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Judgment
PER SHRI AMITABH SHUKLA, AM
This appeal filed by the Revenue is directed against the order of learned Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre, New Delhi, dated 07.10.2025, arising out of assessment order dated 17.03.2022 passed under section u/s 144 r.w.s. 147 of the Act for the Assessment Year 2017-18. The word ‘Act’ herein this order would mean Income Tax Act, 1961.
The Revenue has raised following grounds of appeal:-
1.On facts and circumstances of case and in provisions of law, the learned CITIA) has erred in neither making any further inquiry OR directing the AO to make further inquiry before passing the appellate order as provided in section 250(4) of the Income Tax Act, 1961.
2.On facts and circumstances of case and in provisions of law, the learned CIT has erred in deleting the addition of Rs.7,20,00,000/- made on account of commission income on total deposits of Rs.48,00,00,000/- during demonetization period without considering that the commission charged was for exchange of old currency notes, which cannot be managed through the bank account of the assessee.
The only issue contested by the appellant revenue in this case is regarding the decision of the ld. CIT(A) in deleting an addition of Rs.7,20,00,000/- made by the ld. Assessing Officer through his order dated u/s 147 r.w.s. 144 dated 17.03.2022. The Revenue authorities through above grounds have contested that the ld. CIT(A), u/s 250(4) ought to have either conducted further enquiries or directed Assessing Officer to make further enquiries before adjudicating upon the addition of the ld. Assessing Officer. As per brief factual matrix of the case that the assessee is a retired govt. employee of Bharat Electronics Ltd. Information was received by the ld. Assessing Officer that the assessee had exchange Rs.48 crores from SBI, Sahadra and Chandni Chowk, ICICI Bank, Dariyaganj and Punjab & Sindh Bank, Sahadra, and had received commission income. The ld. Assessing Officer noted that the commission was varying from 20 to 25%. Accordingly, he estimated commission of Rs.9,60,00,000/- and after giving of deduction of expenses of Rs.2,40,00,000/- made final addition of Rs.7,20,00,000/-. The assessee contested the matter before the ld. CIT(A), who deleted the impugned addition after giving his detailed findings as under:-assessment order, submissions made by the Appellant and other details/evidences on records.
5.1.Vide various grounds of appeal, the Appellant has objected to the addition of Rs.7,20,00,000/- on account of undisclosed commission income. The Appellant has made a delailed submission, relevant part of the same has been reproduced at para 4 above. The Appellant has mainly submitted that the AO has passed the order on wrong facts. The AO has not carried out any enquiries and has made the impugned addition based on contents of a tax evasion petition (TEP). The Appellant has submitted that the said TEP also contained some uncorroborated information of substantial tax evasion by his son Mr. Vishal Kushwaha and daughter in law Mrs Mamta Rani. Assessment orders have been passed in their cases u/s 147 r.w.s. 144B, however, no additions have been made therein. The Appellant has submitted that he has never exchanged old currencies (SBNs) of Rs.48,00,00.000/- in any banks nor has done any such transactions. Therefore, the question of earning any commission income does not arise at all.
5.1.1.I have considered the submissions made by the Appellant and 1 am in complete agreement with the same. I have perused the assessment order. The AO has reopened the assessment on the basis of a TEP (copy of the same has been obtained by the Appellant from the AO under RTI Act). The said TEP is not supported with any corroborative evidences. The said TEP contains the information that the Appellant has exchanged SBNs to the extent of Rs.48,00,00,000/- in certain banks. However, there is no evidence in support of the same. The AO has also not carried out any enquiries, not even obtaining details from relevant banks. Nothing has been brought on records in support of the said alleged exchange of SBNs of Rs.48,00,00,000/-. The Appellant has submitted all relevant details i.e ITR, COl and all bank account statements. The bank account statements contain transactions which is commensurate with the return filed. There are no unusual/abnormal transactions appearing in any of the Appellant's bank account statements. And yet. ignoring all these facts, the AO made the impugned addition merely on the basis of TEP, which remain unsubstantiated throughout. In my considered opinion, the AO had no materials available with him to have made such huge addition of RS.7,20,00,000/- on account of commission received on exchange of SBNs of Rs.48,00,00,000/-. It is also a fact that the said TEP also contained similar information about tax evasion by Appellant's son Mr Vishal Kushwaha and Appellant's daughter-in-law Mrs. Mamta Rani. It is observed that the AO has passed orders u/s 147 r.w.s.144B in these two cases for AY 2017-18, without making any addition on the basis of the said TEP.
