Gujarat High Court
The Principal Commissioner Of Income ... vs Mukesh Chand Mal Pitti on 29 August, 2023
Author: Biren Vaishnav
Bench: Biren Vaishnav, Bhargav D. Karia
NEUTRAL CITATION
C/TAXAP/507/2023 ORDER DATED: 29/08/2023
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/TAX APPEAL NO. 507 of 2023
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THE PRINCIPAL COMMISSIONER OF INCOME TAX 1
Versus
MUKESH CHAND MAL PITTI
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Appearance:
MRS KALPANAK RAVAL(1046) for the Appellant(s) No. 1
for the Opponent(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE BIREN VAISHNAV
and
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
Date : 29/08/2023
ORAL ORDER
(PER : HONOURABLE MR. JUSTICE BIREN VAISHNAV) 1 Challenge in this petition is to the order of the Income Tax Appellate Tribunal dated 22.02.2023 in Income Tax Appeal No. 124/RJT/2022. 2 The following substantial questions of law arise for consideration of this Court:
"(i) Whether the Hon'ble Tribunal was justified in quashing the order u/s. 263 of the Income Tax Act of Ld. PCIT when Explanation 2 of Section 263 of the Act expressly provides that it is final opinion of the Ld. PCIT to deem an order prejudicial and erroneous to the interest of revenue?
(ii) Whether the Hon'ble Tribunal was justified in Page 1 of 6 Downloaded on : Sun Sep 17 02:51:16 IST 2023 NEUTRAL CITATION C/TAXAP/507/2023 ORDER DATED: 29/08/2023 undefined quashing the order u/s. 263 of the Income Tax Act of Ld. PCIT observing that the A.O has made enquiries and relying upon material placed on record accepted the genuineness of transactions of aggregate case of Rs.27,00,000/- deposited by the assessee in his bank accounts during the demonetization period?
(iii) Whether the Hon'ble Tribunal was justified n quashing the order u/s. 263 of the Income Tax Act of Ld. PCIT, especially when the Assessment Order passed by the A.O is unsustainable in law?
(iv) Whether the Hon'ble Tribunal was justified in quashing the order u/s. 263 of the Income Tax Act of Ld. PCIT especially when the order passed by the A.O was erroenous and prejudicial to the interest of revenue as he failed to verify the source of aggregate cash of Rs.27,00,000/- deposited during the demonetization period by the assessee in his bank accounts?
(v) Whether the Hon'ble Tribunal was justified in allowing the appeal of the assessee against the order u/s. 263 of the Income Tax Act of Ld. PCIT when there was gross inadequacy in inquiry conducted as per order of the Hon'ble Supreme Court in case of the Commissioner of Income Tax Vs. M/s. Paville Projects Pvt. Ltd. (CA No. 6126 of 2021 (SC)?"
3 Facts in brief indicated that the assessee was an individual on income from salary. The case of the petitioner was taken up for scrutiny under CASS for verifying the reasons for "cash deposits during demonetization period". Pursuant to proceedings under Page 2 of 6 Downloaded on : Sun Sep 17 02:51:16 IST 2023 NEUTRAL CITATION C/TAXAP/507/2023 ORDER DATED: 29/08/2023 undefined Sec.143 of the Income Tax Act, and on satisfaction thereof, assessment order was passed. 3.1 It appears that in exercise of powers under Sec.263 of the Income Tax Act, the Office of the Principal Commissioner of Income Tax, took up the issue for revision. In the perception of the CIT, the Assessing Officer had not examined the sources of cash in hand and that the possibilities of introducing unaccounted income could not be ruled out. It was the case of the revisional authority that in failing to examine and compare the figures of cash deposits made by the assessee in the corresponding period of the preceding year, to judge the genuineness of the cash deposits, the Assessing Officer ought to have compared the figures of the cash deposits made in the demonetization period with the rest periof of the year under consideration.
