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TMI Blog2025 (4) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... gs u/s.263 of the Income Tax Act, 1961. 2. That on the facts and in the circumstances of the case and in law, the appellant prays that the order of the learned PCIT passed u/s. 263 of the Income Tax Act, 1961 needs to be cancelled being void ab-initio and bad in law. 3. That on the facts and in the circumstances of the case and in law, learned Principal Commissioner of Income Tax (Central), Jaipur erred in holding that assessment order dated 20.09.2021 passed by the Assessing Officer u/s 143(3) of the Act was erroneous and prejudicial to the interest of the revenue, as all the issues raised during assessment proceeding were duly considered by the learned Assessing Officer while framing the assessment u/s 143(3) of the Act. 4. That on the facts and in the circumstances of the case and in law, the learned PCIT erred in not himself conducting necessary/proper enquiry and verification of issues mentioned in the notice issued u/s. 263 of the Act and setting aside the assessment order for a de-novo adjudication on issues mentioned therein which is wrong and contrary to the provisions of the Act, and the Rules made thereunder.'' 3. The brief facts of the case of are that a survey a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cash book produced before your good self, thus whole cash was properly accounted for. The annual accounts have been finished on the basis of entries therein.'' The AO considered the reply of the assessee carefully who perused the cash book furnished by the ld.AR of the assessee and thus noticed that the amount of Rs.1,26,874/- was shown on a/c of drawing account and the corresponding entry was not found mentioned in the capital account of the assessee. Thus according to the AO, the justification made by the assessee with regard to expenses of Rs.1,26,874/- was not found satisfactory and the AO held that the amount of Rs.1,26,874/- was unexplained expenditure in terms of provisions of Section 69C of the Act and thus added this amount of Rs.1,26,874/- to the income of the assessee and the Tax will be charged as per provisions of Section 115BBE of the 4. On culmination of the assessment proceeding ld. PCIT called for the assessment records in accordance with the provision of section 263 of the Act. While examining the assessment record ld. PCIT observed that during the survey proceedings, the assessee had surrendered a sum of Rs.22,62,143/- on account of unexplained investment. He f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey proceedings. Neither the assessee had given an iota of evidences that the investment was made from the undisclosed income of the assessee from business. Conclusively, the ld PCIT set aside the matter and restored to the file of the AO to verify the applicability of provisions of Section 69 and Section 36(1)(va) r.w.s. 2(24)(x) of the Income Tax Act by observing as under:- ''09. Considering all the facts and circumstances of the case and for the reasons discussed above, the assessment order dated 20.09.2021for A.Y. 2019- 20 passed by the AO is held to be erroneous in so far as it is prejudicial to the interest of the revenue for the purpose of section 263 of the Act. The said order has been passed by the AO in a routine and casual manner without applying the applicable sections of the Act. The AO has not verified the details which were required to be verified under the scope of scrutiny. The order of the AO is, therefore, liable to revision under the explanation (2) clause (b) and clause (a) of section 263 of the Act. The assessment order is set aside to be made afresh in the light of the observation made in this order. The AO is required to make necessary verification in respe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mated cost of construction including finishing was approx Rs. 1 Crore. (e). First year expenses was Rs. 35 Lakh to Rs. 40 Lakhs. (f). In Year 2016 expenses was around Rs. 20 Lakhs to Rs. 25 Lakhs. (e). Year 2017 and 2018 Rs. 20 Lakh each (iv). That further, Ld. A.O. asked question regarding the sources of construction of building in QUESTION No. 5 of Statement. (v). That in response to above question No. 5, assessee submitted detailed reply regarding the sources of construction of building (i.e. Rs. 25 Lakhs & Rs. 35 Lakhs personal loan from ICICI Bank & HDFC Bank and the sources of remaining investent was out of daily income/earning. Hence, assessee explained sources of investment in building