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TMI Blog2024 (1) TMI 109X X X X Extracts X X X X X X X X Extracts X X X X ..... y, the Assessing Officer shall be required to form a reasonable view that there is a possibility of under statement of income and that view should be based on credible material or information available on record and such a view should not be based on mere suspicion, conjecture or unreliable resources and there should be a direct nexus between available material and formation of view. However, the above conditions are not fulfilled in this case. AO has not referred to any credible or reliable material or information to form the view that there was a possibility of under assessment of income in this case. AO has merely made certain disallowance on adhoc basis without pointing out any information or material available to him which has a direct nexus to show that there was possibility of under assessment of income. In view of this, conversion of limited scrutiny into complete scrutiny is against the spirit of CBDT mandate which is binding on the AO. Therefore, the conversion of limited scrutiny into complete scrutiny being not valid, the consequential additions made by the AO on adhoc basis and further confirmed by the CIT(A) are not sustainable in the eyes of law. Unsecur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate of hearing but no one turned up. Therefore, there was no representation on behalf of the assessee nor any adjournment application has been received through physical mode/e-mail with the bench clerk. We, therefore, adjudicate the appeal of the assessee on the basis of material available on record with the assistance of ld. DR exparte qua. The assessee has raised the following grounds of appeal: i. For that the assessment order passed u/s 143(3) is not based on correct facts and findings and is erroneous on points of law. ii. For that on the facts and circumstances of the case as well as on the points of law, the ld. AO erred in making an addition of Rs. 33,50,000/- u/s 69A of the Income Tax Act, 1961 and the ld. CIT(A) also erred in confirming the same. iii. For that on the facts and circumstances of the case as well as on the points of law, the ld. AO erred in disallowing the set of loss of Rs. 100542/- against income from business and profession and the ld. CIT(A) also erred in confirming the same. iv. For that any other ground/grounds may kingly by allowed to be urged at the time of hearing. 3. Brief facts of the case are that assessee filed her return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heque No Amount 1 Anowar Hussain Mangaldoi, Assam-784115 ADXPH2881C 11.02.2016 SBINRS20160211251125885249 900000.00 2 Mahamaya Saha Natunpatty Mangaldoi Assam-784115 CPPPS2505Q 01.02.2016 UCBAH16032000407 300000.00 3 Abdul Kuddus Ward No. 02, Mangaldoi Assam-784125 AXPPK5119A 12.02.2016 PUNBRS2016021210017019 650000.00 4 Alifuddin Ahmed Ward No. 5 Natunpara, Mangaldoi Assam-784145 AGXPA9599F 30.01.2016 SBINRS2016013025377662 400000.00 5 Arati Saha Natunpatty Mangaldoi Assam-784115 CPPPS2501L 02.02.2016 UCBAH16033016787 200000.00 6 Naitik Agarwalla Guwahati, As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the creditors could not be served or they failed to attend before the assessing officer, cannot be a ground to treat the loans taken by the assessee from those creditors as non-genuine in view of the principles laid down by the Supreme Court in the case of Orissa Corporation (1986) 159 ITR 78 (SC) : 1986 Taxpub (DT) 1425 (SC). In the said decision the Supreme Court has observed that when the assessee furnishes names and addresses of the alleged creditors and the GIR numbers, the burden shifts to the Department to establish the Revenue s case and in order to sustain the addition the Revenue has to pursue the enquiry and to establish the lack of creditworthiness and mere non-compliance of summons issued by the assessing officer under section 131, by the alleged creditors will not be sufficient to draw and adverse inference against the assessee. In the case of six creditors who appeared before the assessing officer and whose statements were recorded by the assessing officer, they have admitted having advanced loans to the assessee by account payee cheques and in case the assessing officer was not satisfied with the cash amount deposited by those creditors in their bank accounts, the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder law the assessee can be asked to prove the source of credits in its books of account but not the source of the source held by the Hon ble Bombay High Court in the case of Orient Trading Co. vs CIT (1963) 49 ITR 723 (Bom). The above judgment of ITAT, stands confirmed by High Court in DCIT vs Rohini Builders (2002) 256 ITR 360 (Guj) Shree Nemi Chand Kothari vs Commissioner of Income Tax, Assam in the Gauhati High Court 264 ITR 254 (Gau) At para -14: It, therefore, further logically follows that the creditor s credit-worthiness has to be judged vis- -vis the transaction which have taken place between the assessee to find out the source of money of his creditor and/or creditworthiness of the sub-creditor for these aspects may not be within the special knowledge of the assessee. At para -15: A person may have funds from any source and an assessee, on such information received may take loan from such a person. It is not the business of the creditor had agreed to advance the amounts were genuine or not. If a creditor has by any undisclosed source a particular amount of money in the bank there is no limitation under the law on the part of the assessee to obtain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ide her submission before your honour has stated that the documents relating to loans received were not traceable as such the address of the loan givers could not be provided at the time of assessment. It has further been stated that documents were found recently. The assessee had taken huge amounts of loans from 6 persons and yet it was claimed that the documents were not available during assessment. It was seen in course of assessment and on the basis of ITR-V submitted that the loan givers were persons with meager means and therefore was not in a position to give such loans. Summons issued to loan givers and sent to the registered mail IDs and by post were unattended. Even on inspector deputed to serve the notices was unsuccessful as the persons were untraceable. The assessee s submission before yo0ur honour that the documents of loans were not available at the time of assessment and is therefore being produced in appeal is not relevant as the alleged loans were received by cheque/RTGS and hence that the transactions had taken place was never in doubt. The persons were required to be examined on oath but the assessee was unable to provide traceable information of the loan g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der to verity the transaction issued the summons u/s 131 of the Act to the respective person who disbursed unsecured loan to the assessee. However, in response to the summons issued by the AO, persons were never turned up before him and the ld. AO had taken an adverse interference against the assessee by adding a sum of Rs. 33,50,000/- in the hands of assessee as unexplained money invoking section 69 of the Act and also disallow the setting off loss to the extent of Rs. 1,00,572/- in the hands of assessee. 8. We notice from the facts of the case as discussed above find that the case of the assessee was selected for limited scrutiny for the specific purpose as specifically stated in the assessment order itself. The ld. AO had made enquiry on the point of notices issued and in this respect assessee also had furnished necessary submission as asked for. However, the ld. AO without converting the limited scrutiny into complete scrutiny issued notice to the assessee on 22.11.2018 raising new issues which is beyond the purview of the limited scrutiny and without obtaining necessary approval from the competent authority. Therefore, the order is bad in law. The assessee has challenged th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e was possibility of under assessment of income. 11. In view of this, conversion of limited scrutiny into complete scrutiny is against the spirit of CBDT mandate which is binding on the AO. Therefore, the conversion of limited scrutiny into complete scrutiny being not valid, the consequential additions made by the AO on adhoc basis and further confirmed by the CIT(A) are not sustainable in the eyes of law. Same are ordered to be deleted. 12. Even on the merits also, we find that assessee has filed additional evidence before the ld. CIT(A) relates to the unsecured loan addition of Rs. 33,50,000/-. We note that the said sum has been received from the six parties namely Anowar Hussain, Mahamaya Saha, Abdul Kuddus, Alifuddin Ahmed, Arati Saha and Naitik Agarwalla find that assessee filed complete details including the Pan No of the persons who provided funds to the assessee. In the instant case once the appellant had produced all documents in order to establishing the identity and capacity of the creditors as well as genuineness of the transaction, the initial onus cast upon the assessee was discharged and the onus shifted to the AO to bring material on record to the effect that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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