Mere producing purchase and sales vouchers along with books did not mean that the Assessing Officer was not required to make inquiry into cash deposits.
In a recent judgment, ITAT Lucknow has upheld the revisionary order u/s 263 on the ground that mere fact that purchase and sales vouchers were produced along with the books of account, did not mean that the Assessing Officer was not required to make inquiry into the cash deposits made by the assessee in the bank account.
ABCAUS Case Law Citation:
4440 (2025) (03) abcaus.in ITAT
In the instant case, the assessee had challenged the revisionary order passed u/s 263 of the Income Tax Act, 1961 (the Act) by the Principal Commissioner of Income Tax (Pr.CIT) due to lack of enquiry.
In this case, assessment order was passed u/s 143(3) of the Act. The income declared by the assessee in return of income plus agricultural income was accepted by the Assessing Officer in the aforesaid assessment order, and no addition was made.
The assessment order was revised by Pr.CIT by way of impugned order passed u/s 263 of the Act. In the aforesaid impugned order of Pr.CIT observed that the Assessing Officer (AO) had not made any inquires on the large amount of cash deposited in the bank account of the assessee. As a result, the assessment framed by the Assessing Officer was set aside, to be framed de novo as per law.
Before the Tribunal the assessee submitted that all the purchase and sales vouchers were produced along with the books of account before the AO who had accepted the sale and purchase disclosed by the assessee. The books of account were not rejected. It was contended that this fact itself proved the availability of cash which was deposited in bank during demonetization period.
It was also submitted that the agricultural income disclosed by the assessee was reasonable and there was no error on the part of the Assessing Officer in accepting the same.
In view of the above, it was contended that no case for reconsideration on same facts was made out. No defect had been found in the maintenance of books of account and even the Pr.CIT himself had not passed any comment on the maintenance of books of account.
On the other hand, the Revenue contended that the mere fact that purchase and sales vouchers were produced along with the books of account before the Tax Authorities, did not mean that the Assessing Officer was not required to make inquiry into the cash deposits made by the assessee in the bank account. It was pointed out that the Assessing Officer did not make any inquiry with regard to the assessee’s claim of agricultural income and with regard to large amount of cash deposited by the assessee in bank account. It was contended that the assessment order was passed by the Assessing Officer without making inquiries or verification, on the issues of cash deposits made by the assessee and claim of agricultural income which should have been made.
The Tribunal expressed agreement with the submissions made by Revenue. The assessment order was passed without making inquiries or verification that should have been made and was deemed to be erroneous in so far as it is prejudicial to the interest of the Revenue, within the meaning of section 263 of the Act.
The Tribunal further observed that the assessee side had failed to show how impugned order of the learned Pr.CIT was not in accordance with law in the light of the facts and circumstances of the case. It was crystal clear that the Assessing Officer passed assessment order without making inquiries or verification that should have been made.
Accordingly, appeal of the assessee was dismissed.
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