IN INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YADAV, AM ITANo.513/JP/16 Assessment Year : 2011-12 Shri Sunil Kumar Girdhar, 33 cuke Principal CIT, Alwar Scheme No.2, Alwar Vs. PAN No. ADHPG 8645 H Appellant Respondent Assessee by : Shri P.C. Parwal (CA) Revenue by : Shri M.S. Meena (CIT) Date of Hearing : 19.09.2016 Date of Pronouncement: 26/09/2016. ORDER PER SHRI VIKRAM SINGH YADAV, A.M. This is appeal filed by assessee against order of ld. Pr. Commissioner of Income tax, Alwar passed u/s 263 of I.T. Act, 1961 dated 29.03.2016 wherein assessee has taken following grounds of appeal: (1) Under facts and circumstances of case, order passed by ld. Commissioner of Income Tax u/s 263 is illegal & bad in law and same be quashed. (2) ld. CIT has erred on facts and in law in holding that no enquiry/verification has been conducted by AO on issues covered by notice issued u/s 263 of Act ignoring that AO has made necessary enquiries on issues raised in notice and after having been satisfied with same passed order which cant be held as erroneous and prejudicial to interest of revenue only on surmises and conjectures. ITA No. 513/JP/16 Shri Sunil Kumar Girdhar vs. Pr. CIT, Alwar (3) ld. CIT has erred on facts and in law in directing AO to also consider issue which may subsequently come to notice of AO during set aside assessment proceedings u/s 143(3)/263 of IT Act. Such direction are against law and be directed to be quashed. 2. Briefly facts of case are that during year under consideration, there was cash deposit of Rs. 21,58,258 in assessee s bank account maintained with ICICI Bank. In assessment proceedings u/s 143(3), assessee explained source of cash deposit and that same is duly recorded in books of accounts. AO however, did not accept explanation of assessee and consider this amount as sale and after rejecting books of accounts assessed income by applying profit rate of 10% on sales (declared sale Rs.31,83,499/- + cash deposit in bank Rs. 21,58,369/-) vide assessment order dated 16.01.2014. ld. CIT held that AO has not made enquiry/verification in respect of deposit of Rs. 21,58,258/- in bank account and also in respect of purchases of Rs. 15,30,436/-. He therefore, held that order passed by AO is erroneous and prejudicial to interest of revenue. 2.1 ld AR submitted that AO in original assessment proceedings has examined issue of deposit in ICICI Bank account and also examined books of accounts including purchase/sale bills and vouchers. assessee has given explanation on these issues and only after considering same, AO made assessment. order passed by AO u/s 143(3), therefore cannot be held to be erroneous and prejudicial to interest of revenue. CIT has wrongly held that no enquiry/verification has been conducted by AO on issues covered by notice issued u/s 263 of IT Act. To what extent, AO should make investigation is matter left to wisdom 2 ITA No. 513/JP/16 Shri Sunil Kumar Girdhar vs. Pr. CIT, Alwar of AO u/s 143(3). Therefore order passed by CIT u/s 263 is not valid in law. For this, reliance is placed on following cases: 1. CIT vs. Ganpat Ram Bishnoi (2008) 296 ITR 292 (Raj)(HC) 2. CIT Vs. New Delhi Television Ltd. (2013) 360 ITR 44/94 DTR 21(Del. HC) 3. CIT vs. Sunbeam Auto Ltd. (2011) 332 ITR 167(Del. HC) 4. CIT vs. Gaberil India Ltd. 203 ITR 108,113,114 (Bom)(HC) 5. CIT vs. Amit Corpn (2012) 213 Taxman 19 (Guj) (HC) (Mag.) 6. CIT vs. Leisure Wear Exports Ltd. (2011)341 ITR 166/201 Taxman 130 (Magz.) (Delhi)(HC) 2.2 ld AR further submitted that ld. CIT has also referred to amendment made u/s 263 w.e.f. 1.06.2015. However, assessee s case do not fall under any of clause mentioned therein and therefore, order passed u/s 263 is even not as per amended law. 2.3 ld AR further submitted that CIT has given direction to AO to consider any other issue which may come to his notice during fresh assessment proceedings u/s143(3)/263. Such direction is beyond scope and power of CIT u/s 263. In order u/s 263 CIT has to point exact error in order. It cannot be kept at large for AO to bring further error in order of his predecessor while framing order u/s 143(3)/263. Reliance in this connection is placed in case of CIT vs. G.K. Kabra (1995) 211 ITR 336 (HC/AP) where it is held that it is necessary for CIT to point out exact error in order which he proposes to revise so that assessee would have adequate opportunity of meeting that error before final order is made. 3 ITA No. 513/JP/16 Shri Sunil Kumar Girdhar vs. Pr. CIT, Alwar 3. We now refer to observation/findings of ld Pr. CIT, Alwar which reads as under: reply of assessee has been carefully considered and not found tenable since assessee has claimed that deposits of Rs. 21,58,258/- in his saving bank account maintained at ICICI Bank was made by sundry debtors and not from cash sales, but has not adduced any documentary