Pr. Commissioner Of Income Tax, Bikaner v. Shri Dilip Kumar Swami

HIGH COURT OF JUDICATURE FOR RAJASTHAN ATJODHPUR D.B. Income Tax Appeal No. 19/2018 Pr. Commissioner Of Income Tax, Bikaner. ----Appellant Versus Shri Dilip Kumar Swami S/o Shri Harsukh Dass Swamin, WardNo. 05, Suratgarh Rajasthan ----Respondent For Appellant(s) : Mr. K.K.Bissa with Mr.G.S.ChouhanFor Respondent(s): Mr. Sharad Kothari HON'BLE MR. JUSTICE SANGEET LODHA HON'BLE MR. JUSTICE ABHAY CHATURVEDI 26/04/2019 Judgment 1.This appeal is directed against order dated 19.5.17 of the IncomeTax Appellate Tribunal (ITAT), Jodhpur Bench, Jodhpur, whereby theappeal preferred by the respondent-assessee against the order dated28.3.16 passed by the Principal Commissioner of Income Tax (Appeals)[PCIT(A)], Bikaner under Section 263 of Income Tax Act, 1961 (forshort “the Act”) setting aside the order passed by the Assessing Officer(AO) and directing him to examine the case afresh after givingopportunity to the assessee, has been allowed. 2.The facts relevant are that during financial year relevant toAssessment Year(AY) 2009-10, the assessee made cash deposits ofRs.33,31,700/- in his Saving Bank account maintained with the StateBank of India (SBI) Branch-Suratgarh. The assessee was asked toexplain the source of the said deposit but he did not file any reply. Theassessee was served with notice dated 22.4.13, issued under Section 148 of the Act, in response whereof the assessee vide letter dated9.7.13 submitted that he had already filed his return of income for AY2009-10 in the office of ITO, Suratgarh on 29.9.09 declaring income ofRs.1,91,680/-. Notice under Section 147/143(2) was issued and servedon the assessee, in response thereto, Authorised Representative of theassessee appeared before the AO and supplied the required information.The assessee submitted that the amount in the said bank account wasdeposited out of the amount received from various purchasers againstthe sale of the goods i.e. tractor and accessories thereof. The copies ofthe bills issued on account of sale of tractors were also placed onrecord. The assessee stated that in the bank statement, the entriesappearing are through transfer from another bank accounts ofcustomers for purchase of tractors either by cheque or other mode. TheAO found that the entries appearing in the bank statement are verifiablefrom the cash book and also the bills produced by the assessee. Thedeposits being reconciled, the AO arrived at the finding that no otheraddition is feasible. Accordingly, the income shown by the assessee atRs.1,91,680/- was accepted vide Assessment Order dated 30.12.13. 3.The records of the assessment year in the question were called forand examined by the PCIT(A), who after examination of the record,being of the opinion that order dated 30.12.13 passed by the AO isprejudicial to the interest of Revenue issued a show cause notice underSection 263 of the Act to the assessee on 5.2.16, raising the issueregarding the cash deposits of Rs.33,31,700/- being not satisfactorilyexplained by the assessee and failure of AO to bring the same to tax.That apart, the issue with regard to withdrawal of meagre Rs.57,525/-by the assessee towards household expenses considering the same tobe very low keeping in view the financial status of the assessee wasalso raised. After due consideration, the PCIT(A) vide order dated28.3.16 set aside the Assessment Order dated 30.12.13 passed by the AO and restored the case to the AO for examination afresh in light ofthe observations made in the order after giving an opportunity ofhearing to the assessee. 4.Aggrieved by the order passed by PCIT(A) as aforesaid, theassessee preferred an appeal before the ITAT, which has been allowedby the order under appeal dated 19.5.17 and while setting aside theorder passed by the PCIT(A) under Section 263 of the Act, the orderpassed by the AO dated 30.12.13 under Section 147/143(3) of the Act,has been restored. Hence, this appeal. AO and restored the case to the AO for examination afresh in light ofthe observations made in the order after giving an opportunity ofhearing to the assessee. 4.Aggrieved by the order passed by PCIT(A) as aforesaid, theassessee preferred an appeal before the ITAT, which has been allowedby the order under appeal dated 19.5.17 and while setting aside theorder passed by the PCIT(A) under Section 263 of the Act, the orderpassed by the AO dated 30.12.13 under Section 147/143(3) of the Act,has been restored. Hence, this appeal. 