TaxTMI 
TaxTMI 
2021 (2) TMI 279
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....ent proceedings u/s 143(2) of the Act, the assessee was asked to produce details of property and sources for cash deposits in the bank account. In response to the same, the assessee submitted details of his properties, bank statements and submitted that the properties belong to the company M/s Indus Creators Pvt. Ltd. and were purchased as a representative for the company. In support of the same, assessee submitted the copies of the sale deeds and after considering the same, the AO accepted the explanation and did not draw any adverse inference. 2.1 With regard to cash deposits, the assessee submitted that these were his business receipts and that the assessee has admitted business income u/s 44AD. When asked to submit the evidence of his carrying on construction activity, he submitted that he is not in a position to produce any evidences/confirmations for the same. The assessee's representative also submitted that he has worked out peak cash credit taking the bank account into consideration and requested that the peak cash credit of Rs. 1,23,90,000/- be treated as his income and also further requested that the income already offered u/s 44AD of Rs. 7,49,200/- be reduced from th....
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....rred both on facts and in law by dismissing the appeal. 2. The Ld.CIT (A) ought to have fairly adjudicated the case basing on the facts and circumstances of the case, grounds of appeal ,submissions and clarifications filed by the assessee. 3. The Ld.CIT (A) erred in confirming the addition made by AO without considering that facts and circumstances of the case. 4. The Ld. CIT(A) ought to have appreciated that the statutory notice issued u/s 143(2) was without intimating the issues that have been identified for examination under limited scrutiny under CASS, which is against the guidelines of the CBDT on this subject. 5. The Ld. CIT(A) ought to have appreciated that AO erred in exceeding the limits as laid down under limited scrutiny CASS by calling for other information other than the issues covered under limited scrutiny is, thus the assessment is without jurisdiction and is invalid. 6. The Ld. CIT(A) ought to have fairly appreciated that AO erred in making addition of Rs. 1,16,40,800/ - towards peak cash deposit without considering that the contract receipts to the extent of Rs. 93,65,000/ -,was also deposited in the bank account. ....
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....T(A) ought to have appreciated that the impugned assessment is invalid abinitio on the ground that the scrutiny notice issued u/s 143(2) is erroneous which is not curable u/s 292B and 292BB of the Act. (b)The Ld. CIT(A) ought to have appreciated that the scrutiny notice issued u/s 143(2) is in violation of clauses 3(a) & 3(b) of CBDT Instruction NO.20/2015 dated 29.12.2015 issued in relation to scrutiny cases selected under Computer Aided Scrutiny Section (CASS) (c) The Ld. CIT(A) ought to have appreciated that since the relevant column in the scrutiny notice u/s 143(2) of the Act has, admittedly, been left blank without specifying the issue identified for examination, the very notice is invalid thereby rendering the impugned assessment invalid abinitio. (d) The Ld. CIT(A) erred in holding that the format of the notice u/s 143(2) of the Act is not a statutory format and, therefore, it is not mandatory that the Assessing Officer should incorporate the issues in respect of which the case was selected for scrutiny. (e) The Ld. CIT (A) ought to have appreciated that merely because the assessee has not raised any objection and has participated in the ....
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.... the CIT(A). 6. The ld. DR, on the other hand, opposed the admission of additional grounds. 7. After considering the material on record in the light of above submissions, we find that these additional grounds of appeal are not actually additional grounds as the validity of the notice u/s 143(2) was raised by the assessee before the CIT(A) who adjudicated the same and these grounds now raised are the arguments against the findings of the CIT(A). Therefore, we deem it fit and proper to admit these additional grounds of appeal. 8. Since, the validity of the notice u/s 143(2) was questioned, during the course of hearing on earlier dates, ld. DR was directed to produce the assessment records before us and the same was produced before us on 25/11/2020. 9. The undisputed facts of the case are that the assessee filed his return of income on 05/01/2017 offering the income from business u/s 44AD of the Act. He has shown gross receipts at Rs. 93,55,000/- and offered the income @ 8% of the same, i.e. at Rs. 7,49,200/-. It is also not in dispute that the assessment was picked up for limited scrutiny through CASS. The points for which the assessment was taken up for scrutiny as per t....
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....g either in 'Limited Scrutiny' or 'Complete Scrutiny' through notices issued under section143(2) of the Income- tax Act, 1961 ('Act'). The procedure for handling 'Limited Scrutiny' cases shall be as under: a. In 'Limited Scrutiny' cases, the reasons/issues shall be forthwith communicated to the assessee concerned. b. The Questionnaire under section 142(1) of the Act in 'Limited Scrutiny' cases shall remain confined only to the specific reasons/issues for which case has been picked up for scrutiny. Further, the scope of enquiry shall be restricted to the 'Limited Scrutiny' issues. c. These cases shall be completed expeditiously in a limited number of hearings. d. During the course of assessment proceedings in' Limited Scrutiny' cases, if it comes to the notice of the Assessing Officer that there is potential escapement of income exceeding Rs. five lakhs (for metro charges, the monetary limit shall be Rs. ten lakhs) requiring substantial verification on any other issue(s), then, the case may be taken up for 'Complete Scrutiny' with the approval of the Pr. CIT/CIT concerned. However, su....
