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TMI Blog2023 (1) TMI 367X X X X Extracts X X X X X X X X Extracts X X X X ..... eal by the assessee before the learned CIT-A deserves to be condoned. Accordingly, we proceed to decide the issue raised by the assessee on merit. Disallowance on account of cash payment u/s 40A(3) - Return of the assessee for the year under consideration was selected for limited scrutiny to verify the genuineness of cash in hand - Conversion of Limited Scrutiny into Complete Scrutiny - HELD THAT:- On perusal of notice under section 143(2) of the Act, we note that the notice for Limited Scrutiny was issued for examination of cash in hand . There was no mentioning/whisper about examination of the fact with regard to cash payment in violation of section 40A(3) of the Act. Further, there no whisper in the order of the authority below that the limited scrutiny was converted into complete scrutiny. DR before us has also 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. Accordingly, we hold that the AO has exceeded his jurisdiction by making disallowances of cash payment as per the provision of section 40A(3) of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is that the learned CIT(A) erred in holding that delay in filling the appeal cannot be condoned. 4. At the outset, we note that there was the delay in filing the appeal by the assessee for 556 days before the learned CIT (A) which was not condoned by him. However, we find that the learned CIT (A) has also decided the issue raised by the assessee on merit. It is the trite law that if the appeal is not maintainable in view of the fact that there was the delay in filing the appeal as the assessee couldn t justify the reason for the same. Thus the appeal filed by the assessee should have been dismissed in limine without going into the merit of the case. But what is arising from the order of the learned CIT (A) that the ld. CIT-A has decided the issue raised by the assessee on merit which implies that the learned CIT (A) by his action has condoned the delay but he has recorded just one line in his order that the delay is not condoned without any speaking order. 4.1 We also note that the Hon ble Gujarat High Court in the case of S.R. Koshti Vs. CIT reported in 276 ITR 165 has held as under: 18. The position is, therefore, that, regardless of whether the revised return was file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .3 We also note that the Hon ble Gujarat High Court in the case of Vareli textile industry versus CIT reported in 154 Taxman 33 wherein it was held as under: It is equally well-settled that where a cause is consciously abandoned (as in the present case) the party seeking condonation has to show by cogent evidence sufficient cause in support of its claim of condonation. The onus is greater. One of the propositions of settled legal position is to ensure that a meritorious case is not thrown out on the ground of limitation. Therefore, it is necessary to examine, at least prima facie, whether the assessee has or has not a case on merits. 4.4 In view of the above and after considering the facts in totality, we are of the view that it is a fit case where the delay in filing the appeal by the assessee before the learned CIT-A deserves to be condoned. Accordingly, we proceed to decide the issue raised by the assessee on merit. 5. Next issue raised by the assessee is that the learned CIT(A) erred in confirming disallowance of Rs. 7,54,700/- on account of cash payment under section 40A(3) of the Act. 6. The facts in brief are that the assessee is an individual engaged in the busi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , on account of gratuity, retrenchment compensation or similar terminal benefit and the aggregate of such sums payable to the employee or his heir does not exceed Rs 50,000. Since the appellant does not fall in any category of exceptions as such the reply has no force. 7. The addition is upheld, appeal stands dismissed, delay is not condoned. 11. Being aggrieved by the order of the learned CIT(A), the assessee is in appeal before us. 12. The learned AR before us filed paper book running from page 1 to 47, compilation case laws and contended that the case of the assessee was selected under limited scrutiny and therefore the scope of the scrutiny was Ltd to the extent of verification of cash balance until and unless some approval is obtained from the higher authorities for converting limited scrutiny into regular scrutiny. But, the AO has not done so and therefore, no addition under the provisions of section 40A(3) of the Act is warranted. 13. On the other hand, the learned DR vehemently supported the order of the authorities below. 14. We have heard the rival contentions of both the parties and perused the relevant materials available on record before us. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case. Such cases shall be monitored by the Range Head concerned. The procedure indicated at points (a), (b) and (c) above shall no longer remain binding in such cases. (For the present purpose, 'Metro charges' would mean Delhi, Mumbai, Chennai, Kolkata, Bengaluru, Hyderabad and Ahmedabad). 15. The CBDT further amended the para 3(d) of the above mentioned instruction via instruction no. 05/2016 dated 14-07-2016 with additional requirement that the AO will form a reasonable view with regard to the potential escapement of income. The relevant portion of the instruction stands as under: 2. In order to ensure that maximum objectivity is maintained in converting a case falling under 'Limited Scrutiny' into a 'Complete Scrutiny' case, the matter has been further examined and in partial modification to Para 3(d) of the earlier order dated 29.12.2015, Board hereby lays down that while proposing to take up 'Complete Scrutiny' in a case which was originally earmarked for 'Limited Scrutiny', the Assessing Officer ('AO') shall be required to form a reasonable view that there is possibility of under assessment of income if the case is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Thus, in our considered view inaction of the AO should not cause any inconvenience to the assessee. In holding so we draw support and guidance from the order of the Hon ble Chandigarh Tribunal in case of Rajesh Jain vs. ITO reported in 162 taxman 212 where it was held as under: The jurisdiction of the Assessing Officer in such 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 doubt that the power of the Commissioner (Appeals) is co-terminus with the power of the Assessing Officer. So, how ..... X X X X Extracts X X X X X X X X Extracts X X X X
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