5.The ITAT arrived at the finding that from bare perusal of the showcause notice, it is evident that PCIT(A) has not applied its mind and itwas not even sure as to whether the AO has examined the issues and ifexamined, he has not taken the same to the logical end. Accordingly,while holding the notice to be invalid and the revisional proceedingsunder Section 263 as void ab initio, the appeal preferred by theassessee was allowed. 6.Learned counsel appearing for the appellant contended thatthough the AO obtained the information in respect of sources of thecash deposits made in Saving Bank Account of the assessee, no inquirywas made that the part of the deposits were made out of the amountreceived from the purchasers of the tractors and spare parts and noteven the confirmation of the purchasers were obtained and thus, thereasoned order passed by the PCIT(A) under Section 263 of the Act wasnot required to be interfered with by the ITAT. Learned counselsubmitted that order impugned passed by the ITAT ignoring thematerial on record is ex facie illegal and deserves to be set aside. 7.On the other hand, the counsel appearing for the respondentsubmitted that on the basis of the information supplied by the assessee,the AO after conducting a proper inquiry arrived at a categorical findingthat the entries appearing in the bank account of the assessee were verifiable from the cash book and also the bill produced by the assesseeand thus, the reason assigned for initiating the proceedings underSection 263 of the Act by the PCIT(A) were apparently contrary torecord and thus, the ITAT has committed no error in setting aside theproceeding initiated by the PCIT(A) as invalid and void ab initio. Learnedcounsel would submit that in view of the categorical finding arrived atby the AO, affirmed by the ITAT no substantial question of law arises forconsideration of this court in the present appeal. 8.We have considered the rival submissions and perused thematerial on record. 9.Indisputably, the power of revision of orders passed by the AOunder Section 263 of the Act is in the nature of supervisory jurisdictionwhich is permissible to be exercised only when the two circumstancesspecified therein are satisfied; (i) the order passed by the AO iserroneous and (ii) on account of order being erroneous, prejudice hasbeen caused to the interest of revenue. 10.In the instant case, while recording the conclusion that the orderpassed by the AO is erroneous and prejudicial to the interest of therevenue, apparently the record of the assessment proceedings was notexamined by the PCIT(A) in its entirety and objectivity. The PCIT(A)while relying upon certain decisions of the High Court has merelyrecorded its ipse dixit that the AO has not examined the genuineness ofthe deposits claimed in the name of various persons. 11.A perusal of the order passed by the AO reflects that theconclusion arrived at that the deposits stand reconciled was precededby a proper inquiry. The office note appended to the Assessment Ordercategorically records that the assessee had produced the statement ofthe bank account, the copies of the bills issued to the purchasers of thetractors as also the books of account showing the entries of the depositsmade in the bank. It is pertinent to note that the assessee had 11.A perusal of the order passed by the AO reflects that theconclusion arrived at that the deposits stand reconciled was precededby a proper inquiry. The office note appended to the Assessment Ordercategorically records that the assessee had produced the statement ofthe bank account, the copies of the bills issued to the purchasers of thetractors as also the books of account showing the entries of the depositsmade in the bank. It is pertinent to note that the assessee had produced the bank statement showing that entries appearing arethrough transfer from another bank accounts from the account ofcustomers for purchase of tractors either by cheque or other made.That apart, after perusal of the record, the AO recorded the categoricalfinding that entries in the bank account are verifiable from the cashbook and also the bills produced by the assessee. In this view of thematter, ignoring the factum of inquiry by the AO, the material on recordand the conclusions arrived at , the proceeding initiated by the PCIT(A)under Section 263 of the Act without application of mind, has rightlybeen held invalid by the ITAT. 12.In view of the discussion above, no substantial question of lawarises for consideration of this court in the present appeal. 13.The appeal is therefore, dismissed. No order as to costs. (ABHAY CHATURVEDI),J 38-Aditya/- (SANGEET LODHA),J