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TMI Blog2024 (7) TMI 132X X X X Extracts X X X X X X X X Extracts X X X X ..... utiny is taken as correct even then the addition u/s. 56(2)(vii)(b) is not found to be justified. As addition made u/s. 56(2)(vii) had been made by the A.O with respect to difference between Fair Market Value (FMV) of the property purchased by the assessee as against the actual consideration for which the property was purchased vide registered deed, addition made u/s. 56(2)(vii)(b) of the Act by the A.O as regards the deficit consideration paid for purchase of the property by the assessee by no means can be brought within the meaning of transfer of properties by the assessee . Accordingly, the addition made by the A.O u/s. 56(2)(vii)(b) does not form the basis for selection of the assessee's case of limited scrutiny . As decided in M/s.Suraj Diamond Dealers Pvt. Ltd. [ 2019 (12) TMI 26 - ITAT MUMBAI] A.O in a case of limited scrutiny assessment only after obtaining approval from the Pr. Commissioner of Income Tax/Commissioner of Income Tax can traverse beyond the reasons for which the case was selected for limited scrutiny after converting the same into complete scrutiny. It was observed by the Tribunal that in all other cases, the A.O would be divested of his jurisdiction from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notices ,before deciding the appeal, were sent on the wrong mail Id in spite of updating the ITBA portal on 26.08.2021 and that no communication was made on other methods or mode of service of notices as stipulated under Section 282(1) of the Act r.w.r. 127(1), this led to violation of natural justice as the appellant could not get opportunity for making its submission. 6. That on the facts and in the circumstances of the case and in law, the Ld. Assessing Officer erred in charging interest under section 234A and section 234B of the Act. 7. The appellant craves to leave, add, alter or modify any grounds of appeal either before or at the time of hearing of the case. 2. Succinctly stated, the assessee had e-filed her return of income for A.Y.2016-17 on 15.02.2017 declaring an income of Rs. 4,30,200/-. Subsequently, the case of the assessee was selected for limited scrutiny through CASS and notice u/s. 143(2) of the Act dated 20.09.2017 was issued by the A.O. 3. Assessment was, thereafter, framed by the A.O vide his order passed u/s. 143(3) of the Act dated 17.12.2018, wherein after making an addition of Rs. 22,13,000/- u/s. 56(2)(vii)(b) of the Act, income of the assessee was determ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... axiomatic that no court or tribunal is supposed to continue a proceeding before it when the party who has moved it has not appeared nor cared to remain present. The dismissal, therefore, is an inherent power which every tribunal possesses. 5.2.4 The principle that every court that is to decide on a matter of dispute, inherently possesses the power to dismiss the case for default, has been upheld by the Hon'ble Supreme Court in case of Dr. P. NallaThampy Vs. Shankar (1984 (Supp) SCC 63 and the case of New India Assurance vs. Srinivasan (2000) 3 SCC 242. In the latter case, the Apex Court has held as under:- That every court or judicial body or authority, which has a duty to decide a list between two parties, inherently possesses the power to dismiss a case in default. Where a case called up for hearing and the party is not present, the court or the judicial or quasi-judicial body is under no obligation to keep the matter pending before it or to pursue the matter on behalf of the complainant, therefore, the court will be well within its jurisdiction to dismiss the complaint for non-prosecution. So also, it would have the inherent power and jurisdiction to restore the complaint o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vide Grounds of Appeal the Statement of Facts. However, there has been total non-compliance to all the Notices issued. So, his contentions raised vide Grounds of Appeal the Statement of Facts cannot be taken on face value. Therefore, these contentions of the appellant are without merit are hereby rejected. 6.1. The A.O. has passed the order on the basis of information available on the record. The AO observed that the details submitted by the assessee , the registered deed, it is observed that the stamp duty value of the property is Rs. 66,13,000/- instead of Rs. 44,00,000/- which has been taken by the assessee in her computation of income. The stamp duty value of the property taken by the assessee is Rs. 44,00,000/-instead of Rs. 66,13,000/-. The difference being Rs. 22,13,000/- is treated as income from other sources and thus added back to the total income of the assessee as income from other sources u/s. 56(2)(vii)(b) of the Income tax Act, 1961. In appeal the assessee has taken a ground that the case was taken for limited scrutiny addition was made under complete scrutiny. It is seen that the case was selected for limited scrutiny being cash deposits mode in bank. The appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de registered deed dated 07.12.2015. The Ld. AR had further taken me through the notice issued by the A.O u/s. 142(1) of the Act dated 05.06.2018, Page 9-10 of APB; dated 03.11.2018, Page 11-12 of APB; and dated 01.12.2018, Page 13-14 of APB wherein the assessee was, inter alia, called upon to put forth an explanation as regards the source of cash deposits made in his bank account during the subject year. The Ld. AR submitted that the assessee vide her reply dated 03.12.2018, Page 14 of APB had submitted before the A.O that the cash deposits of Rs. 10 lacs (supra) were sourced out of sale proceeds of the property that was sold by her vide registered deed dated 07.12.2015 for Rs. 60 lacs. 7. The Ld. AR submitted that the A.O after deliberating on the explanation of the assessee in the backdrop of the material that was placed on his record had found favour as regards her explanation regarding the source of the cash deposits in her bank account and had not drawn any adverse inferences on the said count. The Ld. AR had drawn my attention to the observations of the A.O at Para-5 of his order. 