Thus, in view of facts of the case and discussions made hereinabove, I hold that the AO has erred in making the impugned addition of Rs.7,20,00,000/-. The said addition is, therefore, directed to be deleted. Appeal is, thus, allowed.”
We have heard rival submissions in the light of material placed on records. The ld. Counsel for the assessee submitted before ld. CIT(A) that under RTI, it had solicited certain information from the Assessing Officer in respect of Tax Evasion Petition (TEP) filed against the assessee. It was alluded that the reasons recorded u/s 147 based upon the impugned TEP themselves were non-maintainable on account of several glaring defects and deficiency. The ld. Counsel before the ld. CIT(A) also alluded fundamental defects in the conclusions drawn in reasons recorded vis a vis those in the TEP. We have noted from the order of ld. CIT(A) that he has based his decision upon the identified factual deficiencies, inconsistencies and inaccuracies in the facts of the case. The ld. CIT(A) has vividly recorded in para-5.1 and 5.1.1 of his order (supra) as to how no addition was permissible in the case. The ld. CIT(A) observed that there were no direct connection established between the appellant and the transactions alleged in the TEP. The ld. DR has placed reliance upon the order of the lower authority.
As regards the issue raised by the appellant revenue, the ld. CIT(A) ought to have himself conducted enquiries or directed Assessing Officer to conduct enquiries u/s 250(4), we have noted the following statutory prescription of section 250(4) as under:-
Procedure in appeal.
250.2(1) The 73r*** [Joint Commissioner (Appeals) or the] "5[Commissioner (Appeals)] shall fix a day and place for the hearing of the appeal, and shall give notice of the same to the appellant and to the [Assessing Officer against whose order the appeal is preferred
(2)The following shall have the right to be heard at the hearing of the appeal.
(a)the appellant, either in person or by an authorised representative;
(b)the "[Assessing] Officer, either in person or by a representative.
(3)The "[*]Joint Commissioner (Appeals) or the][Commissioner (Appeals)) shall have the power to adjourn the hearing of the appeal from time to time.
(4)The ]Joint Commissioner (Appeals) or the [Commissioner (Appeal may, before disposing of any appeal, make such further inquiry as he thinks fit, or may direct the [Assessing] Officer to make further inquiry and report the result of the same to the "[**][Joint Commissioner (Appeals) or the] '[Commissioner (Appeals)].
The appellant revenue is assailing the order on the premise of non-invocation of section 250(4) by the ld. CIT(A). We have noted that the challenge is unfounded. Section 250(4) talks of ‘further enquiry’ that ‘may’ be done by CIT(A) or ordered to be done by Assessing Officer. The emphasis is on the word is ‘further enquiry’, which alludes that the ld. CIT(A) if not satisfied with the present enquiries may order further enquiries. In the present case, the ld. Assessing Officer has merely relied upon the information provided in the TEP and not conducted any independent enquiry of his own. Consequently, there cannot be any case of doing any further enquiry.
We have also noted that section 250(4) uses the word ‘may’ and not ‘shall’ alluding that invocation of 250(4) is not mandatory but an obligatory exercise. We have noted from the order of the ld. CIT(A) that he has pointed several factual inconsistencies and inaccuracies before giving his decision. We have also noted that the ld. CIT(A) has also considered the fact of no addition made, on identical facts in the case of appellant’s son and daughter-in-law. Accordingly, we are of the considered view that no case of interference with the order of the ld. CIT(A) is made out at this stage. We, therefore, sustained the order of the ld. CIT(A) and dismiss all the grounds of the appeal raised by the appellant Revenue.
In the result, the appeal of the Revenue is dismissed.