TaxTMI 
TaxTMI 
2024 (1) TMI 849
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....inasmuch as provisions of sec. 68 is not applicable in the facts of the case. 3. Ld. CIT(A) erred in not adjudicating grounds raised by appellant, relating to the validity of assessment order being illegal and the same having been passed in violation of principles of natural justice. 4. Ld. CIT(A) erred in confirming the addition made by AO without appreciating the facts that the issue relating to addition is not covered by scope of "limited scrutiny". 5. The appellant reserves the right to add, amend or modify any of the grounds of appeal. 3. The brief facts of the case are that the assessee is an "individual", has filed her return of income electronically for the A.Y. 2017-18 on 14.03.2018, declaring total income of Rs. 15,90,200/-, which includes agriculture income of Rs. 94,750/-. The case of the assessee was selected for scrutiny through 'CASS' (Under Limited Scrutiny). Notice u/s 143(2) of the Income Tax Act, 1961 dated 21.09.2018 was issued and duly served. Notice u/s 142(1) of the Act, along with questionnaire dated 13.08.2019 was issued and duly served upon the assessee. In response to the aforesaid notices, the assessee has furnished ....
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....aforesaid observations deliberate on the validity of the order passed by the Pr. CIT under Sec. 263. As observed by us hereinabove, the Pr. CIT had held the order passed by the A.O under Sec. 143(3), dated 08.12.2016 as erroneous, in so far it was prejudicial to the interest of the revenue, for the reason, that he had failed to carry out proper investigation as regards the issue of valuation of the "closing stock‟ as reflected in the audited accounts of the assessee. We are of a strong conviction that now when the case of the assessee was selected for limited scrutiny for the reasons viz. (i). Large other expenses claimed in the P&L A/c.; and (ii). Low income in comparison to High Loans/advance /Investment in shares, therefore, no infirmity could be attributed to the assessment framed by the A.O on the ground that he had failed to deal with other issues which though did not fall within the realm of the limited reasons for which the case was selected for scrutiny assessment. In other words, the Pr. CIT in the garb of his revisional jurisdiction u/s 263 cannot be permitted to traverse beyond the jurisdiction that was vested with the A.O while framing the assessment. In sum and ....
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....n assessment or cancelling the assessment with a direction to pass fresh assessment order. In the present case, from the order sheet dated 14.1.2019, it is vivid that the JCIT, Range-2, Sambalpur sent a proposal for initiation of revisional proceedings u/s.263 of the Act to ACIT, Sambalpur and ld. ACIT, Sambalpur after making observation regarding requirement of examination of certain issues forwarded the proposal to Ld. PCIT along with draft notice u/s.263 which was approved by ld. PCIT in a manner in which administrative actions are proved. Hence, we are compelled to hold that the initiation of revisional proceedings, issue of notice has been done on the proposal of JCIT, Range-2, Sambalpur through ACIT, Sambalpur and mandate of procedure as provided in section 263 of the Act has not been followed and on this count, the impugned order u/s.263 of the Act also become unsustainable. While taking this view, we respectfully follow the order of ITAT Kolkata in the case of Manish Chirania order of Pune Bench of ITAT in the case of Span Overseas Ltd and order ITAT Mumbai 'F' Bench in the case of Vinay Pratap Thacker (supra). (iii) Sanjeev Kumar Khemka vs Pr. CIT in ITA No. 1361/....
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....) Kolkata. Report of enquiry at PN 64 of PTA. ii) Both lenders again submitted all the above documents, as referred to in report of DDIT (Inv.). Both lenders again confirmed having given loan [PN 65 & 66, para (c)]. Reliance on CIT vs Metachem Industries (2000) 245 ITR 160 (MP). iii) Absolutely no adverse observation of (Inv.), Kolkata. No allegation of shell companies, no adverse comments on resources available with lenders. 4. Burden cast on assessee discharged. No addition could have been made. Reliance on: - - CIT vs Orissa Corporations (P) Ltd. (1986) 159 ITR 78 (SC), PN 83 to 88 of PB, relevant findings on PN 88 of PB, para no. 13. - Prabhatam Investment P. Ltd. vs ACIT (2017) 49 CCH 299 (Del., Trib.), PN 93 to 104 of PB, relevant conclusion in para 18.5 of PN 102 of PB. - Pr. CIT vs Laxman Industrial Resources Ltd. (2017) 397 ITR 106 (Del.). - CIT vs Jai Kumar Bakliwal (2014) 366 ITR 21 7, 223 & 224 (Raj.) - Claris Lifesciences Ltd. vs ACIT (2008) 298 ITR (AT) 403 (Ahd.) - CIT vs Metachem Industries (2000) 245 ITR 160 (MP), PN 89 to 92 of PB. 5. Reply on some observations of AO ....
