Revisional jurisdiction under Section 263 cannot be invoked for 'inadequate inquiry' where the Assessing Officer has conducted an inquiry and taken a plausible view. The power exists only for cases of 'lack of inquiry' where the order is erroneous and prejudicial to the interests of the Revenue.

ORDER

Per, Dr. Dinesh Mohan Sinha, JM:

1. Captioned three appeals filed by the assessee, by different assessees pertaining to Assessment Year (AY) 2018-19, are directed against the separate orders passed u/s. 263 of the Act by the Learned Principal Commissioner of Income Tax(Appeal), in short “the Ld. PCIT”], all dated 20.03.2025.

2. Since, the issues involved in all the appeals are common and identical; therefore, these appeals have been heard together and are being disposed of by this consolidated order. For the sake of convenience, the grounds as well as the facts narrated in ITA No.343/RJT/2025, for assessment Year 2018-19, have been taken into consideration for deciding the above appeals en masse.

3. Grounds of appeal raised by the assessee, ( in lead case in ITA No.343/RJT/2025), are as follows:

“1. The grounds of appeal mentioned hereunder are without prejudice to one another.

2. The order passed by Pr. Commissioner of Income-tax, Rajkot-1, Rajkot [hereinafter referred as to the "PCIT"] is bad in law, invalid and requires to be quashed, the same may kindly be quashed.

3. The Ld. PCIT erred in law and on facts in arriving at a conclusion that the assessment order passed by the AO was erroneous as well as prejudicial to the interest of the revenue on the ground that the assessing officer has not applied his mind and not conducted proper enquiry/verification/investigation in respect of alleged cash transaction of Rs.41,00,000/-, with M/s. Hari Enterprise (Prop. Haresh Sojitra). The order passed by PCIT requires to be quashed and may kindly be quashed.

4. The learned PCIT erred on facts as also in law in setting aside the assessment order dated 22.03.2023 passed u/s. 147 of the Income Tax Act, 1961, directing the AO to pass a fresh assessment order. The order passed u/s 263 of the Act by the learned Pr. CIT is totally unjustified on facts as also in law therefore the same may kindly be quashed.

5. Your Honour's appellant craves leave to add, to amend, alter, or withdraw any or more grounds of appeal on or before the hearing of appeal.”

4. Brief facts of the case as per lead case are that the return of income for AY 2018-19 was filed by the assessee on 04.10.2018. The assessee is a firm and filed its return of income for A.Y. 2018-19 on 04.10.2018, declaring total income of Rs. 11,37,050/-. In response to notice issued u/s 148 of the Act, the assessee filed its return of income, declaring total income of Rs.11,37,050/-. The Assessment was finalised u/s 147 r.w.s. 144B of the Income-tax Act, 1961 on 22.03.2023, accepting returned income of Rs. 11,37,050/-. Later on, the case of the assessee for A.Y. 2018-19 was reopened on the basis of information available with the department that during the year under consideration, the assessee has deposited aggregate cash of Rs.41,00,000/- in the bank accounts of M/s Hari Enterprises, Prop. Shri Haresh Vajubhai Sojitra. During the course of inquiry made by the Investigation Wing, a statement u/s 131(1A) of the I.T. Act recorded on oath of Shri Harish Vajubhai Sojitra, on 05.08.2021 & 21.12.2021 wherein he is submitted that he was issuing cheques/DD in lieu of cash on commission basis. During the course of recording of statement of Prop. Shri Haresh Vajubhai Sojitra was asked to explain his modus operandi of his business, in reply of the same he stated that he allowed to deposit cash in his bank accounts of the customer and returned the same to the customer through cash/DD/Cheque after deducting his commission. The assessee is one of the beneficiaries and had deposite