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TMI Blog2024 (11) TMI 970X X X X Extracts X X X X X X X X Extracts X X X X ..... ssue of cash deposits during demonetization period . It would indicate that the case was selected for scrutiny but for the issue of cash deposit during demonetization, this mention of the issue would indicate that it was for a limited purpose of scrutinizing the cash deposits during demonetization. Its scope for making other additions would only be enlarged by following due procedure laid down by the CBDT vide its Instruction No. 5 AO has not made any addition of cash deposit during demonetization period. The assessee has deposited small amounts, which have been accepted by the ld. Assessing Officer. Therefore, the assessment order itself is not sustainable because it has been passed by the AO by exceeding his limited powers. The ld. Assessing Officer ought to have followed the procedure contemplated in CBDT Instruction bearing No. 5 of 2016 for converting a limited scrutiny assessment into a full scrutiny. Accordingly, we quash the assessment order. Appeal of the assessee is allowed. - Shri Rajpal Yadav, Vice-President And Shri Rajesh Kumar, Accountant Member For the Assessee : Shri S.K. Tulsiyan, Advocate Lata Goyal, CA For the Revenue : Shri Subhendu Datta, CIT, D.R. ORDER PER ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Appeal filed by the appellant in ITA No 191 l/Kol/2024 against the Order passed by the CIT(A)-22, Kolkata under section 250 of the Act for A.Y.2017-18. Facts of the cases; 1. The assessee is an individual engaged in the business of fish resale. He had filed his ITR for A.Y. 2017-18 on 07.11.2017 declaring income of Rs. 47,14,580/-. 2. The return of the assessee was selected for scrutiny in CASS on the issue of Cash Deposit during demonetization period. 3. A Notice u/s 143(2) of the Act was issued on 24.09.2018. Thereafter notice u/s 142(1) of the Act was issued on 06.09.2019 followed by reminder letter dated 08.11.2019. Thereafter SCN was issued on 20.12.2019 proposing various additions made in in the Return of Income. The assessee did not reply to the same. 4. A notice u/s 133(6) was issued to banks for verification of cash deposit made by the assessee. The reply was duly received by the Ld.AO from the banks and the transactions were duly examined. 5. Thereafter, the assessment order u/s 143(3) of the Act read with section 144 of the Act was passed on 30.12.2019 making the following disallowances/additions: Disallowance of Trawler related expenses and depreciation Rs.1,14,97,58 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mention of the type of scrutiny under which the case of the assessee has been selected. Hence the notice issued u/s 143(2) is not valid as per law. The Hon ble High Court of Punjab and Haryana in the case of Commissioner of Income- tax v. Crystal Phosphates Ltd reported in [2024] 461ITR 289 held as under: [Refer page 13- 16 of the paper book] As per CBDT Instructions the burden was on the authority assuming jurisdiction to show and establish that such instructions have been duly complied and satisfied in letter and spirit. Since notice under section 143 (2) of the Act was not in terms of the instructions of the CBDT, both the notice and the assessment framed were held to be without valid jurisdiction and were accordingly, quashed. 2.Without prejudice to the above, it is further submitted that on perusal of assessment order, it shall be evident that the case was selected for limited scrutiny for verification of Cash Deposit during demonetization . The same shall be evident from 1st para of the assessment order passed in the case of the assessee. The Id.AO in order to verify the cash deposit transaction has issued notice u/s 133(6) to the Banks. The Ld.AO had received reply from Ban ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... corded for expanding the scope of limited scrutiny, no approval was taken from the PCIT for conversion of the limited scrutiny case to a complete scrutiny case and the order sheet was maintained very perfunctorily. Further, the CBDT has recorded that this gave rise to a very strong suspicion of mala fide intentions and the Officer concerned has been placed under suspension. Therefore, it was reiterated that the Assessing Officer should abide by the Instructions of CBDT while completing limited scrutiny assessment and should be scrupulous about maintenance of note sheets in assessment folders. In support reliance is placed on the decision of The Hon ble ITAT, Visakhapatnam Bench Vudatha Vani Rao v. Income-tax Officer [[2024] 159 taxmann.com 1394 (Visakhapatnam - Trib.)] wherein the court held as under: [Refer page 23-25 of paper book] 2. Brief facts of the case are that the assessee, an individual, deriving income from saree designing, filed her return of income for the A.Y.2017-18, admitting total income at Rs. 3,54,500/- for the A. Y. 2017-18. The case was selected for limited scrutiny under CASS to examine the cash deposit during demonetization period. Subsequently, statutory not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard of Direct Taxes has decided to modify format of notice(s) issued under section 143(2] of the Income-tax Act which intimate the concerned assessee about selection of his/her case for scrutiny. This has become necessary in view of Board s decision to utilize E-Proceeding facility for electronic conduct of assessment proceedings in a widespread manner from this financial year. 2. The three formats of notice(s) are: Limited Scrutiny (Computer Aided Scrutiny Selection} Complete Scrutiny (Computer Aided Scrutiny Selection) Compulsory Manual Scrutiny The revised format of 143(2) notice(s) with a note on benefits Procedures of E-Proceeding facility are enclosed for information of the field authorities. 