8. Carrying his contention further, the Ld. AR submitted that the A.O had, thereafter, traverse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y herein observe that though it is the claim of the Ld. AR that the assessee's case was selected for limited scrutiny for the solitary purpose, i.e. to verify the large cash deposits in her bank account , a fact which can not only be gathered from notice issued u/s. 143(2) of the Act, Page 5 of APB but also can be traced from the body of the assessment order (Para-3); but the same is not in conformity with the A.O's report dated 25.06.2024 as had been placed on record. As observed by me hereinabove, the A.O vide his report dated 25.06.2024 had stated that the case of the assessee was selected for limited scrutiny for two-fold reasons viz, (i) large cash deposits in her savings bank account; and (ii) assessee has transferred one and more properties during the year. Be that as it may, if the A.O's report regarding reasons for selecting the assessee's case for limited scrutiny is taken as correct even then the addition u/s. 56(2)(vii)(b) of the Act of Rs. 22.13 lacs is not found to be justified. I, say so, for the reason that the addition made u/s. 56(2)(vii) of Rs. 22.13 lacs had been made by the A.O with respect to difference between Fair Market Value (FMV) of the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nible from the order of the Pr. CIT, the case of the assessee was selected for Limited scrutiny under CASS for two reasons viz. (i). Large other expenses claimed in the P L A/c.; and (ii). Low income in comparison to High Loans/advance /Investment in shares. On the basis of the order passed under Sec. 143(3), dated 08.12.2016 the income of the assessee was assessed by the A.O under the normal provisions at a loss of (-) Rs. 6,31,90,753/-, while for the book profit under Sec. 115JB was worked out at a loss of (-) Rs. 6,65,17,726/-. 3. In exercise of the powers vested with him under Sec. 263 of the Act, the Pr. CIT called for the records of the assessee. After perusing the financial statements of the assessee company, it was observed by him that the assessee during the year under consideration had out of its manufactured goods of Rs. 14,78,69,007/- sold goods worth Rs. 6,86,49,334. Observing, that the closing stock of the finished goods with the assessee company should have been reflected at Rs. 7,92,19,673/- [Rs. 14,78,69,007/- (-) Rs. 6,86,49,334/-] as against that shown by it at Rs. Nil, the Pr. CIT held a conviction that the A.O had prima facie failed to carry out a proper invest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enses claimed in the P L A/c.; and (ii). Low income in comparison to High Loans/advance/Investment in shares, therefore, the A.O was divested of his jurisdiction to advert to the other aspects except for those on the basis of which the case was taken up for scrutiny assessment. It was submitted by the ld. A.R, that the fact that the case of the assessee was selected for limited scrutiny under CASS for the aforesaid reasons viz. (i). Large other expenses claimed in the P L A/c; and (ii). Low income in comparison to High Loans/advance /Investment in shares, was an admitted fact and was categorically admitted by the Pr. CIT in his order passed under Sec. 263 of the Act. In order to drive home his aforesaid contention, the ld. A.R had drawn our attention to the order passed by the Pr. CIT under Sec. 263, wherein the aforesaid factual position was clearly discernible. In the backdrop of the aforesaid facts, it was submitted by the ld. A.R, that in case of a limited scrutiny assessment the A.O is prohibited from adverting to the issues except for those on the basis of which the case had been selected for being scrutinized. In order to fortify his aforesaid claim the ld. A.R had relied on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ares. Insofar the fact that the case of the assessee was selected for limited scrutiny for the aforesaid reasons is concerned, the same as observed by us hereinabove is not disputed and is clearly discernible from the order passed by the Pr. CIT under Sec. 263 of the Act. In fact, we find, that the Pr. CIT in his order had categorically observed that the case of the assessee was not selected for examination on the issue relating to closing stock , but was selected for limited scrutiny for the aforesaid two reasons viz. (i). Large other expenses claimed in the P L A/c.; and (ii). Low income in comparison to High Loans/advance /Investment in shares. We find that as per the CBDT Instruction No. 20/2015, dated 29.12.2015, scrutiny in cases selected through Computer Aided Scrutiny Selection (CASS) is to be confined only to the specific reasons/issues for which the case has been picked up for scrutiny. In order to appreciate the issue under consideration, we deem it fit to cull out the CBDT instruction No. 20/2015, dated 29.12.2015., which reads as under: INSTRUCTION NO. 20/2015, DATED: 29-12-2015 29/12/2015 Subject : Scrutiny Assessments-some Important issues and scope of scrutiny in ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l 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 income exceeding Rs five lakhs (for metro charges, the monetary limit shall be Rs. ten lakhs) requiring substantial verification on any other issue(s), then, the case may be taken up for 'Complete Scrutiny' with the approval of the Pr CIT/CIT concerned. However, such an approval shall be accorded by the by the Pr. CIT/CIT in writing after being satisfied about merits of the issue(s) necessitating Complete Scrutiny' in that particular case Such cases Shalt be monitored by the Range Head concerned The procedure indicated at points (a), (b) and (c) above shall no longer remain binding in such c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scope of a case selected for limited scrutiny as per CASS information the approval of the administrative Principal commissioner of income-tax/Commissioner of income-tax would be required. In the case before us it is an admitted fact that the case of the assessee was selected for limited scrutiny under CASS ,for the reasons, viz. (i). Large other expenses claimed in the P L A/c.; and (ii). Low income in comparison to High Loans/advance /Investment in shares. In fact, it is neither a fact nor the case of the revenue that the said case was thereafter taken up for complete scrutiny with the approval of the administrative commissioner. In the backdrop of the aforesaid facts, we are of the considered view that as the scope of the assessment framed by the A.O under Sec. 143(3), dated 08.12.2016 was circumscribed by the limited reasons for which the case of the assessee was selected for scrutiny assessment, therefore, he was absolutely divested of his powers from traversing on issues which did not fall within the realm of the said limited purpose for which the said case was selected for being scrutinised. 8. We shall now in the backdrop of our aforesaid observations deliberate on the valid ..... X X X X Extracts X X X X X X X X Extracts X X X X
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