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....s of analysis of financial statements of lenders are based on AO's own interpretation. AO of assessee was not competent to comment upon the financial statements of lenders and it was the AO of the lenders whose view could have been material. The AO of lenders has not made any adverse observations and is accepting the resources available in the hands of lenders. 6. Conclusion of Id. CIT(A) i) Ld. CIT (A) observed that the report of DDIT (Inv.) brands the lenders as shell companies and that Investigation Wing unearthed incriminating material. ii) Such observations of CIT (A) are baseless and arbitrary and contrary to material on record. There is nothing in the report of Investigation Wing (PN 64 of PB) which alleges that lenders were shell companies or that there was any incriminating material unearthed. Ground no. 2 Submission of the assessee l . Ground no. I of first appeal assails that the assessment order is illegal, ab initio void. 2. Assessee does not maintain books of account, nor required to maintain it. Deriving income from salary, house property and other sources. Computation of income at PN 68 to 71 of PB. 3. In abs....
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.... Bhaichand N. Gandhi (1983) 141 ITR 67 (Mum.), PN 72 to 74 of PB, para no. 5, PN 74 of ii) Mehul V. Vyas vs ITO (2014) 164 ITD 296 (Mum.) iii) ITO vs Kamal Kumar Mishra (2013) 143 ITT) 686 (Lucknow) iv) Kuldeep Jiwan Mahant vs ITO in ITA No. 105/RPR/2019 cit. 19.07.2022, PN 75 to 82 of PB, relevant findings on PN 81 of PB, para no. 8. v) Amitabh Bansal vs ITO (2019) 175 ITT) 401 (Del.) 7. Ld. AR further drew our attention to page no 79 to of the Assessee's paper book showing the view adopted by the coordinate bench of the ITAT, Raipur in the case of Kuldeep Jiwan Mahant (supra), wherein the ratio of law laid down by Hon'ble Bombay High Court in the case of CIT vs. Bhaichand N. Gandhi (supra) has been adopted and observed as under: 7. We have considered the submissions of the ld. AR of the assessee, carefully perused facts of the case and gone through the judgments relied upon by the assessee. In the circumstances of the present case the addition u/s 68 was made by the Ld. AO and confirmed by the Ld. CIT(A) based on the cash deposit in the bank, which are evident from entries in the bank statement / passbook of the assessee. In this re....
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....ss book supplied by the bank to the assessee in the present case could not be regarded as a book of the assessee, that is, a book maintained by the assessee or under his instructions. In our view, the Tribunal was justified in the conclusions at which it arrived." We find that the aforesaid view of the Hon'ble Bombay High Court had thereafter been followed by a 'SMC' bench of the ITAT, Mumbai in the case of Smt. Manshi Mahendra Pitkar Vs. ITO 1(2), Thane (2016) 73 taxmann.com 68 (Mumbai Trib.) wherein it was held as under: - "I have carefully considered the rival submissions. In the present case the addition has been made by the income tax authorities by treating the cash deposits in the bank account as an unexplained cash credit within the meaning of section 68 of the Act. The legal point raised by the assessee is to the effect that the bank Pass book is not an account book maintained by the assessee so as to fall within the ambit of section 68 of the Act. Under section 68 of the Act, it is only when an amount is found credited in the account books of the assessee for any previous year that the deeming provisions of section 68 of the Act would apply i....
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....leted and we direct to delete the same. Since we have quashed the addition on the ground that no such addition could have been validly made U/s 68 of the Act, therefore, we refrain ourselves to decide the other grounds wherein the assessee has assailed on merits the additions sustained by the ld. CIT(A) 8. On the basis of above judicial pronouncements and material available on record, it is an admitted fact that the addition u/s 68 of the IT Act 1961 made by the Ld. AO and sustained by Ld. CIT(A) was on the basis of deposit entries in the bank statement of the assessee is in contradiction with the settled position of the law as decided in the case of CIT Vs. Bhaichand N. Gandhi (1983) 141 ITR 67 (Bom) wherein it is observed that a bank pass book or bank statement cannot be considered to be a 'book' maintained by the assessee for section 68 of the IT Act. Thus, respectfully following the above legal preposition, we are of the considered view that the addition made by Ld. AO u/s 68 of the Act is liable to be deleted. Accordingly, we set aside the order of Ld. CIT(A) and direct the AO to delete the addition made in this regard. Thus, ground No.2 of the assessee, which is lega....