evidences in order to substantiate his claim. Assessing Officer had treated above deposits as cash sales which were not challenged by assessee before appellate authorities. It means assessee is quite satisfied from decision of Assessing Officer. AO has not obtained any proof/documentary evidence in respect of said cash sales and treated amount of said cash deposits as cash sales proceeds in assessment order. Thus AO failed to make proper enquiries and verifications which he was required to make regarding claim of sales receipts, details and verification from transacting parties. Likewise, purchases of Rs.15,30,436/- has been shown by assessee, but it is observed that no creditor has been shown outstanding on 31.03.2011 indicating thereby that most of purchases were made in cash. This plea was also accepted by AO. As per reply most of bills amount is below Rs. 20,000/- indicating regular cash payments. Further some payments were shown to be made through banking channels. assessee has not given proper justification regarding cash payments made against cash purchases nor explained nature/details and justification in respect of payments made through banking channels. has not made proper enquiry regarding cash purchases and has not raised any query regarding payments made through banking channel. In present case, no enquiry/verification has been conducted by AO on issues covered by notice issued under section 263 of It Act. In 4 ITA No. 513/JP/16 Shri Sunil Kumar Girdhar vs. Pr. CIT, Alwar view of above, order passed by Assessing Officer for assessment year 2011-12 dated 16.01.2014 is deemed to be erroneous in so far it is prejudicial to interest of revenue, as I am of opinion that order has been passed without making enquiries or verification which should have been made. I therefore, cancel assessment order passed by AO u/s 143(3) on 16.01.2014 with direction to AO to pass assessment order after considering above mentioned issues, apart from other issues discussed in assessment order dated 16.01.2014 and also issues which may subsequently come into notice of Assessing Officer during set aside assessment proceedings u/s 143(3)/263 of IT Act, 1961. Consequently, order passed u/s 143(3) of Act is set aside under section 263 of Act with direction that AO should properly examine all issues raised in foregoing paras and pass assessment order afresh after making proper enquiries and after affording adequate opportunity to assessee. 4. ld DR is heard and submitted that source of cash deposit in assesse s bank account has not been examined by AO. AO has not obtained any proof/documentary evidence in respect of said cash sales and treated amount of said cash deposits as cash sales proceeds in assessment order. Thus AO failed to make proper enquiries and verifications which he was required to make regarding claim of sales receipts, details and verification from transacting parties. 5. We have heard rival contentions and perused material available on record. It is noted that Assessing officer has made necessary enquiry from assessee regarding nature and source of deposit in his bank account maintained with ICICI Bank. assessee in response has submitted his explanation regarding nature and source of such deposits and fact that same has been recorded in his books of accounts. 5 ITA No. 513/JP/16 Shri Sunil Kumar Girdhar vs. Pr. CIT, Alwar Assessing officer was however not satisfied with explanation of assessee and brought whole amount of deposit in bank account as unrecorded sales and estimated profits thereon which was brought to tax. Therefore, it is not case of lack of enquiry. Further, where whole of cash deposit has been brought to tax, we fail to understand how action of Assessing officer is prejudicial to interest of Revenue. Infact, Assessing officer has not accepted explanation of assessee to effect that amount has already been recorded in books of accounts and having said that, brought whole amount of cash deposit to tax. In light of above, we are of view that ld. CIT was not justified in holding that assessment order passed by assessing Officer was erroneous and prejudicial to interest of Revenue. In that view of matter, we set- aside impugned order under section 263 of Act passed by ld. CIT and assessment order passed by Assessing Officer is restored. In result appeal filed by assessee is allowed. Order pronounced in open court on 26/09/2016. Sd/- Sd/- (KUL BHARAT) (VIKRAM SINGH YADAV) Judicial Member Accountant Member Jaipur Dated:- 26/09/2016 Pillai Copy of order forwarded to: s 1. Appellant- Shri Sunil Kumar Girdhar, Alwar 2. Respondent- Pr. CIT, Alwar 6 ITA No. 513/JP/16 Shri Sunil Kumar Girdhar vs. Pr. CIT, Alwar 3. CITAlwar 4. CIT(A)- 5. DR, ITAT, Jaipur 6. Guard File (ITA No.513 /JP/2016) By order, Assistant. Registrar 7 Sunil Kumar Girdhar v. Principal CIT, Alwar