INCOME TAX ACT, 1961

Section 263

Revision under section 263 - Erroneous and prejudicial order - No lack of enquiry on AO's part -

Pr. CIT treated order passed by AO as erroneous and prejudicial to the interest of revenue on the ground of AO not having examined source of cash deposited into assessee's bank account. Held: During the course of assessment proceedings, AO issued notice under sections 143(2) and 142(1) and there was a specific query by AO asking assessee to furnish source of cash deposited in the bank account. Assessee had given specific reply along with copy of agreement and details of transactions which took place in the course of sale of agricultural land held by the assessee at Village-Trigriya Sancha, Dist. Dewas (M.P.). Nexus of cash deposited in the bank account and sale proceeds of agricultural land made by the assessee during the year substantiated by copy of agreement to sale. AO had made due application of mind and conducted necessary enquiry to examine issue of cash deposited in the bank and thus assessment order could not be held as erroneous or prejudicial.

Supported by:Khaiiza S. Oomerbhoy v. ITO (2006) 101 TTJ 1095 (Mum-Trib) : 2006 TaxPub(DT) 1436 (Mum-Trib), Malabar Industrial Co. Ltd. v. CIT (2000) 243 ITR 83 (SC) : 2000 TaxPub(DT) 1227 (SC), V.G. Krishnamurthy (1985) 20 Taxman 65 (Karn) : 1985 TaxPub(DT) 0408 (Karn-HC), Smt. Minalben S. Parikh (1995) 215 ITR 81 (Guj) : 1995 TaxPub(DT) 618 (Guj-HC) and H.H. Maharaja Raja Power Dewas (1983) 15 Taxman 363 (MP) : 1982 TaxPub(DT) 891 (MP-HC).