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TMI Blog2025 (1) TMI 1346X X X X Extracts X X X X X X X X Extracts X X X X ..... ere replied, along with documentary evidence, which were furnished before the A.O. further regarding the ICICI Bank account, AO did not agree with the audit objection and clarified that ICICI Bank account was part of the record lying in the other folder as per the annotated report reproduced above.
Thus, it is not a case of inadequate enquiry, rather the A.O. had made the enquiry and also by relying upon the various judgments of the 'Apex Court' and of the Chandigarh Bench, particularly of 'Loil Continental Foods' [2019 (12) TMI 263 - ITAT CHANDIGARH] we hold that even on merits, the issue of notice u/s 263 was bad in law as the A.O. had made the necessary enquiries on both the issues and, thus, the order as passed by the PCIT both on legal and merits of the case is quashed. Assessee's appeal is allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... er advised the assessee not to file the appeal against the order passed by the Ld. PCIT, the condonation of 1740 days were condoned. Along with the application of condonation, the affidavit of the assessee was also filed on identical facts, which has been placed on record. 3. The Ld. DR argued that there is a considerable delay in filing the appeal and then stated that the decision may be taken on the merits by the Hon'ble Bench. 4. We have considered the application for condonation of delay, along with the affidavit and gone through the submissions along with, the affidavit of the assessee and the case laws and considering the all facts & circumstances, we deem it fit to condone the delay and proceed to decide the appeal on merits. 5. Grounds of appeal taken by the Assessee are as under:- 1. That the Ld. PCIT, Panchkula has erred in setting aside the order, as passed by the Ld. Assessing Officer u/s 143(3) r.w.s section 147 of the income tax, dated 24.10.2018 and holding the same as erroneous, in so far as, prejudicial to the interest of revenue. 2. That the Ld. PCIT has failed to appreciate that the assessment was framed by the Ld. Assessing Officer vide order, dated 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r AY 2011-12 u/s 143(3)/147, for which, a copy of assessment order was placed at page 24 to 28 of the paper book. It was also brought to our notice that the addition of Rs. 2.14 lacs have been made, while considering the cash deposits in the joint bank account. 7. It was further argued that after the completion of the assessment, there was an 'audit objection' raised by the audit party and copy of that 'audit objection' have been placed at pages 29 to 33 of the paper book and objection was raised that one bank account with the ICICI Bank in the name of the assessee at Rohtak had not been disclosed by the assessee. The assessee was confronted with such 'audit objection' by the A.O. A detailed reply was furnished to the A.O. along with the copy of the relevant bank account of ICICI Bank account along with the cash flow chart in order to prove the deposit in the bank account. Such papers have been enclosed in the paper book pages 34 to 47 of the paper book. 8. It was further argued that the A.O. sent an annotated report to the CIT, Audit in which he stated as under: "In this regard, it is submitted that there is two assessment folders of the said assessee o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment record and, thus, the same had been considered by the A.O. 12. Thereafter, the ld. PCIT issued another notice dated 17.02.2022, wherein certain new issues had been raised, which were not part and parcel of the earlier notice u/s 263 dated 04.03.2021. Thereafter, PCIT passed an order dated 25.02.2022 setting aside the assessment as framed byt he A.O. 13. It has been vehemently argued, before us that in the original show-cause notice dated 04.03.2021 had only single issue of cash deposit of Rs. 43,52,100/- was raised by the PCIT in the notice u/s 263 and that order of the PCIT u/s 263 had been set aside to the file of PCIT by the ITAT to pass fresh order, PCIT had raised the same issue vide notice u/s 263 dated 19.01.2022 and the same was replied by the assessee. It has been argued, that the ld. PCIT by issue of fresh show cause notice dated 17.02.2022, had exceeded her / his jurisdiction by raising altogether new issues as well, which were not part of the earlier show cause notice u/s 263 dated 04.03.2021. It was further argued that there is a time limitation of two years for issue notice u/s 263 it had elapsed before the new notice of 25.2.2022. The case had been set aside t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 294 (SC) c. LOIL CONTINENTAL FOODS LIMITED vs. PCIT in ITA No. 577/CHD/2017(Chd- Trib). d. PCIT vs. SPML Infra Ltd. [2024] 164 taxmann.com 505 (SC). e. VIRTUSA CONSULTING PVT. LTD. VS DCIT 326 CTR 59 (2022)(MAD)(HC). f. CIT (EXEMPTION) VS M/S DHANESWAR RATH INSTITUTE OF ENGINEERING & MEDICAL SCIENCES (2023) 458 ITR 0506 (Orissa). g. PCIT vs. Pramod Kumar Tekriwal [2023] 154 taxmann.com 142 (SC). h. PCIT vs. Clix Finance India (P.) Ltd. [2024] 160 taxmann.com 357 (Delhi). i. PCIT vs. Ramchandra Dahyabhai Narrow Fab (P.) Ltd. [2023] 155 taxmann.com 431 (Gujarat). j. Pawan Kumar vs. ITO [2022] 142 taxmann.com 13 (Chandigarh - Trib.) 16. Thus, in nutshell, it was prayed by the ld. Counsel that both on legal issues as well as on merits, the order as passed by the PCIT deserves to be quashed. 