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TMI Blog2023 (11) TMI 1138X X X X Extracts X X X X X X X X Extracts X X X X ..... king into consideration all these factors, we condone the delay and admit this appeal. Revision u/s 263 - unexplained cash deposits - as per CIT no explanation as to the nature and source of the cash deposit and as to whether the same is explained for income tax purposes given - CIT observed that AO framed the assessment without making enquiries and verifications which should have been made - HELD THAT:- As submissions were filed by the assessee regarding the cash collected from investors, depositing them in ICICI Bank account and then payments made to project organisers and thereafter the cash withdrawal from ICICI Bank account and refunded to the investors. As submissions filed by the assessee which pertains to the deal of purchase of land from Ramel Group of Industries which could not materialize, it is established that the alleged cash deposit and withdrawal are not related to the business turnover of the assessee and the same is a separate transaction. Since the assessee was able to satisfy the AO that alleged cash withdrawal are not part of the regular business carried out by the assessee of trading in goods, he accepted the contention by way of proper application ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnection to the alleged cash deposit which was the sole reason for selection of the case under limited scrutiny, had taken a plausible and judicious view, which did not suffer from lack of independent and adequate enquiry. 2. That, the Ld. Pr. C.I.T erred in holding the assessment order u/s. 143(3) of the Act erroneous and prejudicial to the interest of the revenue for alleged non- compliance of clause (a) of Explanation 2 to sec. 263(1) of the Act in spite of the fact that the impugned assessment was not a case of no enquiry and after thorough examination of the bank accounts suing notice u/s. 133(6) of the Act together with detailed examination of the cash deposits in savings bank account with the books of accounts of the assessee, the Ld. A.O. took a judicious view in the matter and allowed the cash deposits made in the saving bank account during the relevant financial year. 3. That, the Ld. Pr. C.I.T. has acted against the Explanation 2 to sec.263 of the Act, inasmuch as the assessment order was passed after making proper enquiries/verification which the A.O. was required to make with respect to the cash deposits made in the saving bank account during the relevant f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar was passed by the ITO, Ward -42(1), Murshidabad on 16/11/2016 and subsequently proceeding u/s. 263 of the Act was initiated and show cause notice dated 21/08/2018 was issued in this connection. Order u/s. 263 of the Act was passed by the Ld. Principal C.I.T-14, Kolkata on 21/02/2019 against which neither the appellant was guided nor was any action taken by the tax consultant. Thereafter, the re-assessment order u/s. 143(3)/263 of the Act was passed by the ITO, Ward -42(1), Murshidabad on 27/12/2019 against which the tax consultant filed an appeal before the Ld.CIT(A), NFAC. Subsequently, on 28/11/2022, it was learnt from the tax consultant that the appeal was dismissed by the Ld.CIT(A), NFAC vide order dated 10/11/2022. The appellant took advice from the present Counsel, Shri S.K. Tulsiyan, who advised filing of appeal against the order u/s. 263 of the Act. Consequently, the appeal was filed before the ITAT. All these events caused this delay of 1326 days and there was no mala fide intention behind not filing the appeal within the prescribed time. Therefore, this appeal is being presented with an explanation for condonation of delay. He prayed that delay be condoned and appeal b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o benefit by resorting to delay. In fact he runs a serious risk. 6. It must be grasped that judiciary is respected not on account of its power to legalize injustice on technical grounds but because it is capable of removing injustice and is expected to do so. 7. Similarly, we would like to make reference to authoritative pronouncement of Hon'ble Supreme Court in the case of N. Balakrishnan Vs. M. Krishnamurthy (supra). It reads as under: Rule of limitation are not meant to destroy the right of parties. They are meant to see that parties do not resort to dilatory tactics, but seek their remedy promptly. The object of providing a legal remedy is to repair the damage caused by reason of legal injury. Law of limitation fixes a life-span for such legal remedy for the redress of the legal injury so suffered. Time is precious and the wasted time would never revisit. During efflux of time newer causes would sprout up necessitating newer persons to seek legal remedy by approaching the courts. So a life span must be fixed for each remedy. Unending period for launching the remedy may lead to unending uncertainty and consequential anarchy. Law of limitation is thus founded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sultant of the assessee Shri S.K. Paul and the assessee did not have any malafide intention to cause the delay. Therefore, cumulative setting of all these factors would suggest that there is no deliberate delay at the end of the assessee because the assessee was not going to gain anything from delaying this appeal. It is also pertinent to note that the Hon ble Supreme Court in the case of N. Balakrishnan Vs. M. Krishnamurthy (supra) has observed that period of delay does not matter. It is the quality of the explanation. If some valid reason is there, then any period can be condoned. In this case delay was caused due to fault of the erstwhile tax consultant of the assessee. Taking into consideration all these factors, we condone the delay and admit this appeal. 10. Brief facts of the case are that the assessee is an individual engaged in the wholesale trading business of seasonal goods and country produce. Income of Rs. 1,98,350/- was declared in the return manually filed on 31/03/2015. Case selected for scrutiny through CASS for the reason that cash deposit in savings bank accounts is more than the turnover. Statutory notice u/s 143(2) 142(1) of the Act were duly served upon t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amounts running into several lakhs were being deposited in cash on various dates and amounts running into several lakhs were being withdrawn from the bank account in cash on various dates. In the absence of any explanation relating to the nature and source of cash deposits and purpose of withdrawals, even if the amounts were recorded in the books of accounts the same should have warranted addition u/s 68 of the I.T. Act 1961 since these are not disclosed as receipts or turnover or even as any loans or advanced received. The amount of Rs. 1,37,01,000/- should have been prima facie, brought to tax u/s 68 of the I.T. Act 1961. The A.O. has made no enquiries and verifications in this regard and has passed the order. 