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TMI Blog2022 (12) TMI 1399X X X X Extracts X X X X X X X X Extracts X X X X ..... the total cash deposit during the month of October and November 2016. On the basis of aforesaid factual discussions and on the basis of details called for by AO, we find that the Assessing Officer after calling the details of cash deposit, while making addition of 10% of cash deposit of Rs. 77.00 lacs, being income component, which is a reasonable addition. The addition made by assessing officer is plausible and legally sustainable view, which cannot be branded as erroneous. The investigation conducted and the view adopted by the assessing officer in the present case, if not accepted by the Ld. PCIT, is nothing but change of opinion. It is settled position in law that no revision of assessment order is permissible on mere change of opinion. AO took reasonable, plausible and legally sustainable view, which cannot be branded as erroneous. There is no doubt that while accepting the claim in the assessment, there may be some loss of revenue, tax can be levied only with the authority of law, and every loss of revenue as a consequence of an order of the Assessing Officer, cannot be treated as prejudicial to the interests of the revenue unless the view adopted by assessing officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stances of the case as well as law on the subject, the learned Pr.CIT has failed to appreciate that the assessment order passed by the ACIT, Navsari Circle, Navsari (hereinafter referred to as the AO) was neither erroneous nor prejudicial to the interest of the revenue and thus the very invocation of power under section 263 is wholly illegal and beyond jurisdiction. 6. On the facts and in the circumstances of the case as well as law on the subject, the learned Pr.CIT has erred in invoking powers under section 263 and passing order holding the assessment order to be erroneous and prejudicial without even justifying, which of the two phraseology used in section 263 is applicable and as to how the order of assessment is erroneous causing loss to the revenue . 7. On the facts and in the circumstances of the case as well as law on the subject, the learned Pr.CIT has erred has failed to make proper enquiry into the facts of the u/s 143(3), is erroneous as well as prejudicial to the interest of Revenue and in cancelling the assessment with the direction to the AO to reframe the assessment. 8. On the facts and in the circumstances of the case as well as law on the subje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontents of reply of assessee is recorded by Assessing Officer in para-3.4 of assessment order. The assessee in its reply stated that there is nothing abnormal about cash sales, which took place in the current year, just there was a currency note demonetization during the assessment under consideration should not lead to presumption that this transaction is abnormal and suspicious. However, the assessee stated that they have already given the particulars on the date of sales, name of customers, address of customers, description of sales gross weight of jewellery, diamond weight and amount utilized on such sales. The assessee further submitted that as per Rule 114B of the Income Tax Rules, 1963, the assessee is not under obligation to obtain PAN of the customers, in case the sale was not exceeding rupee two lakh in any of the case. The assessee stated that independent inquiry may be made. The assessee furnished the stock register, audited accounts. The sales were disclosed in the month of October, 2016 VAT returns, before VAT authority under statutory obligation, copy of VAT return of the month of October and November, 2016 were filed along with sales register respectively. The asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profit of such inflated sales and made addition in the assessment order dated 31.12.2019 passed under section 143(3) of the Act. 3. The assessment order was revised by Ld. PCIT vide order dated 30.03.2022 by exercising his jurisdiction under section 263. Before revising the assessment order, the Ld. PCIT issued show cause notice dated 19.03.2022 to the assessee. In the said show cause notice, Ld. PCIT recorded that on perusal of assessment, it was noted that assessment order was passed without making inquiries and verification, which should have been made by Assessing Officer and grant relief to the assessee without making inquiries into the claim that assessee has made specified bank notes (SBN) cash deposits in specified demonetization period of Rs. 77.00 lakh. During the assessment, the assessee was asked to submit details regarding source of such cash deposits. The assessee submitted that cash was out of sales proceed and cash sales during the month of October, 2016 to 08.11.2016 at Rs. 78,89,541/- whereas there were no such cash sales during same period in earlier financial year. The assessing officer held that the assessee furnished the party-wise details, which was not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... side the assessment order with the direction to frame the assessment as de novo after making proper inquiries on the aforesaid issues after giving reasonable opportunities to the assessee. 