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TMI Blog2024 (8) TMI 862X X X X Extracts X X X X X X X X Extracts X X X X ..... y, Addl. CIT ORDER PER: SANDEEP GOSAIN, JM The assessee has filed an appeal against the order of the ld. CIT(A) dated 14-08-2023, National Faceless Appeal Centre, Delhi [ hereinafter referred to as (NFAC)] for the assessment year 2016-17 wherein the assessee has raised the following grounds of appeal. 1. On the facts and in the circumstances of the case and in law, Ld.CIT(A) has erred in confirming the addition of Rs. 8,50,000/- and Rs. 10,48,737/-on allegation of cash deposit in bank account and difference in cash balance as on 31.3.2016 vis a vis as on 31.3.2015 respectively/- being cash in hand as on 31.03.2015, when as per notice issued under CASS, the only reason for selection in scrutiny was Return filed after 07.11.2016 and cash deposit during demonetization period. It is submitted that making additions on the issue other than recorded for limited scrutiny without following the procedure for conversion of limited scrutiny to the fully complete scrutiny as prescribed by CBDT is bad in law and thus the consequent addition so made deserves to be deleted. 2. On the facts and in the circumstances of the case and in law, ld.CIT(A) has grossly erred in confirming the addition of Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e addition. In this case, assessment was selected for scrutiny on the basis of cash deposited in the bank account during the demonetization period i.e. subsequent assessment year and the appellant has filed the return of income for the impugned assessment year u/s. 139(4) of the Act after demonetization period. Therefore, during the assessment proceedings for the impugned assessment year, the Assessing Officer was required to examine the source of the cash deposits made in the subsequent assessment year of the demonetization period. The appellant in the submission has stated that the Assessing Officer has converted the case of limited scrutiny into complete scrutiny and disregarded the various Instructions issued by the CBDT from time to time and made the additions. However, this contention of the appellant is not correct as the addition made by the Assessing Officer is with regard to the issue for which the case was selected for scrutiny. The Income-tax Department has found that some of the assessees tried to build an explanation for cash deposits in their bank accounts during the demonetization period by manipulating their books of accounts and filing revised or belated ITR and i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nk account maintained with Punjab National Bank. Accordingly, the appellant was asked to explain the source of cash deposited in the bank account vide query raised on 18.12.2018. The appellant in the submission has contended that such query was never raised by the Assessing Officer during the assessment proceedings, which can be evident from the e-proceedings. However, the appellant has not submitted the details of cash deposited in the bank account along with the source of deposits in the submission made during the appellate proceedings. It is a settled legal proposition that the power of CIT(A) are co-terminus with that of the Assessing Officer and therefore, during the appellate proceedings the appellant was given an opportunity to furnish the source of cash amounting to Rs. 8,50,000/- deposited in the bank account. In spite of giving an opportunity, the appellant has not submitted the evidence of source of cash amounting to Rs. 8,50,000/- deposited in the bank account during the financial year relevant to the Assessment Year 2016-17. The appellant has submitted a copy of cash book and on perusal of the same it is seen that the appellant has credited every month systematically a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant has also relied upon the decision of Hon'ble Delhi High Court in the case of CIT v. Anoop Jain and Hon'ble Karnataka High Court decision in the case of CIT v. Pangariya Nand kishore Suvalalji and contended that no additions can be made in her case. In the case of Anoop Jain the issue was that there were some credits in his bank account which was explained as receipt sales proceeds was not accepted by the AO and in the case of Pangariya Nandkishore Suvalalji the AO had not accepted that the cash deposits made in the bank account were out of sale of agricultural products. The appellate authorities deleted the addition stating that the assessee has explained the source of cash credits and therefore no addition is warranted, which was confirmed by the Hon'ble High Court. In the case of the appellant, the appellant failed to submit the source of cash deposited in the bank account with supporting evidence and therefore, the Hon'ble High Court decisions relied upon by the appellant cannot be applied in this case. Therefore, the addition made on account of cash deposited in the bank account amounting to Rs. 8,50,000/- by the Assessing Officer is confirmed. 