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TMI Blog2023 (3) TMI 1108X X X X Extracts X X X X X X X X Extracts X X X X ..... e allowed. - I.T. A. No. 66/Asr/2022 And I.T. A. No. 67/Asr/2022 And I.T. A. No. 68/Asr/2022 - - - Dated:- 22-3-2023 - Dr. M. L. Meena, Accountant Member And Sh. Anikesh Banerjee, Judicial Member For the Appellant : Sh. Surinder Mahajan, CA For the Respondent : Smt. Balwinder Kaur, CIT-DR ORDER PER DR. M. L. MEENA, AM: These appeals have been filed by the assessees against the order passed u/s 263 of the Ld. Pr. Commissioner of Income Tax, Jalandhar-1. 2. The assessee has raised the following similar grounds of appeal in ITA No. 66/Asr/2022: 1. That Learned Pr. Commissioner of Income Tax-1, Jalandhar has grossly erred in holding that assessment order passed by the Assessing Officer ( AO ) was erroneous and prejudicial to the interest of revenue. Action of the Pr. Commissioner of Income Tax-1, Jalandhar in invoking provisions of clause (a) Explanation 2 sub-section (1) of section 263 of the Act is illegal bad in law. 2. That on the facts and circumstances of the case, Learned Pr. Commissioner of Income Tax-1, Jalandhar has grossly erred in law in holding that Assessing Officer had no material on record to accept the explanation that Rs. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of Income Tax was a nullity in the eyes of law and had no existence since assessee was never provided copy of reasons recorded to initiate proceedings u/s 147 of the Act in spite of specific request by the assessee to provide copy of reasons recorded. Non-providing of copies of reasons recorded inspite of specific request has resulted the assessment proceedings void ab-initio and consequent assessment framed no-nest. 5. That the appellant requests for leave to add or amend the grounds of appeal before the appeal is heard or disposed off. 4. Grounds of appeal in ITA No. 68/Asr/2022 1. That Learned Pr. Commissioner of Income Tax, Jalandhar-1 ( Ld. CIT ) has grossly erred in holding that assessment order passed by the Assessing Officer ( AO ) was erroneous and prejudicial to the interest of revenue. Action of the Learned Pr. Commissioner of Income Tax, Jalandhar-1 ( Ld. CIT ) in invoking provisions of section 263 of the Act is illegal bad in law. 2. That on the facts and circumstances of the case, Learned Pr. Commissioner of Income Tax-1, Jalandhar has grossly erred in holding that assessment has been framed without carrying out any enquiry at all on the issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad case for adjudication. The Ld. PCIT held the assessment order passed by the Assessing Officer is held to be erroneous in so far as it is prejudicial to the interests of revenue in terms of the provisions of clause (a) of Explanation 2 below sub section (1) of section 263 of the I.T. Act, 1961 by observing as under: (iii) As a follow up to the declaration of demonetization, CBDT issued Instruction No 3of 2017 dated 21.2.2017 laying down SOP for verification of cash transactions relating to demonetization . Annexure to F.No.225/100/2017/ITA-11 titled Source Specific General Verification Guidelines directed that in case of taxpayers (other than minors) not having any business income, no further verification was required to be made if total cash deposit is up to Rs. 2.5 lakh. The source of such amount could be household savings/ savings from past income or amounts claimed to have been received from any of the sources mentioned in Paras 2 to 6 of the annexure. [Paras 2 to 6 were for Cash out of receipts exempt from tax, Cash withdrawn from bank, Cash received from identifiable persons with PAN, Cash received from identifiable persons without PAN, and Cash received from unident ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 20,00,000/-, including Rs 17,50,000/- declared by the assessee in the return of income, was required to be taxed u/s 115BBE of the income Tax Act 1961, as substituted wef 1.4.2017. As per the substituted clause (a) of sub section (1) of section 115BBE, tax at special rate as provided in section 115 BBE is to be charged on total income as referred to in Sections 68, 69, 69A, 69B, 69C or 69D and reflected in the return of income furnished under section 139. Hence, tax on this income was to be charged under section 115BBE even if it had been declared by the assessee in the return of income. Income has been erroneously taxed at lower tax rate in this case causing prejudice to revenue. 4. In view of the above facts and discussion, the assessment order passed by the Assessing Officer is held to be erroneous in so far as it is prejudicial to the interests of revenue in terms of the provisions of clause (a) of Explanation 2 below sub section (1) of section 263 of the I.T. Act, 1961. 8. The Ld. Counsel submitted that the proceedings u/s 263 of the Act have been initiated on the basis of audit objection raised by Income Tax Officer (Audit) vide his audit memo dated 27.08.2021 to wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addressed to Pr. CIT-1, Jalandhar offered his comments on the audit objection and concluded that audit objection raised by Income Tax Officer (Audit) is not acceptable (Page 40-42 of paper book). Assessing Officer vide letter dated 17.12.2021 addressed to Addl. C1T Range-IV, Jalandhar offered his comments on internal audit objection in the case of Harneet Kaur Junejaand concluded that audit objection raised by Income Tax Officer (Audit) is not acceptable (Page 43-46 of paper book). 4. That show cause notice u/s 263 of the Act dated 11.02.2022 was issued by the Pr. C1T, Jalandhar, copy enclosed herewith at page no. 6-8 wherein assessee was asked that assessment framed u/s 143(3) of the Act is erroneous and prejudicial to interest of revenue since assessment has been framed by the Assessing Officer without carrying out the necessary enquiries and verifications. Reply to the show cause notice was filed (Page 47-59 of paper book). Pr. CIT, Jalandhar has set aside the assessment framed to the file of the Assessing Officer to pass fresh order. Our Submissions Additional ground of appeal no. 1 1. That Income Tax Officer Audit, Jalandhar vide his orders d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SR/2020 (Page 63-76 of case laws index) Additional ground of appeal no. 2 1. That Ld. Principal Commissioner of Income Tax-1, Jalandhar passed order u/s 263 of the Act wherein Ld. Principal Commissioner of Income Tax-1, Jalandhar at para 5 page 4 of the order has observed as under:- The assessment order dated 21.12.2019 is set aside to this extent to the fde of the Assessing Officer to pass fresh order after making necessary enquiries/investigations in the light of the discussion made above and after giving due opportunity to the assessee of being heard. 