5. Aggrieved by the order of ld. PCIT, the assessee has filed present appeal before the Tribunal. 6. We have heard the submissions of learned Authorized Representative (Ld.AR) for the assessee and Ld. Commissioner of Income-Tax Departmental Representative (ld. CIT-DR) for the Revenue and have gone through the order of ld. PCIT carefully. The ld. AR for the assessee submits that assessee is a partnership firm engaged in the business of manufacturing and trading of diamond / gold jewelleries. During the demonetization period, the assessee deposited cash of Rs. 77.00 lakhs in its bank account. The assessee filed its return of income for assessment year 2017-18 on 20.09.2017 declaring income of Rs. 3,51,324/-. Thereafter case was selected for scrutiny. During assessment, Assessing Officer issued various show cause notice and in response thereto assessee furnished detailed reply thereof. The Ld. AR for the assessee submits that Assessing Officer vide notice dated 30.30.01.2019 asked the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are filed e before Tribunal in the form of paper book. The Ld. AR for the assessee submits that ultimately the Assessing Officer after considering the details, furnished by assessee added @ 10% of cash sales by estimating profit of such cash sales. The Ld. AR for the assessee submits that Assessing Officer passed assessment order after making full-fledged investigation and considering the reply and evidence produced by assessee and took a reasonable, plausible and legal sustainable view and added @ 10% of profit on the impugned cash deposits. The assessment order passed after such details discussion cannot be branded erroneous as the same is legally sustainable and one of the possible view taken by assessing officer in the assessment order. 7. The Ld. AR for the assessee further submits that ld. PCIT issued show cause notice dated 19.03.2022. The assessee furnished its reply dated 25.03.2022; copy of show cause notice and reply of assessee thereto is already placed on record. The assessee furnished a very details and exorbitant reply to substantiate the fact that assessment order was passed after full deliberation on the issue identified by ld. PCIT. The relevant contents of ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecision: Malabar Industrial Co. Ltd. vs. CIT 243 ITR 83 (SC) Kwality Steel Suppliers vs. CIT 395 ITR 1 (SC) CIT vs. Mehsana District Co-Op.Milk Producers Union Ltd. 263 ITR 645 (Guj) CIT vs. D.P.Karia 266 ITR 113 (Guj) CIT vs. Arvind Jewellers 259 ITR 502 (Guj) Sir Dorabji Tata Trust vs. DCIT (2921) 188 ITD 38 (Mum-Trib) Torrent Pharmaceuticals vs. DCIT (2921) 173 ITD 130 (Ahd) Minal Shah vs. PCIT 57 CCH 140) (Ahd) 10. The Ld. AR of the assessee submits that though the assessing officer made adequate inquiry, yet inadequacy of inquiry by Assessing Officer cannot be ground for proceedings under section 263 of the Act. To support of his submission, Ld. AR for the assessee relied upon following decision: CIT vs. Sunbeam Auto Ltd. 332 ITR 167 (Del) CIT vs. Anil Kumar Sharma 335 ITR 83 (Del) CIT vs. Vikas Polymers 341 ITR 537 (Del) 11. On merit, ld. AR for the assessee submits that cash deposits of Rs. 77.00 lakhs in the form of HDFC bank during such demonetization period were detailed opening cash balance at the beginning of demonetization period, which, in turn was on account of cash sales made by assessee and earlier withdrawal of am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ordinate Bench of Rajkot in the case of Premji Valji Sons in ITA No.125/RJT/2022 based on similar set of fact quashed the order of ld. PCIT passed under section 263. The Ld. AR for the assessee submits that ld. PCIT himself ought to have examined the order passed by Assessing Officer on merit and then ought to have established that assessment order is erroneous and prejudicial to the interest of Revenue without doing so, ld. PCIT could not have set aside the issue to the file of Assessing Officer with the direction to conduct further inquiries. To support his submission, Ld. AR for the assessee relied on the decision of Hon'ble Delhi High Court in the case of ITO vs. D.G. Housing Projects Ltd (2012) 343 ITR 329 (Del) on the addition of aforesaid submission, Ld. AR for the assessee prayed before the Bench to set aside / quash the impugned order of ld. PCIT passed under section 263 of the Act. 13. On the other hand, ld. CIT-DR for the Revenue submits that Assessing Officer completed the assessment proceedings without raising required question and had not carried out proper verification and examination of the issues which clearly rendered the assessment erroneous as well as p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l be attracted. 