. 15,61,000/-. (c) Provide the details of debtors and creditors. (d) Provide the details of account of loan from LIC. (e) Copy of the bank statement of OD account and Saving Bank account of Bank of In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2,50,000/- - 25,00,000/- 19.04.2010 - 14,00,000/- 11,00,000/- 19.04.2010 - 1,00,000/- 10,00,000/- 20.04.2010 1,00,000/- - 11,00,000/- 20.04.2010 - 11,00,000/- 0.00 After considering the submissions filed by you on 26.09.2013 during the assessment proceedings and the comparison of both the accounts mentioned above reveals that there is short balance of Rs. 8,00,000/- on 21.04.2010 which remains unreconciled. Please file your submissions in this regard. (f) You have filed the return of income declaring profit u/s 44AD of the Income-tax Act, 1961, wherein gross receipts of Rs. 15,61,000/- have been claimed during the assessment proceedings as sale proceeds. The OD limit account as well as Saving Bank account transactions reveals that there are frequent deposits and withdrawals in a single day in la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paid interest to bank for availing the OD limit, therefore, interest should have been charged on these advances. Thus, the AO failed to enquire about the interest free advances made by the assessee for business purposes. d) During proceedings u/s 263, the assessee was asked vide show cause notice dated 2.11.2015 to reconcile the short balance of Rs.8,00,000/-as on 21.04.2010. Only submission already filed by the assessee on 26.09.2013 during the assessment proceedings alongwith evidence in support of sales have again been filed. During assessment proceedings, the assessee submitted that Rs.8 Lacs cash deposited in Saving Bank A/c is from withdrawals made from OD A/c. However, there is short / minus balance of Rs.8 Lacs on 21.04.2010, if both the Saving Bank A/c and OD A/c are considered together. Then during 263 proceedings, the assessee changed his stand and submitted that Rs.8 Lacs was met from the sale proceeds of his business. This explanation does not seem true, as out of Rs. 15.60 Lacs sale for 12 months, how can there be sale of Rs.8 Lacs or more in the initial 21 days only. On the so called sale bills quantity or quality of the goods is not mentioned. Further, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nquiry incorrect. She submitted that all enquiries were made by the Assessing Officer as it is evident from para 1 to 3 of the Assessment Order. Hence, she submitted that AO has given a categorical finding in the Assessment Order itself that the source of cash deposited in bank account was duly examined and verified. She, further, submitted that the ld. PCIT is himself observing that AO vide order sheet entry dated 10.04.2013 and 02.05.2013, the assessee was asked for explanation in this regard from the assessee and hence the ld. PCIT observation that no enquiry has been made itself contrary from his observations itself. She submitted that assessee has made all submission before the AO. She submitted following chart that issues raised by the ld. PCIT were already considered by the AO as under: S. No. (as per para 4 of the PCIT order) Issue raised by PCIT Reply already filed before AO a) Cash deposit in the bank account and source thereof Reply dt. 26/09/2013 explaining each and every entry of cash deposit in bank account b) Explanation f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6.2015 is applicable as much as the impugned order u/s 263 was passed on 28.03.2018. He further referred to several case laws. 15. We have gone through the submissions and case laws relied upon. Upon careful consideration, we note that ld. PCIT in order u/s 263 has itself noted that this case was selected for CASS for verifying the source of cash deposit. Thereafter, the ld. PCIT referred to order sheet entry from which AO sought explanation from the assessee regarding cash deposit. Despite noting the above and noting that assessee replied to the same, the ld. PCIT contradicted himself by the observation that no enquiry has been done on this issue and the AO simply accepted the version of the assessee. The above line mentions that firstly there is no enquiry and in the same breath it states that AO simply accepted the version of the assessee. There is no whisper as to what was the version of the assessee which according to ld. PCIT was to be further examined. Hence, it is amply clear that ld. PCIT invoked his jurisdiction u/s 263 without any application of mind. As noted by the ld. PCIT himself enquiries were made by the AO and due replies were given by the assessee. After duly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9. Please furnish details of bank account maintained by you dependent family members. 10. Regarding agriculture income, if any, please furnish full particulars of the agriculture land holding backed by copies of title deeds/Farad/Jamabandhi/Girdwari etc. details of agriculture produce sold, expenses incurred in support of agriculture income 'shown: in the return of income. 17. Similarly, notice dated 06.08.2013 reads as under: In order to complete the assessment proceedings in your case for the A.Y. 2011-12, you are. requested to fomish the following information/documents alongwith the complete books of account i.e. cash book, ledger, sale/purchase bill, vouchers for expenses claimed on the next date of hearing on 20.8.13 at 11.30AM. 1. In the reply filed on dated 02.05.13. You have shown doing business of handloom goods covered u/s 44AF/44AD of the I.T. Act, whereas in the return of income, no such business activities are shown. Only salary interest income has been shown in the- return. Please explain it. 2. Income from business profession has been shown at Rs. 1,25,000/- u/s 44AD of the I.T. Act. Please furnish the basis of such income w.r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... effective from 01.06.2015 and Hon ble Delhi High Court has held that the same is not retrospective. The submission of the ld. CIT DR where he submits that the Explanation-2 to Section 263 is applicable even for A.Y. 2011-12 as ld. PCIT s order was passed on 28.03.2018 has no legal substance. The various case laws cited by the ld. DR for no proper enquiry made by the AO or the AO s order being cryptic or that AO accepted the reply without any further enquiry are not at all applicable on the facts of the present case as already found by us. The observation of ld. PCIT that no enquiry was done by the AO is absolutely not sustainable as a proper enquiry has been done. Moreover, the amendment in this regard is not applicable in this assessment year. Further, the observation that AO accepted the reply without further enquiry has no substance as to what further enquiries was required is also not stated by ld. PCIT. There is no mention by ld. PCIT what was wrong in the explanation given by assessee and what more enquiries were required. It is a classic case of ld. PCIT directing for roving enquiries totally unsustainable in law. This is further amplified by the second notice by ld. PCIT d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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