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TMI Blog2024 (7) TMI 1433X X X X Extracts X X X X X X X X Extracts X X X X ..... monetization period. CIT in the instant case, despite having all the material, has not examined the details himself and came to a definite conclusion but has merely set-aside the matter to the file of the AO for afresh assessment. The various decisions relied on by the ld. Counsel for the assessee in the case law compilation support his case to the proposition that where the AO had conducted enquiries regarding the source of cash deposits made during the demonetization period and has taken a possible view, the Pr.CIT was not justified in invoking the revision powers u/s. 263 of the Act by merely directing the AO to carry out enquiries afresh without himself conducting further enquiries. Since the AO in the instant case has made detailed enquiries regarding the source of cash deposits made during the demonetization period and after being satisfied has taken a possible view, therefore, we are of the considered opinion that the ld. Pr.CIT is not justified in invoking the provisions of section 263. We, therefore, set aside the same. The grounds raised by the assessee are accordingly allowed. - Shri Rama Kanta Panda, Vice President And Ms. Astha Chandra, Judicial Member For the Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the bank account during demonetization period, month-wise cash sales for the A.Y. 2017-18 and A.Y. 2016-17, analysis of month-wise cash sales from 01.04.2016 to 08.11.2016, details of VAT returns for the F.Y. 2016-17 etc. vide Annexure attached to the notice. The assessee in response to the same has filed complete details explaining the source of such cash deposited during demonetization period. Relying on various decisions, it was argued that the proceedings u/s. 263 being not in accordance with law should be dropped. 5. However, the Pr.CIT was not satisfied with the arguments advanced by the assessee. He observed that the assessee failed to explain the nature and source of cash deposited during the demonetization period in SBN amounting to Rs. 18,84,20,100/- by producing any concrete evidence except the arguments. Further, the AO did not carry out necessary enquiry and has blindly accepted the returned income and submissions of the assessee. The AO has failed to appreciate the fact that the assessee could not furnish the relevant information in connection with the cash deposited during the demonetization period by way of SBN. Therefore, he was of the opinion that the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the root of the matter and all the necessary facts are already available on record. Referring to the decision of Hon ble Supreme Court in the case of the National Thermal Power Co. Ltd. v. CIT [1998] 229 ITR 383 (SC) and in the case of Jute Corporation Of India Ltd vs Commissioner Of Income Tax And Anr (1991) 187 ITR 688 submitted that the additional ground raised by the assessee should be admitted. 9. After hearing both the sides and considering the fact that the additional ground raised by the assessee is purely legal one and all the material facts are already available on record and no new facts are required to be investigated, therefore, in view of the decision of Hon ble Supreme Court in the case of the National Thermal Power Co. Ltd. v. CIT (supra) and in the case of Jute Corporation Of India Ltd vs Commissioner Of Income Tax And Anr (supra), the additional ground raised by the assessee is admitted for adjudication. 10. The ld. Counsel for the assessee at the outset drew the attention of the Bench to the notice issued u/s. 142(1) along with the Questionnaire dated 14.08.2019, copy of which is placed at pages 23 to 25 of the paper book and submitted that the AO vide Question N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 08.11.2016. Referring to pages 41 and 42 of the paper book, the ld. Counsel for the assessee submitted that vide letter dated 12.12.2019, the assessee has replied to the notice issued u/s. 142(1) on 06.12.2019. 12. Referring to the letter dated 12.12.2019, copy of which is placed at pages 43 and 44 of the paper book, the ld. Counsel for the assessee drew the attention of the Bench to the reasons given by the assessee for the amount of cash in hand during F.Y. 2016-17 till 08.11.2016 and the reason for huge difference in the amount of cash deposited in the bank account during the period 08.11.2016 to 30.12.2016 and the same period of the preceding financial year. Referring to pages 45 and 46 of the paper book, the ld. Counsel for the assessee drew the attention of the Bench to another notice issued u/s. 142(1) dated 20.12.2019 along with questionnaire to which the assessee has also submitted the requisite details before the AO. He accordingly submitted that when the AO has asked for complete details regarding the nature and source of such cash deposited during the demonetization period and the assessee has explained the same, it cannot be said that the AO has not made any enquiry a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 21] dated 11.09.2023. 