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TMI Blog2023 (12) TMI 137X X X X Extracts X X X X X X X X Extracts X X X X ..... firm view adopted by the Ld. AO at the time of original Assessment under section 143(3). 4. That the Ld. CIT has erred in concluding proceedings under section 263 of the Act without proper perusal of Assessment record. That the Appellant craves leave to add, amend or alter the grounds of appeal before the appeal is finally disposed off." 2. Briefly the facts of the case are the assessee is engaged in operating a Petrol Filling Station under the name and style of M/s Toor HP Centre and has filed his return of income declaring total income of Rs. 10,90,270/-. The case of the assessee was selected for scrutiny through CASS and notices u/s 143(2) and 142(1) were issued and assessment was completed u/s 143(3) dated 29.05.2019 wherein assessed income was determined at Rs. 11,52,495/- by making certain disallowances of expenses amounting to Rs. 62,225/- as against the returned income of Rs 10,90,270/-. 3. Subsequently, the assessment records were called for and examined by the ld. Pr. CIT and as per observations of the ld. PCIT, the AO omitted to conduct basic enquiries that were necessary to ascertain the true facts of the case with regard to the reasons for selection of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the ld. PCIT is not borne out from the records as the AO has conducted the requisite enquiries and has duly verified the claim made by the assessee during the course of assessment proceedings. It was submitted that it is a matter of record that the AO vide notice u/s 142(1) dated 05.04.2019 and thereafter vide notice dated 10.05.2019 had raised certain enquiries and in response, the assessee filed the requisite submissions and documentation from time to time. It was further submitted that all the verbal enquiries as raised by the AO were duly answered to his satisfaction and the AO has therefore, formed an opinion after perusal of the evidences submitted and it is, therefore, not a case of no enquiry or non-application of mind by the AO. 8. Regarding various contentions/findings raised by the ld. PCIT in the Show Cause Notice and thereafter confirmed in the final order, it was submitted that the assessee can demonstrate that the necessary enquiries stood conducted during the assessment proceedings. 9. Firstly, regarding the contention of the ld. PCIT in relation to bank account No.65078774798, that the said account pertains to Mr. Raj Kumar, Village Dakhla and the bank stateme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. It was submitted that at para 5.2 of the impugned order, the ld. PCIT has already stated his comments with respect to recovery from debtors but has again repeated the figure to create further conjecture at Sr. No. 1 i.e. cash received from debtors which stood verified as explained earlier. 12. It was further submitted that with respect to the retail cash sale, ld. PCIT has failed to appreciate the fact that the assessee is running a Petrol Pump which owing to the grave necessity of the population of the country for basic necessities, use of demonetized currency for purchase of fuel was allowed by the Government to avoid bringing the economy to a complete standstill. It was submitted that the AO has verified the appellant's purchase which is from a duly authorized source and Government Company i.e. HPCL and daily sale register has been duly submitted and verified by the AO and reduction of one asset i.e. stock of oil and increase of other assets i.e. cash is a basic enquiry already conducted by the AO to verify the source of cash deposit. It was, accordingly, submitted that where the enquiry already stood conducted by the AO, ld. PCIT's contention for further enquiry is against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Audit Report along with the audited accounts and the assessment has been completed without even examining the Audit Report, it was submitted that Form 3CD is an e-filed document duly submitted on the e-filing Portal of the tax department and same is available for verification by the AO. It was, further submitted that it is not in doubt that the AO has called for and verified the purchases, sales, cash, bank, creditors, debtors expenses accounts and after detailed perusal and verification thereof, certain additions have been made. It was, accordingly, submitted that where the AO has made additional enquiries, beyond the scope of the assessment, the contention of the ld. PCIT that further enquiry was not made by the AO cannot be sustained. It was, accordingly, submitted that the AO has passed the assessment order after taking into consideration all the relevant documents and evidences submitted during the course of assessment proceedings and it is, therefore, not a case of no enquiry. 18. Further reliance was placed on the Hon'ble Supreme Court decision in the case of CIT Vs Nuclear Power Corporation of India Ltd. 138 taxmann.com 332, ITAT Chandigarh Bench in the case of Kr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted that all the AO has done in the present case is placing documents furnished by the assessee on the assessment records in a mechanical manner without even caring to carefully go through the contents and carrying out any independent enquiries or verification in respect of various claims made by the assessee. 