2021 (10) TMI 1104 - AT - Income Tax

Validity of selection of case for scrutiny under compulsory scrutiny criteria - the assessee has challenged the scrutiny assessment as the Assessing Officer has not obtained necessary sanction from the competent authority as per the instruction of CBDT - Whether there was no information nor satisfaction of the department for conducting survey and thus the entire survey proceedings is nothing but a biased action on the part of the department which is illegal and unjustified? - HELD THAT - There is no much gap between the survey and the post survey enquiry conducted by the AO therefore the post survey enquiry are part and partial of the survey proceedings and would deem to be concluded on the conclusion of the post survey enquiry on 27.01.2012. Thus, when the fact of the conducting the survey as well as the post survey enquiry is not in dispute then the case of the assessee would certainly fall under the category of selection under compulsory scrutiny. No substance or merit in the additional ground raised by the assessee. The same is dismissed. Ground no. 1 of the original grounds is general in nature and does not require any specific adjudication. Addition u/s 68 - unexplained cash credit - HELD THAT - The assessee has shown the unsecured loan of ₹ 2,60,000/- which means the remaining unsecured loans was repaid by the assessee. Assessee has failed to explain the source of cash credit of ₹ 8,50,000/- and repayment of the unsecured loan of ₹ 8,30,000/-. The consolidated balance-sheet as referred by the learned AR has been re-casted and filed at this stage but was not produced before the authorities below. Even the capital account balance of the assessee shown in the consolidated balance-sheet as on 31st March, 2011 is contrary to the balance-sheet of M/s Rastogi Mobile Zone wherein there is a negative capital balance. AR has submitted that the loan amount is mistakenly shown as capital balance in the consolidated balance-sheet but the same is the unsecured loan amount of ₹ 10,29,797/-. This figure alongwith the current liabilities of M/s OM Jewellers is again not matching with the unsecured loan shown by the assessee in the return of income for the assessment year 2012-13 -Therefore, the assessee has grossly failed to explained the source of the cash credits - Decided against assessee.

Issues Involved:
1. Legality of the survey and scrutiny assessment.
2. Addition of ?8,50,000/- under section 68 as unexplained cash credit.
3. Non-submission of documents showing cash in hand.
4. Non-submission of evidence of filing Income Tax Return for AY 2011-12.
5. Ignoring written submissions made on 04.09.2019.
6. Additional grounds regarding the jurisdiction under section 143(2) without prior approval.

Detailed Analysis:

1. Legality of the survey and scrutiny assessment:
The appellant challenged the scrutiny assessment on the grounds that the Assessing Officer (AO) did not obtain necessary sanction from the competent authority as per CBDT instructions. The Tribunal noted that the issue was raised before the CIT(A) but was dismissed as not pressed. The Tribunal admitted this ground for adjudication, noting that the survey under section 133A was interrupted and not concluded. However, the AO conducted a post-survey enquiry, issuing notices under sections 131 and 142(1) and recording statements. The Tribunal concluded that the post-survey enquiry was part and parcel of the survey proceedings, thereby validating the compulsory scrutiny. The additional ground raised by the assessee was dismissed.

2. Addition of ?8,50,000/- under section 68 as unexplained cash credit:
The AO made an addition of ?8,50,000/- under section 68, noting several cash deposits for which the assessee did not provide an acceptable explanation. The assessee claimed that the cash was from the closure of a previous business, M/s Rastogi Mobile Zone, and provided balance sheets to support this claim. The CIT(A) confirmed the addition, and the Tribunal upheld this decision, noting discrepancies in the balance sheets and the failure to explain the source of cash credits and repayment of unsecured loans.

3. Non-submission of documents showing cash in hand:
The assessee argued that the balance sheet of M/s Rastogi Mobile Zone showed cash in hand of ?9,76,764/- as of 31.03.2011. The Tribunal found that the capital account had a negative balance, and the cash in hand was offset by unsecured loans, thus rejecting the claim that this cash could be taken to the capital account of the assessee.

4. Non-submission of evidence of filing Income Tax Return for AY 2011-12:
The assessee contended that they had filed the Income Tax Return for AY 2011-12, supported by an acknowledgment and balance sheet. However, the Tribunal found inconsistencies in the documents and upheld the CIT(A)'s decision that no evidence was submitted.

5. Ignoring written submissions made on 04.09.2019:
The assessee claimed that the CIT(A) ignored the written submission, including the acknowledgment of the Income Tax Return for AY 2011-12. The Tribunal did not find merit in this claim, as the evidence provided was inconsistent and did not substantiate the source of cash credits.

6. Additional grounds regarding the jurisdiction under section 143(2) without prior approval:
The Tribunal addressed the additional grounds raised by the assessee, noting that the AO had issued a notice under section 143(2) after conducting a post-survey enquiry. The Tribunal found that the AO had jurisdiction to select the case for compulsory scrutiny, dismissing the additional grounds raised by the assessee.

Conclusion:
The appeal was dismissed, and the Tribunal upheld the CIT(A)'s order, confirming the addition of ?8,50,000/- under section 68 as unexplained cash credit and validating the legality of the survey and scrutiny assessment. The Tribunal found no merit in the additional grounds raised by the assessee regarding the jurisdiction under section 143(2).

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