16. Further, Hon ble Bombay High Court in CIT Vs Gabriel India Ltd (233 ITR 108 Bom /71 Taxman 585) held that the power of suo-motu revision under sub-section (1) of section 263 is in the nature of supervisory jurisdiction and the same can be exercised only if the circumstances specified therein exist. Two circumstances must exist to enable the Commissioner to exercise power of revision under this subsection, viz., (i) the order is erroneous; and (ii) by virtue of the order being erroneous prejudice has been caused to the interests of the revenue. It has, therefore, to be considered firstly as to when an order can be said to be erroneous. One finds that the expressions 'erroneous', 'erroneous assessment' and 'erroneous judgment' have been defined in Black's Law Dictionary. According to the definition, 'erroneous' means 'involving error; deviating from the law'. 'Erroneous assessment' refers to an assessment that deviates from the law and is, therefore, invalid, and is a defect that is jurisdictional in its nature, and does not refer to the judgment of the Assessing Officer in fixing the amount of valuation of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t by the application of the relevant statute on an incorrect or incomplete interpretation a lesser tax than what was just has been imposed. Therefore, in order to exercise power under section 263(1) there must be material before the Commissioner to consider that the order passed by the ITO was erroneous insofar as it is prejudicial to the interests of the revenue and that it must be an order which is not in accordance with the law or which has been passed by the ITO without making any enquiry in undue haste. An order can be said to be prejudicial to the interests of the revenue if it is not in accordance with the law in consequence whereof the lawful revenue due to the State has not been realized or cannot be realized. There must be material available on the record called for by the Commissioner to satisfy him prima facie that the aforesaid two requisites are present. If not, he has no authority to initiate proceedings for revision. Exercise of power of suo-motu revision under such circumstances will amount to arbitrary exercise of power. It is well-settled that when exercise of statutory power is dependent upon the existence of certain objective facts, the authority before exercis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omers, description of sales gross weight of jewellery, diamond weight and amount utilized on such sales. The assessee took plea that as per Rule 114B of the Income Tax Rules, 1963, the assessee is not under obligation to obtain PAN of the customers, in case the sale was not exceeding rupee two lakh in any of the case. The assessee stated that independent inquiry may be made. We find that assessee also provided sales made in the month of October, 2016 VAT returns, filed before VAT authority under statutory obligation, copy of VAT return of the month of October and November, 2016. The assessee also furnished cash book, sale book for the month of October and November, 2016, wherein stock register showing the entries of sales and names and complete address of the customers to whom cash sales were made. The assessee stated that there is no scope of any doubt that assessee has furnished names and addresses of such customers, sales invoices, statutory VAT return. We further find that after considering the material before assessing officer, the assessing officer made addition of 10% of the total cash deposit during the month of October and November 2016. On the basis of aforesaid factual d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considering the workload that he carries and the period of limitation within which an order is required to be made; and, secondly, the order is an appealable order. An appeal lies, would be filed, only against disallowances which an assessee feels aggrieved with. 20. Thus, in view of the aforesaid factual and legal discussions, in our view, the investigation conducted and the view adopted by the assessing officer in the present case, if not accepted by the Ld. PCIT, is nothing but change of opinion. It is settled position in law that no revision of assessment order is permissible on mere change of opinion. 21. As we have already held that on the basis of material before the assessing officer, he took reasonable, plausible and legally sustainable view, which cannot be branded as erroneous. There is no doubt that while accepting the claim in the assessment, there may be some loss of revenue, tax can be levied only with the authority of law, and every loss of revenue as a consequence of an order of the Assessing Officer, cannot be treated as prejudicial to the interests of the revenue unless the view adopted by assessing officer permissible in law. Once the assessing officer h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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