23. It was submitted that the ld. Pr. CIT in his order has discussed at length various instances where there was complete failure on the part of the AO to carry out requisite enquiries and verification and in this regard, our reference was drawn to para 5 to 5.10 of the impugned order, which read as under : 24. Further, our reference was drawn to the findings of the ld. Pr. CIT which are contained at para 6 and para 9 of the impugned order, which reads as under: "6. In view of the discussion above, the assessment order passed u/s 143(3) of the Act dated 29.05.2019 is prima-facie erroneous in so far as it is prejudicial to the interest of revenue, as the order has been passed without making requisite enquiries or verification which should have been made. There is thus failure on the part of the Assessing Officer in making the requisite enquires and verification. It is su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vo after due consideration of the facts and law in this regard. The assessee is at liberty to adduce the facts as deemed relevant before the assessing officer at the time of assessment proceedings in consequence to this order. The Assessing Officer shall allow the assessee adequate opportunity of being heard and to make relevant submissions. It may be ensured that the fresh assessment order is passed within the prescribed time as stipulated under section 153(3) of the Act." 25. It was accordingly submitted that the assessment order so passed by the AO has been rightly held to be erroneous in so far as prejudicial to the interest of the Revenue and thus, there is no basis in various contentions so raised by the ld AR and the same deserve to be dismissed and the order of the ld PCIT be upheld. 26. We have heard the rival contentions and purused the material available on record. The ld PCIT has referred to specific instances and/or transactions reflected in the assessee's return of income and accompanying financial statements, other documents/submissions filed during the course of assessment proceedings as well as certain specific documents available on record at the time of his ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rest of the Revenue and the findings of the ld PCIT in para 5 of the impugned order is hereby set-aside. 29. Now, coming to transactions with M/s A.K. Minerals and M/s G.K Laxmi where the assessee has show cash receipts of Rs 5 lacs each against sales made to them and in respect of which, ledger account and a confirmation from these two parties has been filed during the course of assessment proceedings, the ld PCIT has referred to confirmations so filed by the assessee from these persons during the course of assessment proceedings and subsequent confirmations received directly from these persons, which were called for by the AO towards the end of the assessment proceedings but have been received after the close of the assessment proceedings wherein they have denied making any cash payment to the assessee. The ld PCIT has held that the confirmations given by the assessee during the course of assessment proceedings which is on a plain paper, undated and doesn't bear any PAN details and signed by Shri Suresh Kumar though it was a case of proprietorship concern of M/s A K Minerals of Shri Krishan Kant Goyal is absolutely false and the AO has accepted the bald assertion on face value. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the matter though enquired into by the AO but the transaction itself stood falsified by the subsequent confirmation received directly from the concerned parties and where the PCIT is ceased of the matter and the necessary information is available on record at the time of his examination, we find that he was well within his jurisdiction u/s 263 to set-aside the assessment order on this count and order a de-novo assessment. 31. It is no doubt true that operation of both section 263 and 147 is somewhat similar in the sense that where the ld PCIT under Section 263 of the Act finds that the assessment order is prejudicial to the interest of the Revenue, he can review the assessment, at the same time, the Assessing Officer, under section 147 and 148 of the Act can reopen assessment on account of income having escaped assessment. The re is however a fine distinction which is maintained between the two sections in terms of power to review and power to reassess and the AO doesn't have power to review his own order and such power is enshrined under section 263 of the Act and bestowed on the ld PCIT which cannot be ceded to the AO. Thus where an Assessing Officer comes to a wrong conclusion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mi is hereby confirmed. 35. Now, coming to the ld. PCIT's findings in para 5.3 of the impugned order where he has held that assessee's claim of receipt of cash of Rs. 17,27,521/- from various persons was false and was not investigated by the AO and the assessee's claim to have received cash amounting to Rs. 86,09,079/- from unnamed persons where no documents are available on assessment records to show that the AO has not made any enquiry or verification in respect of these cash receipts. In this regard, it was submitted by the ld AR that at para 5.3 of the impugned order, the ld. PCIT has already stated his comments with respect to recovery from debtors but has again repeated the same figure to create further conjecture at Sr.No. 1 i.e. cash received from debtors which stood verified as explained earlier. It was further submitted that with respect to the retail cash sale, ld. PCIT has failed to appreciate the fact that the assessee is running a Petrol Pump which owing to the grave necessity of the population of the country for basic necessities, use of demonetized currency for purchase of fuel was allowed by the Government to avoid bringing the economy to a complete stand stil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment order as erroneous in so far as prejudicial to interest of Revenue. Basis review of the said documentation and the explanation so furnished by the assessee and being satisfied therewith, where the AO has not recorded any adverse finding and has accepted the source of cash deposit as from the sale of petroleum products and which has been duly offered to tax, we find that the AO has duly enquired into the matter. The fact that the sales were effected in initial period during the same financial year and the cash has been received in the subsequent period even though during the demonetization period cannot be a basis strong enough to hold the order so passed by the AO is erroneous in so far as prejudicial to the interest of Revenue in absence of any adverse findings regarding availability of requisite stock and the sales so effected by the assessee which are both reported to tax. Where the AO felt satisfied with the documentation and explanation so submitted by the assessee, basis review of the same documentation, the ld PCIT may arrive at a different opinion, however, the same cannot lead to a situation of holding the order so passed as erroneous in so far as prejudicial