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TMI Blog2022 (6) TMI 255X X X X Extracts X X X X X X X X Extracts X X X X ..... 2). DR before us has not brought anything on record justifying that the Limited Scrutiny was converted by the Assessing Officer under normal scrutiny after obtaining necessary approval from the appropriate authority. We are also not convinced with the argument of the DR that the issue raised by the AO is limited to the cash in hand available at the end of the financial year under consideration - as because if we admit the contention of the learned DR then the same will be beyond the scope of limited scrutiny as there was no question raised in the notice issued for the limited scrutiny under section 143(2) of the Act for the cash balance. The right course of action for the AO was to take the approval from the competent authority for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed CIT(A) has erred in law and on facts in confirming the action of AO of making an addition and not limiting the income of the appellant to presumptive income of Rs.2,45,200/- as mandated u/s.44AD of the Act. 3. Both the lower authorities have erred in stepping into the shoes of the appellant and holding that profit of the appellant at 50.90% of the turnover is on the higher side especially when S.44AD of the Act does not prescribe an upper limit. 4. Both the lower authorities have passed the orders without properly appreciating the facts and they further erred in grossly ignoring various submissions, explanations and information submitted by the appellant from time to time which ought to have been considered before passing the impug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made the addition of Rs. 5,98,200.00 being the amount shown as cash in hand as on 31-3-2015, treating the same as income of the assessee from undisclosed sources. 5. Aggrieved, assessee preferred an appeal before the learned CIT (A) who confirmed the order of the AO. 6. Being aggrieved by the order of the Ld. CIT(A) the assessee is in appeal before us. 7. The Ld.AR before us filed a paper books running from pages 1 to 79 and drew our attention on page 8 of the paper book where the notice for Limited Scrutiny issued u/s 143(2) of the Act was placed. The Ld. AR further claimed that the Assessing Officer has not converted the Limited Scrutiny to the normal/regular scrutiny u/s 143(3) of the Act. Accordingly, the addition cannot b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... procedure for handling 'Limited Scrutiny' cases shall be as under: a. In 'Limited Scrutiny' cases, the reasons/issues shall be forthwith communicated to the assessee concerned. b. The Questionnaire under section 142(1) of the Act in Limited Scrutiny' cases shall remain confined only to the specific reasons/issues for which case has been picked up for scrutiny. Further, the scope of enquiry shall be restricted to the 'Limited Scrutiny' issues? c. These cases shall be completed expeditiously in a limited number of hearings. d. During the course of assessment proceedings in 'limited Scrutiny' cases, if it comes to the notice of the Assessing Officer that there is potential escapement of incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... credible material or information available on record for forming such view; b. this reasonable view should not be based on mere suspicion, conjecture or unreliable source; and c. there must be a direct nexus between the available material and formation of such view. 9.1 However, on perusal of the notice for Limited Scrutiny we find that there was no mentioning/whisper about examination of the cash in hand. As such, the case was selected on account of deposit of cash in the bank but the closing cash in hand balance was added to the total income of the assessee. To our understanding, the deposit of cash in the bank and the closing cash in hand are two different items. However, the AO has not made any addition qua the deposit of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h cases where the notices are issued for limited scrutiny is confined to the claims he has set out in the notice for verification. This position of law was further elaborated by the CBDT in its Circular No. 8/2002, dated 27-8-2002. The CBDT Circular clarifies that the Assessing Officer does not have the powers to make the entire assessment of income in limited scrutiny cases. Now question had to be decided when the Assessing Officer does not have the powers while making limited scrutiny assessment to decide such issues which are not covered by the limited scrutiny notice, the Commissioner (Appeals) on appeal against limited scrutiny assessment can exercise the powers in excess of the power vested with the Assessing Officer. There is no doub ..... X X X X Extracts X X X X X X X X Extracts X X X X
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