2. That from the observations of the Ld. Principal Commissioner of Income Tax-1, Jalandhar, it will be observed that there is no specific direction by the Ld. Principal Commissioner of Income Tax-1, Jalandhar. No decision about the erroneous nature of the order has been taken by Ld. Principal Commissioner of Income Tax-1, Jalandhar which is not permitted under the law. Once Commissioner of Income Tax concludes that order passed by the Assessing Officer is erroneous he has to give a categorical finding with regard to error in the order of the Assessing Officer while passing order u/s 263 of the Act. CIT ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 17 SOT 0602 d) M/S SU-RAJ DIAMOND DEALERS PVT. LTD vs. PRINCIPAL COMMISSIONER OF INCOME-TAX IN THE ITAT MUMBAI BENCH G (2020) 203 TTJ 0137 (Mumbai) e) MRS. SONALI HEMANT BHAVSAR VS. PR. CIT-29 [ITA NO. 742/MUM/2019, DATED 17.05.2019 (MUMBAI)] f) SANJEEV KR. KHEMKA VS. PR. CIT-15, KOLKATA [ITA NO. 1361/KOL/2016 (KOLKATA)] Ground of anneal no. 1 to 5 1. That words erroneous and prejudicial to the interest of revenue have not been defined in the law. An order cannot be termed as erroneous unless it is not in accordance with law. If an Income-tax Officer acting in accordance with law make certain assessment, the same cannot be branded as erroneous simply because, the order should have been written more elaborately. Case may be visualized where the Income-tax Officer while making an assessment examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and determines the income either by accepting the accounts or by making some estimates himself. On perusal of the records one may be of the opinion that the estimate made by the officer concerned was on the lower side and left to the Commissioner he would have est ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT IT AT AMRITSAR BENCH, AMRITSAR, IT A NO. 219 672/ASR/2015 I) RAMAN LAKHA VS. ITO WARD-2, HOSHIARPURITA NO. 324/ASR/2016 3. That in para (vii) page 3 order Ld Pr. CIT-1, Jalandhar has observed as under: It was only because the assessee did not have any evidence to substantiate her explanation that Rs 17,50,000/- was offered by her to tax as Miscellaneous income of Rs. 17,50,000/- of the current Asst, year (cash deposited in excess of Rs. 2,50,000/-). The explanation offered by the assessee was not substantiated in any manner by the assessee as is required under the provisions of section 68 of the Act. The AO had no material on record to accept the explanation that Rs 20,00,000/- was not unexplained cash credit as the primary onus cast upon the assessee u/s 68 of the Act had not been discharged by her. Ld. Pr. CIT-1, Jalandhar while passing order u/s 263 of the Act is of the opinion that onus cast on the assessee u/s 68 of the Act has not been discharged by her. It is submitted that provisions of section 68 of the Act are not attracted on cash deposits in saving bank account with banks. These observations of Ld. Pr. CIT- 1, Jalandharitself makes the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2021 wherein Assessing Officer explained in detail that objection raised is not acceptable and hence, the subject proceedings u/s 263 of the Act, cannot be initiated on the basis of the same audit objection, and hence, it is bad in law. In support, he placed reliance on the judgement of the Hon ble HIGH COURT OF PUNJAB AND HARYANA in the case of COMMISSIONER OF INCOME TAX vs. SOHANA WOOLLEN MILLS , (2008) 296 ITR 0238 (Page 1-4) 11. It is further noticed that the case of the assessee was selected for limited scrutiny under CASS with the reason large value cash deposited during demonetization period as compared to returned income. The AO during the course of the assessment proceedings, issued various notices wherein he raised queries towards large value cash deposited during demonetization period. The appellant assesse file replies to queries raised and The AO being satisfied with the replies of the assesse passed the assessment at returned income. It is settled law that the AO was not authorized to travel beyond issues in the limited scrutiny and Accordingly, the proceedings u/s 263 of the Act, cannot be initiated by the PCIT, in the case of limited scrutiny under CASS when th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15. On similar facts, the coordinate Bench has allowed the appeal in I.T.A. No.75/Asr/2022 vide order dated 15/9/2022 in the case of Leela Gupta vs PCIT-1 , Jalandhar wherein it has held that During the notice u/s 142(1) the assessee submitted the relevant documents before the revenue authorities. On basis of these documents the order was passed by the Id. AO. It cannot be said that the issue was untouched and unverified by the assessing authority. Mere change of opinion an order cannot be called as erroneous. We directed that the order passed by the PCIT is unjust for, and the order is setting aside. 16. In the above view, we hold that the impugned order in ITA No. 66/Asr/2022 and 68/Asr/2022 passed on the issue of audit objection and in ITA No. 66/Asr/2022 on No/Lack of enquiry by the PCIT is perverse to facts on record in holding assessment order erroneous and prejudice to the interest of revenue. Accordingly, the impugned orders passed by the PCIT -1, Jalandhar u/s 263, are cancelled being bad in law. 17. In the result, appeal of the assessees in ITA Nos. 66/Asr/2022; 67/Asr/2022 and 68/Asr/2022 are allowed. Order pronounced in the open court on 22.03.2023 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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