t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been replied to by the assessee as evident from his replies which find mention in the order sheet entries as well as the submissions filed by the assessee in terms of qualitative and quantitative stock of petroleum products including opening and closing stock, sales and purchase register of petrol, diesel and lubes and VAT returns besides reporting the purchase and sale transactions in the profit/loss account. Where the AO felt satisfied with the documentation and explanation so submitted by the assessee, we find that the matter has been duly enquired into by the AO and the findings of the ld PCIT that no enquiry has been conducted by the AO is not borne out of the records and the same thus deserve to be set-aside. Further, there is no adverse finding recorded by the ld PCIT regarding availability of stock of petroleum products and corresponding sales reported by the assessee and where the stock and sales have been accepted, realization of sale proceeds in cash which is permissible under law cannot be held against the assessee or to hold that the assessment order is erroneous in so far as prejudicial to the interest of Revenue. Therefore, the findings of the ld PCIT regarding c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hts and quantum thereof is expected which unfortunately the assessee didn't care and bother to submit inspite of specific enquiry made by the AO. In such a situation, where the ld PCIT examines the matter and comes to a conclusion that the confirmation so filed is half-baked and incomplete and further, there is no explanation regarding the source of cash gift to the assessee and the AO didn't mount further examination and accepted the said incomplete confirmation on face value, we find that the ld PCIT has rightly exercised his discretion in setting aside the assessment order to examine the matter a fresh after providing reasonable opportunity to the assessee. The findings of the ld PCIT in para 5.5 are thus upheld. 42. Now, coming to the findings of the ld. PCIT regarding unsecured loans, it has been stated by the ld PCIT that as per questionnaire dated 9.5.2019 issued by the AO, only generic information has been called regarding the unsecured loans by the AO whereby the AO has called for the confirmation from the persons where unsecured loan amount was outstanding above Rs one lacs as on 31.03.2017 as well as copy of ITR and computation of income and in response, the assessee ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nancial statement including source of cash deposited during the demonetization period which aptly demonstrate that the AO was aware and conscious of the fact that the case of the assessee was selected for complete scrutiny and not limited scrutiny. In the first part of the assessment order, the AO has again made a mention that the case of the assessee was selected under the category of complete scrutiny to verify cash deposit during the demonetization period and apparently, the ld AR emphasis on the latter part thereof which is no doubt cash deposit during the demonetization period but one cannot lose sight of the fact that it was again a case of complete scrutiny and not a case of limited scrutiny. On perusal of records, the ld PCIT has also stated that the case of the assessee was selected for complete scrutiny through CASS, primarily for the reason of high value receipts of cash shown from third parties in response data and cash deposits during the demonetization period and these were just the two scenarios of the scheme adopted under the CASS at the given point in time to flag the cases that needed to be picked up for scrutiny and the A.O. was under an obligation to verify the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uestion mark on the transactions so undertaken by the assessee and which if not considered and relevant enquiry or investigation not mounted will lead to passing of erroneous order which is prejudicial to the interest of the Revenue. In the instant case, we don't find that the ld PCIT has referred to any tangible piece of information or documentation which warrant examination and investigation across all transactions of unsecured loans which are undertaken by the assessee. Further, where the relevant confirmations from the creditors have been called for and examined by the AO, the latter being satisfied with the same and explanation so furnished by the assessee, merely the fact that the AO has not carried out independent enquiries of these confirmations from the creditors cannot be a basis to hold the order as erroneous in so far as prejudicial to the interest of Revenue. The ld PCIT has not pointed out any deficiency or inaccuracy in the confirmations so filed by the creditors unlike some of the other cases as we have noted above and in absence thereof, the order so passed by the AO in this regard cannot be held as erroneous in so far as prejudicial to the interest of Revenue and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the same are hereby set-aside. 49. In light of aforesaid discussions, the findings of the ld PCIT are hereby modified whereby the directions of the ld PCIT in para 5 relating to bank account is set-aside, the findings in para 5.2 so far as it relates to M/s A.K Minerals and M/s G.K Laxmi is confirmed and rest all findings in para 5.2 relating to Shri Bhupinder Singh, Shri Bindri, Shri Ajmer Singh and M/s Gurleen Traders are set-aside, the findings in para 5.3 relating to other cash receipts of Rs 18,84,733/- is hereby directed to be verified to check and delete to the extent of duplicity of figures vis-à-vis figures in para 5.2, the findings in para 5.3 relating to retail cash sales of Rs 67,24,346/- is set-aside, the findings in para 5.4 relating to CBDT Instructions is set-aside, the findings in para 5.5 relating to gift of Rs 3,23,000/- is upheld, the findings in para 5.7 relating to unsecured loan transactions with three specified persons are upheld, the findings in para 5.8, 5.9 and 5.10 are set-aside, and in view of the same, corresponding findings in para 6 stand set-aside or confirmed as the case be and in so far as scope of assessment proceedings, the findings ..... 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