expressly, concisely and clearly. (vi). That in QUESTION No. 6, the Ld. A.O. asked question regarding the annual income from M/s. Bharat Ultrasounds. (vii). That in response to above question No. 6, assessee submitted detailed statement regarding the annual income from M/s. Bharat Ultrasounds. (viii). That further, in QUESTION No. 15, the Ld. A.O. made detailed query regarding the total area of construction and made baseless & vague estimation of construction of building which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urvey . So, it is crystal clear that the undeclared investment was from disclosed sources of income only. 6. That assessee had filed his return of income u/s. 139(1) of the I.T. Act, 1961 on 30.10.2019, declaring total income amounting to Rs. 78,98,350/- as per audited books of accounts and Rs. 22,50,000/- declared which was on account of undisclosed investment on the basis of valuation report & surrendered. 7. That proceeding of assessment was initiated and a notice u/s. 143(2) of the I.T. Act, 1961 were issued on 23.09.2020. 8. That further, assessee received notices u/s. 142(1) of the I.T. Act, 1961 on 29.01.2021 and on this query letter the Ld. A.O. made specific query No. 1 and 2 regarding disclosure of undisclosed income in ITR filed by assessee. 9. That assessee submitted proper reply along with the required documents/details/information and the same reply was considered by the Ld. A.O. 10. That the Ld. A.O. passed an assessment order on 20.09.2021 by making an addition of Rs. 1,26,874/- on account of unexplained expenditure (i.e. as cash found short). 11. That further, Revision proceedings were initiated by Ld. PCIT (Central), Jaipur and issued a Show Cause No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the file of Assessing officer to verifying applicability of provisions of section 69 and section 36(1)(va) r.w.s. 2(24)(x)of the Income tax Act." 14. That the Ld. PCIT (Central), Jaipur has mentioned the incorrect facts while passing order u/s. 263 of the I.T. Act, 1961, which is as follows:- (i). The assessee had surrendered Rs. 22,62,143/- on account of unexplained investment. (ii) The assessee has shown in his return of income Rs. 22,50,000/- as unexplained investment. (iii). The Ld. A.O. has not verified the details which were required to be verified under the scope of scrutiny. (iv). The order has been passed by Ld. A.O. in a routine and casual manner without applying the applicable sections of the Act. (v). Wrong calculation of difference in Valuation report & the amount recorded in books + the amount offered for tax Rs. 12,143/- instead of Rs. 59,343/-. (vi). Wrong calculation of ESI late deposited Rs. 17,298/- for the month of May, July, November and January, whereas correct facts which are as follows:- May Rs. 2,479/- July Rs. 2,366/- November Rs. 2,419/- January Rs. 2,555/- Rs. 9,819/- Provisions of Income Tax Act, 1961:- Section 263 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atter of any appeal filed on or before or after the 1st day of June, 1988, the powers of the* Principal Commissioner or Commissioner under this subsection shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in such appeal. Explanation 2.-For the purposes of this section, it is hereby declared that an order passed by the Assessing Officer [or the Transfer Pricing Officer, as the case may be,] shall be deemed to be erroneous in so far as it is prejudicial to the interests of the revenue, if, in the opinion of the Principal [Chief Commissioner or Chief Commissioner or Principal] Commissioner or Commissioner,- (a)the order is passed without making inquiries or verification which should have been made; (b)the order is passed allowing any relief without inquiring into the claim; (c)the order has not been made in accordance with any order, direction or instruction issued by the Board under section 119; or (d)the order has not been passed in accordance with any decision which is prejudicial to the assessee, rendered by the jurisdictional High Court or Supreme Court in the case of the assessee or any other person. