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TMI Blog2023 (8) TMI 141X X X X Extracts X X X X X X X X Extracts X X X X ..... t the cash has been deposited during the demonetization period by the assessee which can only be considered for the purpose of determining the income. Admittedly, there were also withdrawals of cash deposit from the bank account as evident from the submission made by the assessee before Ld. CIT(A). We are of the view that the entire cash deposit cannot be treated as income of the assessee. Computation of income - The dispute before us relates to the cash deposits during the demonetization period which to our understanding represents business receipts and therefore only a percentage of such deposits should be taken for calculating the income of the assessee. Thus, in the interest of justice and fair play, we are of the view that a lumpsum addition of Rs. 82,825.00 being 5% of Rs. 16,56,500 over and above the income declared, will serve justice to the assessee as well as revenue. Hence, the ground of appeal of the assessee is partly allowed. - ITA Nos. 02 & 03/AHD/2023 - - - Dated:- 7-7-2023 - Shri Waseem Ahmed, Accountant Member And Shri Tr Senthil Kumar, Judicial Member For the Assessee : Shri P.F Jain, A.R For the Respondent : Shri Atul Pandey, Sr.D.R O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 04,265/- and 2348B of of the Act aggregating to Rs.48,51,180/- ought to have been levied. (8) The appellant craves leave to add to alter and/or to modify any of the grounds of appeal. 3. The only issue raised by the assessee is that the Ld. CIT(A) erred in confirming the addition made by the AO for Rs. 1,74,31,100/- under the provisions of section 69A/68 of the Act. 4. The facts in brief are that the assessee in the present case is an individual and claimed to be engaged in the trading business of vegetable in APMC market under license J-91 from Khetivadi Utpann Bajar Samiti Ahmedabad . There were cash deposits in his bank account maintained with SBI amounting to Rs. 1,74,31,100/- in the year under consideration. The details of the same stand as under: 4.1 On question by the AO about the source of cash deposit, the assessee failed to make any reply. Therefore, the AO made the addition of Rs. 1,74,31,100/- to the total income of the assessee by observing as under: 5. In view of the above discussion and in the absence of any compliance from the assessee, the amount of Rs. 1,74,31,100/- [including cash deposited during demonetization period of Rs. 16,56,500/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the demonetization period, but the AO has exceeded his jurisdiction by taking cash deposit of the entire year as income of the assessee. As per the assessee the cash deposited during the demonetization period stands at Rs. 16,56,500/- representing business receipt and therefore only percentage of profit on such cash deposit can be added to the total income of the assessee. However, the Ld.CIT(A), disregarded the contention of the assessee and confirmed the order of the AO by observing as under: 6.3 I have gone through the submissions, bank statements filed by the appellant. No effort has been made to support the withdrawal and deposit during this period. No bills and vouchers and no supporting documents have been provided. I do not know whether the appellant is maintaining the books of accounts because no effort has been made to corelate any entry appearing in the bank statement. 6.4 Hence, the entire deposit of Rs.1,74,31,100/- remains unexplained. Hence, the Assessing Officer is justified in making addition u/s.68 of the Income Tax Act. 7. Being aggrieved by the order of the learned CIT-A, the assessee is in appeal before us. 8. The learned AR before us filed p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ', the scrutiny assessment proceedings would initially be confined only to issues under 'Limited Scrutiny and questionnaires, enquiry, investigation etc. would be restricted to such issues. Only upon conversion of case to 'Complete Scrutiny' after following the procedure outlined above, the AO may examine the additional issues besides the issue(s) involved in 'Limited Scrutiny. The AO shall also expeditiously intimate the taxpayer concerned regarding conducting 'Complete Scrutiny in such cases. 10.2 We also note that the ITAT in identical facts and circumstances in ITA No. 981/AHD/2019 in the case of Shri Narendrakumar Rameshbhai Patel has decided the issue vide order dated 28/03/2020 by observing as under: 12. We have heard the rival contentions of both the parties and perused the relevant materials available on record before us. Admittedly, the case of the assessee was selected under Limited Scrutiny scheme as evident from the notice u/s 143(2) of the Act, placed on page 1 of the paper book-I. As per the CBDT instruction No.20/2015 dated 29/12/2015 and instruction no 05/2016 dated 14-07-2016 the Assessing Officer in case of Limited Scrutiny ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utiny' 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 not examined under 'Complete Scrutiny'. In this regard, the monetary limits and requirement of administrative approval from Pr. CIT/CIT/Pr. DIT/DIT, as prescribed in Para 3(d) of earlier Instruction dated 29.12.2015, shall continue to remain applicable. 3. Further, while forming the reasonable view, the Assessing Officer would ensure that: a. there exists 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. 13. However, on perusal of the notice for Limited Scrutiny ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rse of action for the AO was to take the approval from the competent authority for expanding the scope of Limited Scrutiny to the regular assessment but he failed to do so. Thus, in our considered view inaction of the AO should not cause any harassment to the assessee. 18. 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 ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inent to note that the assessee has filed the income tax return while declaring an income of Rs. 3,14,870/- only. Out of such income, the income of Rs. 2,50,100/- was shown as income from the trading of vegetables as claimed by the assessee. 10.5 It is significant to note that the assessee has conceded to have earned commission income at the rate of 4% on the trading of vegetable receipts. As per the assessee the amount deposited in the bank account represents turnover then the gross income of the assessee can be worked out taking 4% of the cash deposited in the bank being Rs. 6,97,244/- only (4% of 1,74,31,100). However, we note that the assessee has already shown gross income from the activity of vegetable trading at Rs. 7,58,860.00 and net income of Rs. 2,50,100 after claiming certain expenses out of the gross income from the activity of vegetable trading. It appears that the assessee has duly shown the income from the vegetable trading after considering the transaction recorded in the bank. 10.6 Nevertheless, the dispute before us relates to the cash deposits of Rs. 16,56,500.00 during the demonetization period which to our understanding represents business receipts and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tical facts and circumstances, the Delhi Tribunal has decided the issue in favour of assessee in part in the case of Smt. Rekha Rani Vs. DCIT in ITA No. 6131/DEL/2013 by observing that penalty for the first default of non-compliance of notice under section 142(1) of the Act was sufficient enough. The relevant extract of the order reads as under: 5. We have considered the submissions of learned DR and have perused the order of the Assessing Officer and the learned CIT(A). we find that there was no reasonable cause on the part of the assessee for not appearing on the different dates of hearing before the Assessing Officer in response to notice issued under Section 143(2) of the Act. However, we find that the default is same and, therefore, penalty of Rs. 10,000/- could be imposed for the first default made by the assessee in this regard. The penalty under Section 271(1)(b) could not be imposed for each and every notice issued under Section 143(2), which remained not complied with on the part of the assessee. The provision of Section 271(1)(b) is of deterrent nature and not for earning revenue. Any other view taken shall lead to the imposition of penalty for any number of times (w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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