Dismissed appeal upholds addition of unexplained cash credit under section 68, validates survey assessment

The appeal was dismissed, and the Tribunal upheld the CIT(A)'s order, confirming the addition of Rs. 8,50,000/- under section 68 as unexplained cash credit and validating the legality of the survey and scrutiny assessment. The Tribunal found no merit in the additional grounds raised by the assessee regarding the jurisdiction under section 143(2).

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Issues Involved:
1. Legality of the survey and scrutiny assessment.
2. Addition of Rs. 8,50,000/- under section 68 as unexplained cash credit.
3. Non-submission of documents showing cash in hand.
4. Non-submission of evidence of filing Income Tax Return for AY 2011-12.
5. Ignoring written submissions made on 04.09.2019.
6. Additional grounds regarding the jurisdiction under section 143(2) without prior approval.

Detailed Analysis:

1. Legality of the survey and scrutiny assessment:
The appellant challenged the scrutiny assessment on the grounds that the Assessing Officer (AO) did not obtain necessary sanction from the competent authority as per CBDT instructions. The Tribunal noted that the issue was raised before the CIT(A) but was dismissed as not pressed. The Tribunal admitted this ground for adjudication, noting that the survey under section 133A was interrupted and not concluded. However, the AO conducted a post-survey enquiry, issuing notices under sections 131 and 142(1) and recording statements. The Tribunal concluded that the post-survey enquiry was part and parcel of the survey proceedings, thereby validating the compulsory scrutiny. The additional ground raised by the assessee was dismissed.

2. Addition of Rs. 8,50,000/- under section 68 as unexplained cash credit:
The AO made an addition of Rs. 8,50,000/- under section 68, noting several cash deposits for which the assessee did not provide an acceptable explanation. The assessee claimed that the cash was from the closure of a previous business, M/s Rastogi Mobile Zone, and provided balance sheets to support this claim. The CIT(A) confirmed the addition, and the Tribunal upheld this decision, noting discrepancies in the balance sheets and the failure to explain the source of cash credits and repayment of unsecured loans.

3. Non-submission of documents showing cash in hand:
The assessee argued that the balance sheet of M/s Rastogi Mobile Zone showed cash in hand of Rs. 9,76,764/- as of 31.03.2011. The Tribunal found that the capital account had a negative balance, and the cash in hand was offset by unsecured loans, thus rejecting the claim that this cash could be taken to the capital account of the assessee.

4. Non-submission of evidence of filing Income Tax Return for AY 2011-12:
The assessee contended that they had filed the Income Tax Return for AY 2011-12, supported by an acknowledgment and balance sheet. However, the Tribunal found inconsistencies in the documents and upheld the CIT(A)'s decision that no evidence was submitted.

5. Ignoring written submissions made on 04.09.2019:
The assessee claimed that the CIT(A) ignored the written submission, including the acknowledgment of the Income Tax Return for AY 2011-12. The Tribunal did not find merit in this claim, as the evidence provided was inconsistent and did not substantiate the source of cash credits.

6. Additional grounds regarding the jurisdiction under section 143(2) without prior approval:
The Tribunal addressed the additional grounds raised by the assessee, noting that the AO had issued a notice under section 143(2) after conducting a post-survey enquiry. The Tribunal found that the AO had jurisdiction to select the case for compulsory scrutiny, dismissing the additional grounds raised by the assessee.

Conclusion:
The appeal was dismissed, and the Tribunal upheld the CIT(A)'s order, confirming the addition of Rs. 8,50,000/- under section 68 as unexplained cash credit and validating the legality of the survey and scrutiny assessment. The Tribunal found no merit in the additional grounds raised by the assessee regarding the jurisdiction under section 143(2).

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