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arding difference of Rs. 12,143/-:- (i). That there werewrong calculation of difference in Valuation report & the amount recorded in books and the amount offered for tax Rs. 12,143/-. (ii). The Surrender was based on the valuer's report. The valuation report is pure estimation. (ii). There are many defects in Valuation report as this is valuation report, not actual cost of construction. (iii). Addition can be made during the year of investment. Here, the construction work was completed in 4 years. So, there is no clear bifurcation that which year of investment is unrecorded. (iv) The above issue was a very petty & explained before A.O. and discussed at the time of hearing during assessment proceeding & the Ld. A.O. satisfied on this difference, explained by the appellant. (b). Calculation of disallowable contribution of employee of ESI is incorrect. (i). That the Ld. PCIT (Central), Jaipur had stated that assessee had made late deposit of ESI amounting to Rs. 17,298/- for the month of May, July, November and January. (ii). That the calculation done by Ld. PCIT was totally factually incorrect. (iii). That the actual calculation of ESI late deposited for the month ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew of the above it is submitted that:- A. The Judgment of Hon'ble Supreme Court in case of Checkmate Services Pvt. Ltd. was pronounced on 12.10.2022 was came after the reassessment proceeding. B. The Judgment of Rajasthan High Court in PCIT, Jaipur-2 vs. Rajasthan State Beverages Corporation Ltd., ITA No. 150/2016 was pronounced on 04.08.2016. C. The Judgment Rajasthan High Court in case of Rajasthan State Beverages Corporation Ltd is applicable in case of assessee at the time of assessment proceedings. D. So, the order passed by Ld. A.O. is not erroneous and prejudice to the interest of Revenue. Moreover, assessee is also relying on the Judgment of Hon'ble ITAT, Jaipur Bench in case of Mahesh Kumar Saini v. PCIT (Central), Jaipur, having ITA No. 477 to 479/JP/2024, Date of Order 01.08.2024& the finding of the Hon'ble Court is as follows:- "12. We have heard the rival contentions of both the parties and perused the materials available on record. In this case, the assessment was framed u/s 143(3) of the Act on 22.09.2021. It has been held to be erroneous in so far prejudicial to the interest of revenue for the reason that the income surrendered during survey operation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essary to classify the income under the relevant head provision under section 69, 68, 69B etc. as they are penal in nature. In present case, the income surrendered was to be classified u/s 68, 69 & 69A of the Act. As per the direction of the Ld. PCIT, however, we find that the Ld. PCIT has nowhere pointed out that the income surrendered by the assessee falls within the provision of section 68, 69 & 69A of the Act. As such, the assessee was able to justify the source of income surrendered during survey operation. Therefore we are of the view that the same cannot be treated as deemed income. Once, the income goes out of the preview of the deeming provision, the provision of section 115BBE of the Act cannot be applied. 17. Thus, we note that the AO has taken one of the plausible view by treating the income offered during survey operation as income under the head of business and profession. The similar view has been taken by the co-ordinate bench of Delhi ITAT in the case of Hema Raman vs. PCIT in ITA No. 1012/DEL/20222 dated 12.05.2023. 18. So, we are of the considered view that ld. PCIT could not substitute the view taken by ld. AO as per his understanding of facts of the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng revision proceedings u/s 263 of the Act.) 7. Further the ld.AR of the assessee has relied upon the following decisions as to the case of PF & ESI 1. PCIT,Jaipur-2 vs Rajasthan State Beverages Corp. Ltd (DBIT No. 150/2016 dated 04-08-2016 0 Rajasthan High Court -Appeal dismissed.) 2. PCIT, Jaipur vs Rajasthan State Beverages Corp. Ltd.(Record of proceedings [Diary No. (s) 15041/2017 (SC) - Judgement dated 04-08-2016 arising out of ITA No. 150/2016 passed by the High Court of Judicature for Rajasthan Bench, at Jaipur] 3. Checkmate Services Pvt. Ltd vs CIT-1 (Civil Appeal No.2833 of2016 - Departmental appeals dismissed. Vide Order 12th Oct. 2022) 8. On the other hand, the ld. DR supported the order of the ld.PCIT. 9. We have heard both the parties and perused the materials available on record. In this case, it is noted that the ld. PCIT observed that the AO has not done verification. It may be noted that whether Section 69 of the Act is applicable or not which depends upon the following conditions. (i) Investment is not recorded in the books. (ii) Assessee offer no explanations about the nature and sources of the investment or the explanation made by him is not in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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