3. I am further directed to state that all scrutiny notices under section 143(2) of the Act, shall henceforth, be issued in these revised formats only. The Systems Directorate is effecting necessary changes in the 1TBA module in this regard. 4. The above may be brought to the notice of all for necessary compliance. Limited Scrutiny (Computer Aided Scrutiny Selection) Notice under Section 143(2) of the Income-tax Act. 1961 PAN No: .. Dated: . To Sir/Madam This is for your kind information ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e applicable if you have an account in e-Filing website of Income-tax Department. Till such an account is created by you, assessment proceedings shall be carried out either through your e-mail account or manually (if e-mail is not available). (*) Subject to exceptions as per the enclosed note Yours faithfully, Seal (Name of the Assessing Officer) (Designation) (Telephone No./Fax No.) (E-mail ID) Compulsory Manual Selection Notice under Section 143(2) of the Income-tax Act, 1961 PAN No: Dated: . PAN No: Dated: To Sir/Madam This is for your kind information that the return of income for Assessment Year filed vide ack. No on has been selected for Scrutiny on the basis of parameter at Para 1( ) of Manual Compulsory Guidelines of CBDT issued vide Instruction No ..dated 2.In view of the above, I would like to give you an opportunity to produce any evidence/information which you feel is necessary in support of the said return of income on or before .. 3.The abovementioned evidence/information is to be furnished online electronically in E- Proceeding facility through your account in e-Filing website of Income-tax Department. Further proceedings shall also be conducted electronically (*). A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of enquiry in cases under 'Limited Scrutiny' selected through CASS 2015 2016-regd.- Vide Instruction No.20/2(J15 dated 29.12.2015 in File of even number, Board has laid down Standard Operating Procedure for handling of cases under 'Limited Scrutiny7 which were selected through Computer Aided Scrutiny Selection in 'CASS Cycle 2015'. In these cases, it was stated that the general scope of enquiry in scrutiny proceedings should be restricted to the relevant parameters which formed the basis for selecting the case for scrutiny. However, in revenue potential cases, it was further provided that 'Complete Scrutiny could be conducted, if there was potential escapement of income above a prescribed monetary limit, subject to the approval of administrative Pr. CIT/CIT/Pr. DIT/DIT. 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 Scrutiny7 in a case which was originally earmarked for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to follow. Sd/- (Rohit Garg) Deputy Secretary to the Government of India . 9. Since in this case ld. Assessing Officer has not taken due care for converting the limited scrutiny to a full scrutiny, therefore, assessment order is not sustainable. For buttressing his contention, he relied upon the judgment of the Hon ble Jurisdictional High Court in the case of Principal Commissioner of Income Tax -vs.- Weilburger Coatings (India) (P.) Limited reported in 155 taxman.com 580, 296 ITR 205, [2024] 463 ITR 89. 10. On the other hand, ld. D.R. relied upon the order of ld. Assessing Officer and submitted that perusal of page no. 9 of the paper book, wherein copy of the notice under section 143(2) has been placed, would reveal that no expression exhibiting the limited scrutiny is being used by the ld. Assessing Officer. The notice would indicate that the case was selected for scrutiny assessment. 11. We have duly considered the rival contentions and gone through the record carefully. At the cost of repetition, we deem it necessary to take note of the format propounded by the CBDT for the use of ld. Assessing Officer while issuing notice under section 143(2) in a limited scrutiny case. Para ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eyond the scope of limited scrutiny, without taking into consideration the fact that the claim of the assessee pertaining to carried forward losses was inadmissible since the beginning itself and therefore the Assessing Officer was justified in disallowing the same without converting the case into complete scrutiny? These questions have been decided in favour of the assessee and against the revenue. The Hon ble High Court concurred with the ITAT that due procedure was not followed while converting limited scrutiny case to a full scrutiny. 14. Similarly, the order of the ITAT, Visakhapatnam Bench in the case of Vudatha Vani Rao -vs.- Income Tax Officer reported in [2024] 159 taxmann.com 1394 (Visakhapatnam) was relied upon by the ld. Counsel for the assessee. This SMC order of the ITAT is also in the line of Hon ble High Court s decision. The ld. Assessing Officer has not made any addition of cash deposit during demonetization period. The assessee has deposited small amounts, which have been accepted by the ld. Assessing Officer. Therefore, the assessment order itself is not sustainable because it has been passed by the ld. Assessing Officer by exceeding his limited powers. The ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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