17. He accordingly submitted that the order of the PCIT u/s 263 be quashed and the grounds raised by the assessee be allowed. 18. The ld. DR on the other hand while supporting the order of the Pr.CIT relied on the various decisions : 1. Hon'ble High Court of Kerala in case of Perinthalmanna Services Co-operative Bank Ltd. Vs ITO [2014] 49 Taxmann.com 438 (KERALA)/[2014] 363 ITR 268 (Kerala) [31-01-2014] 2. Hon'ble High Court of Madras in case of Ashok Leyland Ltd. Vs CIT [002] 125 Taxman 965 (Madras) / [2003] 260 ITR 599 (Madras) / [2003] 181 CTR 332 (Madras) [30-09-2002] 3. Hon'ble High Court of Madras in case of CIT Vs Neyveli Lignite Corporation Ltd. [2001] 118 Taxman 230 (Madras) / [2001] 248 ITR 611 (Madras) / [2001] 171 CTR 154 (Madras) [06-11-2000] 4. Hon'ble High Court of Rajasthan in case of CIT Vs Emery Stone Mfg. Co [1995] 83 Taxman 643 (Rajasthan) / [1995] 213 ITR 843 (Rajasthan) / [1995] 126 CTR 345 (Rajasthan) [21-07-1994] 5. Hon'ble High Court of Karnataka in case of Thalibai F Jain Vs ITO [1975] 101 ITR 1 (Karnataka) [14-03-1975] 6. Hon'ble Supreme Court of India in case of Malabar Industrial Co Ltd. Vs CIT [2000] 109 Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to furnish the information as per the annexure of the notice u/s 142(1) dt. 14/08/2019 along with following details. Cash deposit made between 9th Nov to 31st Dec 2016. ii. Please specify the nature of cash deposit (i.e. out of loan received, repayment of loan, gift, sale or advance for sale of land or nay other capital asset, cash received for services rendered other exempt income, cash in hand or any other). iii. Whether stock register maintained. If yes, please provide monthwise stock position. iv. Details of cash deposits in Bank: Sl No Description Amount 1(a) Total cash deposit in Bank in F.Y. 2015-16 (b) Total cash deposit in Bank from 01.04.2015 to 08.11.2015 (c) Total cash deposit in Bank from 09.11.2015 to 31.12.2015 2(a) Total cash deposit in Bank in F.Y. 2016-17 (b) Total cash deposit in Bank from 01.04.2016 to 08.11.2016 (c) Total cash deposit in Bank from 09.11.2016 to 31.12.2016 3(a) Percentage increase between 2(a) 1(a) (b) Percentage increase between 2(b) 1(b) (c) Percentage increase between 2(c) 1(c) v. Details of Cash Sales Sl No Description Amount 1(a) Total cash sales in F.Y. 2015-16 (b) Total cash sales from 01.04.2015 to 08.11.2015 2(a) Total cash sales in F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nthwise purchase in the following format Month Total Purchase Cash Purchase Credit Purchase 1. Provide the monthwise sales in the following format Month Total Sales Cash Sales Credit Sales 1. Please provide the details of cash deposited during 08/11/2016 to 31/12/2016 in the following format: Date of deposits Denomination of Rs. 500 Rs. 1000 note Number of notes Total Amount 1. Please give details regarding cash balance at the end of every month till the month of December-16 in the following format. Cash available on the opening day of the month Cash received during the month from the various sources excluding bank account Cash withdrawn from bank Actual utilization of cash for the business activity Cash balance at the end of the month i. Cash deposit made between 9th Nov to 31st Dec 2016 ii. Please specify the nature of cash deposit (i.e. out of loan received, repayment of loan, gift, sale or advance for sale of land or any other capital asset, cash received for services rendered, other exempt income, cash in hand or any other) iii. Whether stock register maintained. If yes, please provide monthwise stock position. iv. Details of cash deposits in Bank: Sl No Description Amount 1(a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollowing details along with the reply : viii. Reason for mounting cash in hand in F.Y.2016-17 till 08.11.2016. The Assessee Firm is having cash balance of Rs. 16,33,30,867/- as on 08.11.2016. The said cash balance is attributable towards cash sates recorded in the books of accounts. I wish to submit that a survey action u/s. 133A has been conducted on 09.08.2016 in the case of the Assessee Firm. I decided to increase Sales to off-set higher Income tax payout due to Survey action. Accordingly, sales have increased in the post survey period leading to high amount of Cash in hand as on 08.11.2016. In this respect I wish to state that the sale is genuine and the same is recorded in the books of accounts. The VAT on such Sales have also been paid. I wish to further submit that Purchases have also increased in sync with Sales. Thus, the Sales recorded is genuine and the cash amount as on 08.11.2016 is sourced out of Cash Sales. In support of the above facts, I am producing Purchase Invoices, Sales Invoices and Stock record for the period 01.04.2016 to 08.11.2016 before your honor. Reason for huge difference in the amount of cash deposited in the bank account during the period 08.11.2016 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has made due enquiries which is expected of him and after receiving the replies from the assessee from time to time, has accepted the source of such cash deposits in the bank account during the demonetization period. 