Appeal Allowed: AO Exceeded Jurisdiction by Disallowing Cash Withdrawals Without Proper Scrutiny, Order Quashed.

The appeal was allowed as the AO exceeded jurisdiction by disallowing cash withdrawals under section 40A(3) without converting the case to complete scrutiny, contrary to CBDT directions. The AO failed to obtain necessary approval for verifying cash withdrawals, which was beyond the limited scrutiny scope of verifying cash deposits. The disallowance for payments to fishermen was deemed invalid, and the order under section 143(3) r.w.s 144B was quashed. Grounds 3 and 4 raised by the assessee were accepted, affirming the appeal against the Ld. CIT(A)-NFAC's decision.

---

---

Issues Involved:
The appeal against the order of the Ld. Commissioner of Income Tax (Appeals) regarding disallowance under section 40A(3) of the Income Tax Act, 1961 without proper jurisdiction and approval.

Facts of the Case:
The assessee, a Fish Commission Agent, filed his return of income for the AY 2018-19. The case was selected for limited scrutiny to verify cash deposits. The Ld. AO disallowed cash withdrawals exceeding limits under section 40A(3) and added to total income. Assessee appealed before Ld. CIT(A)-NFAC, contesting that the AO exceeded limited scrutiny without proper permission. Ld. CIT(A)-NFAC upheld the AO's order. Assessee appealed again, raising grounds challenging the disallowance and jurisdiction of the AO.

Legal Grounds Raised:
1. Contrary order of Ld. CIT(A) to facts and law.
2. Lack of notice under section 143(2) by AO with jurisdiction.
3. Disallowance under section 40A(3) beyond scope of limited scrutiny.
4. Unjustified confirmation of disallowance by Ld. CIT(A).
5. Any other grounds to be raised during hearing.

Decision and Reasoning:
The Ld. AO exceeded jurisdiction by disallowing cash withdrawals without converting to complete scrutiny as per CBDT directions. The AO did not seek approval for verifying cash withdrawals, beyond the limited scrutiny purpose of verifying cash deposits. Limited scrutiny must be confined to selected parameters. No material found against the assessee regarding cash deposits. The disallowance under section 40A(3) for payments to fishermen was deemed invalid. The order under section 143(3) r.w.s 144B of the Act was quashed, and grounds 3 and 4 raised by the assessee were allowed. The appeal of the assessee was allowed.

Separate Judgment:
No separate judgment was delivered by the judges in this case.

---