17. The ld. DR relied on the order of the PCIT u/s 263 and argued that the ld. PCIT was well within her rights to raise fresh issues in the notice u/s 263 and justified that the notice dated 17.02.2022 as issued by her, raising fresh issues was very much valid. At the time of original assessment proceedings, there was no proper enquiry and, thus, it was a case of lack of enquiry an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The said audit objection was confronted to the assessee and the assessee replied in July 2019, alongwith relevant documents, which had been submitted during assessment proceedings. 24.10.2019 The Assessing Officer filed a reply to the Commissioner (Audit), Chandigarh and did not accept the audit objection, since according to A.O., all such facts have been examined during assessment proceedings. 04/05.03.2021 The PCIT issued the notice u/s 263 (1) and only issue raised was about the non examination of bank account with ICICI Bank. Copy of notice u/s 263 (1) was filed during hearing. 18.03.2021 The PCIT passed the ex-parte order u/s 263. 20.12.2021 The assessee filed an appeal before the Hon'ble ITAT, Chandigarh Bench, Chandigarh that due to COVID, the assessee could not appear before the PCIT during the course of proceedings u/s 263. The ITAT set aside this case back to the file of Ld. PCIT. 09.01.2022 The successor PCIT issued the notice, u/s 263 and in that notice, she gave a reference to the or ginal notice u/s 263 as issued on 04/05.10.2021 and asked that assessee to submit the reply. 07.02,.2022 The assessee furnished a reply to the PCIT and personally appeare ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sis of audit objection by the audit wing of the department." c). Ganga Acrowools Limited vs. PCIT in ITA No.196/CHD/2021, wherein it was held as under:- "Therefore, we hold that the impugned action u/s 263 of the Act was not justified both on the allegation of lack of enquiry by the A.O. as well as on the allegation of nonapplication of mind by the A.O. We also hold the impugned action u/s 263 of the Act to be bad in law as it was initiated on the bases if audit objection. Accordingly, we quash the impugned order". d). Jaswinder Singh vs. CIT [2013] 2013 31 taxmann.com 80 (Chandigarh - Trib.),wherein it was held as under:- "Section 263 of the Income-tax Act, 1961 - Revision - of orders prejudicial to interest of revenue [Conditions precedent] - Assessment year 2005-06 -Whether an order of assessment cannot be said to be erroneous merely because in opinion of Commissioner percentage adopted by Assessing Officer was on lower side - Held, yes - Whether where show cause notice issued under section 263 was issued for non-deduction of tax at source out of certain expenses incurred by assessee, and in final order, Commissioner had directed Assessing Officer to recomputed income in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ond notice of 17.2.2022 was not a valid one. Accordingly, the order as passed by the PCIT is quashed on this issue as well. 22. Even on merits, we have examined the arguments advanced by both the sides and considering the synopsis and various case laws, we find that the investment in immovable property and the deposit in the ICICI Bank account were subject matter of issue of notice u/s 148. The A.O. was well aware of the issues involved while framing the assessment, for which, he raised specific queries which were replied, along with documentary evidence, which were furnished before the A.O. further regarding the ICICI Bank account, the A.O. did not agree with the audit objection and clarified that ICICI Bank account was part of the record lying in the other folder as per the annotated report reproduced above. Thus, after considering the various case laws of the coordinate benches and others, it is not a case of inadequate enquiry, rather the A.O. had made the enquiry and also by relying upon the various judgments of the 'Apex Court' and of the Chandigarh Bench, particularly of 'Loil Continental Foods' as cited supra, we hold that even on merits, the issue of notic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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