5.5 The sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 727/- is confirmed. 5.6 The third addition is on account of sundry debtors of Rs. 3,75,400/-. It is seen from the assessment order that the Assessing Officer made the addition on the ground that in earlier assessment year the appellant had not shown any sundry debtors in the Balance Sheet. Merely on the ground that the appellant had not shown the sundry debtors in the earlier assessment year, the addition cannot be made in the subsequent assessment year, In this case the appellant has filed Profit and Loss Account and the gross receipts as per the Profit and Loss Account is Rs. 4,45,625/- Since the gross receipts exceeds sundry debtors shown in the Balance Sheet, the Assessing Officer cannot add the sundry debtors without bringing into record any evidence to prove that the sundry debtors shown in the Balance Sheet is non- genuine. Accordingly, the addition made on account of sundry debtors amounting to Rs. 3,75,400/- is deleted. 6. In the result, the appeal is partly allowed. 2.2 During the course of hearing, the ld AR of the assessee has filed the following written submission that the additions confirmed by the ld. CIT(A) are not justified which deserves to be deleted. Grounds of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ancy whatsoever has been pointed out. Thereafter, the learned AO at para 3 of page 3 of the assessment order has observed that: Further, on 18.12.2018 some additional queries were raised and the assessee was required to submit her explanation on the issue till 20.12.2018 in respect of cash deposited of Rs. 8.50 lacs, commission income, cash in hand and sundry debtors. But on the fixed date of hearing, no explanation has been submitted by the assessee which itself proves that she had nothing to submit in the matter and accepted the discrepancies which were noticed and communicated to the assessee on 18.12.2018 . In this regard, it is submitted that, no notice dated 18.12.2018 as stated above, was communicated to the assessee, which is evident from the screenshot of Income Tax portal of assessee, where in E-proceeding Window (APB 39), no notice dated 18.12.2018 is seen and after notice dated 4.12.2018, assessment order is appearing. However, ld.AO has completed assessment on the basis of such additional queries stated to have been raised vide aforesaid notice dated 18.12.2018, which was not communicated and thus without providing assessee with opportunity of being heard. Therefore, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cash to this extent only and enquiries made beyond that are definitely outside the scope of Limited Scrutiny. Whereas in the instant case, ld.AO has been silent about cash deposit of Rs. 4,55,500/- and rather has conducted other enquiries, which are in the nature of complete Scrutiny, i.e. cash of Rs. 8,50,000/- deposited even prior to demonetization (which cannot in any way be treated as connected with deposits made during demonetization) and closing cash in hand worth Rs. 10,48,737/- At this juncture, kind attention of your goodself is invited to the CBDT Instruction No.05/2016 dated 14.07.2016 (APB 40-42) which was issued in partial modification to Instruction No.20/2015 dated 29.12.2015 defines the Direction regarding scope of enquiry in cases under Limited Scrutiny selected through CASS 2015 2016 . Para 4 of such instruction clarifies that ..in cases under Limited Scrutiny, the scrutiny assessment proceedings would initially be confined 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 additio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 000/- being made in respect of cash deposits made even prior to announcement of demonetization, cannot be treated as planned affair and not at all connected with cash deposited by assessee during demonetization in any manner, and thus outside the scope of Limited Scrutiny, deserves to be deleted outrightly. Similarly, addition of Rs. 10,48,737/- made on account of difference in cash in hand is also not covered under Limited Scrutiny as stated above and deserves to be deleted. Ground of Appeal No.3: In this ground of appeal, assessee has challenged the action of ld. CIT(A) in confirming the addition of Rs. 10,48,737/- made by ld.AO by alleging the difference between cash in hand as on 31.03.2016 and 31.03.2015 as undisclosed cash. In this regard, it is submitted that during the course of assessment proceedings as well as in appellate proceedings before ld.CIT(A), assessee furnished copies of Commission ledger, Sales and Purchase ledger, Cash book and also explained how opening balance of Capital was arrived at. Since, closing cash in hand as shown in balance sheet as on 31.03.2016 was computed according to cash book so furnished, wherein no discrepancy whatsoever was pointed out by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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