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....ould be incorporated in the notice u/s 143(2) itself. It would suffice if the reasons are to be communicated immediately thereafter. We find that the intention behind such a condition is that the assessee should be made aware of the reasons for the scrutiny of his return of income. In the present case, though the reasons have not been incorporated/annexed to the notice u/s 143(2), we find that the assessee was made aware of the reasons for limited scrutiny on the very next date of hearing i.e. 10/10/2017 as is evident from the docket sheet entries and in compliance thereof, the assessee has also provided all the required details on the subsequent date. Therefore, no prejudice has been caused to the assessee by such intimation of the reasons subsequent to the issuance of notice u/s 143(2) of the Act. Further, though the return was selected for scrutiny on two issues, the AO has made addition only on account of one issue, i.e. cash deposits, the sources of which could not be explained by the assessee and, therefore, he has not exceeded his brief of the limited scrutiny. Only where the AO believes that there is income, which has to be brought to tax but is not the issue for the limite....
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....n accepted by the department and, therefore, for the year under consideration also income offered u/s 44AD should be accepted. Further, he also submitted that the assessee's revised computation of income ought to have been considered by the AO. In support of this contention, he placed reliance upon the following case law: 1. CIT Vs. Abhinitha Foundation (P) Ltd., [2017] 83 Taxmann 100 (Mad.) 2. M/s Andhra Pradesh Industrial Development Corporation Ltd. Vs. DCIT, ITA No. 548/H/2017 (ITAT, Hyd.) 13. Having regard to the rival submissions and the material on record, we find that the assessee has offered business income u/s 44AD and has claimed to have carried on construction activity. His argument was that since the aggregate turnover from construction activity was below Rs. 1 crore, there was no need for him to get his accounts audited and thus, the assessee has offered the income u/s 44AD of the Act. He submitted that the requirement of audit is only to arrive at the correct profit of the assessee, but, since the assessee did not maintain the books of account for the relevant year, he could offer the income at a percentage of the turnover u/s 44AD of the Act and....
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....cited supra) has held as under: "18. In sum, what emerges from a perusal of the ratio of the judgments cited above, in particular, the judgments rendered by the Supreme Court in Goetze's India Ltd's case (supra) and National Thermal Power Co. Ltd's case (supra), and those, rendered by the Division Bench of this Court in Ramco Cements Ltd (supra) and Malind Laboratories (P) Ltd (supra) as also the judgments of the Delhi High Court in Sam Global Securities Ltd's case (supra) and Jai Parabolic Springs Ltd 's case (supra), that, even if, the claim made by the assessee company does not form part of the original return or even the revised return, it could still be considered, if, the relevant material was available on record, either by the appellate authorities, (which includes both the CIT (A) and the Tribunal) by themselves, or on remand, by the Assessing Officer. In the instant case, the Tribunal, on perusal of the record, found that the relevant material qua the claim made by the assessee company under Section 80 IB (10) of the Act was placed on record by the assessee company during the assessment proceedings and therefore, it deemed it fit to direct its ....
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....orities. 13. The judgment of the Division Bench of this Court rendered in Shriram Investments case (supra) , which is relied upon by the learned counsel for the Revenue, is clearly distinguishable, as in that case, the assessee had sought assessment of tax by disclosing a lower taxable income, albeit, by filing a second revised return. It is in that context that the Division Bench came to the conclusion that the second revised return, which was filed beyond the period of limitation, being non est in law, would not be considered for the purposes of ascertaining the taxable income. 14. In so far as the judgment of the Supreme Court in the matter of Shriram Investments case (supra) is concerned, according to us, it has no applicability to the issue raised in the instant appeal. In that case, the Tribunal appears to have allowed the claim of the assessee for deduction under Section 35 B of the Act without examining the facts of the case. The assessee, evidently, had neither made a claim before the ITO nor the AAC nor, had he, furnished particulars of the expenditure incurred by it. It is in this context that the Supreme Court observed that the onus of proving facts an....
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....record, either by the appellate authorities, (which includes both the CIT(A) and the Tribunal) by themselves, or on remand, by the Assessing Officer. In the instant case, the Tribunal, on perusal of the record, found that the relevant material qua the claim made by the assessee company under Section 80IB (10) of the Act was placed on record by the assessee company during the assessment proceedings and therefore, it deemed it fit to direct its reexamination by the Assessing Officer. 18.1 In our opinion, the view taken by the Tribunal is unexceptionable and therefore, does not merit any interference. 19. Consequently, the Tax Case Appeal is dismissed, leaving the parties to bear their own costs". 3.2. In the light of the law enunciated above, we are of the considered opinion that AO as well as the CIT(A) ought not to have rejected the revised computation filed during the course of assessment proceedings and we therefore, remit the matter back to the file of the AO to consider the revised computation in accordance with the provisions of law. 4. In the result, appeal of assessee is partly allowed for statistical purposes." Thus, ground 6 ....