9911796707
TMI Blog2025 (1) TMI 1400X X X X Extracts X X X X X X X X Extracts X X X X ..... this first reason, the AO was competent to scrutinize the case not by way of limited scrutiny, but as a complete scrutiny case. Second reason given in selecting the case for scrutiny, it was found that the assessee had lent huge sum by way of loans as per Form 3CD of debtors, in comparison to the gross total income shown in ITR. Accordingly, when genuineness of loan transactions and sources of loan was to be verified, it cannot be said that the case was selected for limited scrutiny. Third reason in selecting the case for scrutiny is concerned, as per tax audit report, substantial amount of loans was squared up by the assessee during the year under consideration. Accordingly, genuineness of the transactions, sources of unsecured loan, identity as well as creditworthiness of the lenders were to be verified. It was also required to be verified whether the loan amounts had been actually and genuinely returned to any such creditors and also that the provisions of Section 269SS were followed, while returning the said amount. CIT(A), NFAC fell in error in observing that the AO had passed the assessment order without following procedure i.e. without seeking approval of the competent au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e fall to trading in only cotton and not cotton seeds as in the past. The assessee in support has given the comparative chart of P&L account of this year and immediate assessment year. Further the assessee stated that G.P rates of cotton and cotton seeds were 5.55% and 24.22% respectively which was 10.31% in consolidation of both in the last year. If the comparison is made between the trading in cotton then there is a marginal difference is 0.56% which is negligible. In view of huge tumover even the fall in G.P rate of 0.56% comes to Rs. 22,21,757/- Which is not negligible. The assessee has submitted the comparative chart of cotton trade in which the closing stock of 33600 Kg as per last year valued at Rs 28.06. In this year the closing stock of 87650 kg has been shown at Rs. 160.00 per kg. The assessee was asked to submit top 15 purchase and sales bills for the month of Feb and March. But the assessee has submitted only purchase bills made during the month of March, the assessee has not given any details of sale bills pertaining to Feb and March. The details of purchases in the last week of March is tabulated here under- Sr. no. Purchase party detail Date qty Amount includi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to the discounts given to various parties. It is apparently not acceptable as any prudent business man will not share 25% with some one else as against his own margin of around 5%. Therefore in view of these facts the claim of commission/ brokerage can't be called genuine. In view of the above discussion on deficiencies in evidence etc found in respect of Under Reporting of G.P (Rs. 22,21,757/-.), undervaluation of closing stock (Rs.77,13,200/-), Discount (Rs. 56,99,493/-) and Brokerage/commission (Rs.7,77,060/-),. To sum up in view of substantial fall in G.P and N.P rate other deficiencies on the part of the assessee to furnish complete and correct information and also the deficiency pointed out above, the correctness and completeness of books of accounts and profits offered for taxation by the assessee can't be relied upon. Hence, in these facts and circumstances of the case, I am left with no other alternative but to complete assessment by invoking the provisions of section 145 of the Act and on the basis of above discussion a variation of Rs. 1,64,11,510/-which is total of above discussed claims is made. I am also satisfied that the assessee is liable for initiation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee, and in setting aside the assessment order. Accordingly, Ld. DR has urged that this appeal be allowed, and the Cross Objection/appeal filed by the assessee, be dismissed, and the matter be remanded to Learned CIT(A), NFAC for decision of the matter of the appeal afresh. 8. On the other hand, Ld. Counsel for the assessee has only contended that the case was selected for scrutiny due to the three reasons specified therein, and as such, Ld. CIT(A) was justified in allowing the appeal filed by the assessee holding that the Assessing Officer had exceeded jurisdiction in passing the assessment order, by converting the limited scrutiny case to an unlimited scrutiny case, and that too without approval of the competent authority. In support of his contention, Ld. AR for the appellant has relied on decision in case of Shri Arun Kumar Palawat vs. PCIT in ITA No. 144/JP/2022, vide order dated 11.04.2023, for the A.Y. 2017-18, by the Co-ordinate Bench of Jaipur Bench. 9. As is available from the assessment order, for the assessment year under consideration i.e. A.Y. 2022-23, the case of the assessee was selected for scrutiny under CASS due to the following three reasons:- "A. High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs were to be verified. It was also required to be verified whether the loan amounts had been actually and genuinely returned to any such creditors and also that the provisions of Section 269SS were followed, while returning the said amount. 11. In view of the above discussion, we find that Learned CIT(A), NFAC fell in error in observing that the Assessing Officer had passed the assessment order without following procedure i.e. without seeking approval of the competent authority, as per CBDT Circular dated 28.11.2018, which contains directions for converting of a limited scrutiny case to an unlimited scrutiny case. Having regard to the reasons recorded for selecting the case for scrutiny, it cannot be said to be a case selected for "limited scrutiny" or that the Assessing Officer had expanded his jurisdiction. 12. The decision in case titled as Shri Arun Kumar Palawat case (supra) by the Coordinate Bench of Jaipur Benches, does not come to the aid of the assessee, being distinguishable on facts. That was a case where Ld. PCIT passed an order u/s 263 of the Act, pertaining to the assessment year 2017-18, and the said case was selected for scrutiny by issuing notice u/s 143(2) of ..... 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