3.2 On the respondent carrying the matter further in appeal to the Income Tax Appellate Tribunal, the Tribunal, after examining the question of law and Page 3 of 6 Downloaded on : Sun Sep 17 02:51:16 IST 2023 NEUTRAL CITATION C/TAXAP/507/2023 ORDER DATED: 29/08/2023 undefined referring to various decisions on the scope of inquiry under Sec.263(A) of the Act, held as under:
"6.9 Now coming to the facts before us, from the records we observe that the issue regarding the cash deposited by the assessee during the demonetization period has been discussed in detail during the course of assessment proceedings. The assessment proceedings were initiated specifically for the reason "verifiying the cash deposited during demonetization period". Accordingly, the AO issued notice for verifying the cash deposits made by the assessee, in response to which the assessee furnished the details which have been mentioned in the preceding paragraphs. Therefore, this is not a case where no enquiry was made by the AO during the course of assessment proceedings. Further, we also observe that the assessee also duly filed his reply in response to the notice issued by the AO and various details like Certificates from Lakshmi Vilas bank and Certificate from Allahabad Bank, bank statements of Lakshmi Vilas Bank and Allahabad Bank, cash book for financial year 2016-17, VAT returns for financial year 2016-17 etc were submitted before the AO in response to this query regarding the cash deposits made by the assessee during the demonetization period. We further observe that it is also not the case of the Principal CIT that the AO has taken a view which is legally impermissible. Therefore, from the above facts, we are of the considered view that the AO had made enquiries into the aspect of cash deposit in the bank accounts of the assessee during demonetization period, and after due consideration of the assessee and did not make any addition to the returned income. Accordingly, in our view, this is not a case where no enquiry has been made by the Assessing Officer during the course of assessment proceedings. In our view, Pr.CIT has incorrectly Page 4 of 6 Downloaded on : Sun Sep 17 02:51:16 IST 2023 NEUTRAL CITATION C/TAXAP/507/2023 ORDER DATED: 29/08/2023 undefined observed in the instant facts that the Ld. AO failed to apply his mind to the issues on hand or he had omitted to make enquiries altogether or had takn a view which was not legally plausible in the instant facts. As hely by various Courts, Principal CIT cannot in 263 proceeings set aside an assessment order merely because he has different opinion in the matter. In our view, s.263 of the Act does not visualize a case of substitution of the judgment of the Principal CIT for that of the Assessing Officer who passed the order unless the decision is held to be wholly erroneous. As noted in various judicial precedents highlighted above, the Principal CIT, on perusal of the records, may be of the opinion that the estimate made by the officer concerned was on the lower side and left to the Commissioner he would have estimated the income at a figure higher than the one determined by the Income-tax Officer. That would not vest the Commissioner with power to re-visit the entire assessment and determine the income himself at a higher figure."
3.3 Perusal of the order would indicate that the Income- tax Appellate Tribunal and in our opinion rightly came to the conclusion that since the assessment proceedings were specifically undertaken for the reason of verifying the cash deposits during the demonetization period, it was not the case where no enquiry was made by the A.O during the course of assessment proceedings. 3.4 Perusal of the order and reasons would indicate that Page 5 of 6 Downloaded on : Sun Sep 17 02:51:16 IST 2023 NEUTRAL CITATION C/TAXAP/507/2023 ORDER DATED: 29/08/2023 undefined these are finding of facts arrived at by the Tribunal. Having found that in response to the notice issued by the A.O, details were supplied such as Certificates from the Lakshmi Vilas Bank, certificate from the Allahabad Bank, Bank Statements of the banks concerned, cash books for the financial year 2016-17 etc., based on which the A.O had taken a decision, the Income Tax Tribunal allowed the appeal of the assessee.
4 We find no reason to interfere with the impugned order and the appeal is accordingly, dismissed.
(BIREN VAISHNAV, J) (BHARGAV D. KARIA, J) BIMAL Page 6 of 6 Downloaded on : Sun Sep 17 02:51:16 IST 2023