25. We find the Hon ble Bombay High Court in the case of CIT Vs. Gabrial India Ltd. (1993) 203 ITR 180 (Bom.) has observed as under : 14. We, therefore, hold that in order to exercise power under sub-section (1) of section 263 of the Act there must be material before the Commissioner to consider that the order passed by the Income-tax Officer was erroneous in so far as it is prejudicial to the interests of the Revenue. We have already held what is erroneous. It must be an order which is not in accordance with the law or which has been passed by the Income-tax Officer without making any enquiry in undue haste. We have also held as to what is prejudicial to the interests of the Revenue. 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 realised or cannot be realised. There must be material available on the record called for by the Commissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e claim was allowed by the Income-tax Officer on being satisfied with the explanation of the assessee. Such decision of the Income-tax Officer cannot be held to be erroneous simply because in his order he did not make an elaborate discussion in that regard. Moreover, in the instant case, the Commissioner himself, even after initiating proceedings for revision and hearing the assessee, could not say that the allowance of the claim of the assessee was erroneous and that the expenditure was not revenue expenditure but an expenditure of capital nature. He simply asked the Income-tax Officer to re-examine the matter. That, in our opinion, is not permissible. Further inquiry and/or fresh determination can be directed by the Commissioner only after coming to the conclusion that the earlier finding of the Income-tax Officer was erroneous and prejudicial to the interests of the Revenue. Without doing so, he does not get the power to set aside the assessment. In the instant case, the Commissioner did so and it is for that reason that the Tribunal did not approve his action and set aside his order. We do not find any infirmity in the above conclusion of the Tribunal. 26. We find the Hon ble D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be wrong. CIT cannot direct reconsideration on this ground but only when the order is erroneous. An order of remit cannot be passed by the CIT to ask the Assessing Officer to decide whether the order was erroneous. This is not permissible. An order is not erroneous, unless the CIT hold and records reasons why it is erroneous. An order will not become erroneous because on remit, the Assessing Officer may decide that the order is erroneous. Therefore CIT must after recording reasons hold that the order is erroneous. The jurisdictional precondition stipulated is that the CIT must come to the conclusion that the order is erroneous and is unsustainable in law. We may notice that the material which the CIT can rely includes not only the record as it stands at the time when the order in question-was passed by the Assessing Officer but also the record as it stands at the time of examination by the CIT [see CIT vs. Shree Manjunathesware Packing Products, 231 ITR 53 (SC)]. Nothing bars/prohibits the CIT from collecting and relying upon new/additional material/evidence to show and state that the order of the Assessing Officer is erroneous. 27. We find the Mumbai Bench of the Tribunal in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her, the Pr.CIT in the instant case, despite having all the material, has not examined the details himself and came to a definite conclusion but has merely set-aside the matter to the file of the AO for afresh assessment. The various decisions relied on by the ld. Counsel for the assessee in the case law compilation support his case to the proposition that where the AO had conducted enquiries regarding the source of cash deposits made during the demonetization period and has taken a possible view, the Pr.CIT was not justified in invoking the revision powers u/s. 263 of the Act by merely directing the AO to carry out enquiries afresh without himself conducting further enquiries. So far as the various decisions relied on by the ld. DR are concerned, these are all distinguishable and not applicable to the facts of the present case. Since the AO in the instant case has made detailed enquiries regarding the source of cash deposits made during the demonetization period and after being satisfied has taken a possible view, therefore, we are of the considered opinion that the ld. Pr.CIT is not justified in invoking the provisions of section 263. We, therefore, set aside the same. The ground ..... 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