11.1. In response to the show cause notice dt. 21/08/2013, the assessee filed various details and the purpose of cash deposits in bank was to by a big land from Ramel Group of Industries on behalf of group of persons who gave cash to assessee but thereafter the deal was cancelled due to imposition of ban by the Government of selling any property of Ramel Group of Industries and finally the cash was returned back in cash. It was also submitted that all these details w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce u/s 133(6) of the Act was issued for getting the necessary information and detailed examination of the cash deposit in the savings bank account. 16. We find that the provision of Section 263 of the Act has direct bearing on the issue raised before us, therefore, it is pertinent to take note of this section which reads as under: 263(1) The Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Assessing Officer is erroneous in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment. Explanation- For the removal of doubts, it is hereby declared that, for the purposes of this sub-section,- (a) an order passed on or before or after the 1st day of June, 1988 by the Assessing Officer shall include- (i) an order of assessment made by the Assistant Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me when he will judge an order passed by an Assessing Officer on culmination of any proceedings or during the pendency of those proceedings. On an analysis of the record and of the order passed by the Assessing Officer, he formed an opinion that such an order is erroneous in so far as it is prejudicial to the interests of the Revenue. By this stage the learned Commissioner was not required the assistance of the assessee. Thereafter the third stage would come. The learned Commissioner would issue a show cause notice pointing out the reasons for the formation of his belief that action u/s 263 is required on a particular order of the Assessing Officer. At this stage the opportunity to the assessee would be given. The learned Commissioner has to conduct an inquiry as he may deem fit. After hearing the assessee, he will pass the order. This is the 4th compartment of this section. The learned Commissioner may annul the order of the Assessing Officer. He may enhance the assessed income by modifying the order. He may set aside the order and direct the Assessing Officer to pass a fresh order. At this stage, before considering the multi-fold contentions of the ld. Representatives, we deem it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ued u/s 142(1) of the Act. Thereafter ld. Assessing Officer has stated that the amounts have been duly verified with relevant supporting documents on test check basis. Further the ld. Assessing Officer also stated that purchase, sale and cash deposit in the savings bank account have duly examined with the books of account produced by the Authorised Representative of the assessee. Further bank accounts were also examined by issuing notice u/s 133(6) of the Act. Even during the course of impugned proceedings detailed submissions were filed by the assessee regarding the cash collected from investors, depositing them in ICICI Bank account and then payments made to project organisers and thereafter the cash withdrawal from ICICI Bank account and refunded to the investors. It was stated that the reason for this huge cash deposit and withdrawal was basically for the purpose of purchasing land from Ramel Group of Industries by group of persons but since at a subsequent stage, a ban was imposed by the Government on sale of properties of Ramel Group of Industries, the deal did not materialise. The submissions filed by the assessee before the ld. Pr. CIT in para 3 4 of the impugned order, r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be kept in mind that where the assessing officer during the scrutiny assessment proceeding raised a query oral/written, which was answered by the assessee to the satisfaction of the AO and the same was not recorded/reflected in the assessment order by the AO, itself cannot be a basis for drawing an adverse conclusion by the Principal Commissioner that no enquiry with respect to the issue was made by the AO to enable him to assume jurisdiction under section 263 of the Act. If the AO allows the claim, on being satisfied with the explanation of the assessee, on an enquiry made during the course of Assessment Proceedings as aforestated, the decision of AO cannot be held to be erroneous, on the ground that there is no discussion in that regard in the assessment order. The AO while scrutinizing the books of the assessee will come across numerous facts which he may raise query and once the assessee or the AR explains to the satisfaction of AO, it is upto the AO to mention about the same in the assessment order or not. Simply because the AO did not discuss the query which he raised during assessment proceedings and did not incorporates the assessee's explanation or his satisfaction, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee giving the CIT jurisdiction to invoke s. 263, more so when the Tribunal had found that there had been an enquiry which had not been conducted with 'undue haste' . Therefore, in the facts and circumstances discussed supra, we are of the considerate opinion that the assessment order framed by the AO is neither erroneous nor prejudicial to the interest of the revenue and therefore, the Ld. Pr. CIT's impugned action of interfering with the order of AO invoking the revisional jurisdiction under section 263 of the Act is without jurisdiction and, therefore, null in the eyes of law and so it is quashed. 19. The Hon ble Delhi High Court in the case of CIT vs. Sunbeam Auto Ltd. (supra), under identical circumstances held as under:- The Assessing Officer in the assessment order is not required to give detailed reasons in respect of each and every item of deduction, etc. Therefore, one has to see from the record as to whether there was application of mind before allowing the expenditure in question as revenue expenditure. One has to keep in mind the distinction between 'lack of inquiry' and 'inadequate inquiry'. If there was any inquiry, eve ..... X X X X Extracts X X X X X X X X Extracts X X X X
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