TaxTMI 
TaxTMI 
2024 (8) TMI 862
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssue other than recorded for limited scrutiny without following the procedure for conversion of limited scrutiny to the fully complete scrutiny as prescribed by CBDT is bad in law and thus the consequent addition so made deserves to be deleted. 2. On the facts and in the circumstances of the case and in law, ld.CIT(A) has grossly erred in confirming the addition of Rs. 8,50,000/- made by AO on allegation of cash deposit by assessee in bank account during the year under consideration. It is submitted that the case was selected for scrutiny in view of the fact the return was filed belated and cash was deposited during demonetization, which happened to be on 8.11.2016, i.e. after end of F.Y. 2015-16. Appellant prays that deposits made in bank account even prior to announcement of Demonetization cannot be deemed to have been a planned affair, therefore addition of Rs. 8,50,000/- being outside the scope of limited scrutiny deserves to be deleted. 3 On the facts and in the circumstances of the case and in law, the ld. CIT(A) has further erred in confirming addition of Rs. 10,48,737/- being difference between cash in hand as on 31.03.2016 and as on 31.3.2015. It is submi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s contention of the appellant is not correct as the addition made by the Assessing Officer is with regard to the issue for which the case was selected for scrutiny. The Income-tax Department has found that some of the assessees tried to build an explanation for cash deposits in their bank accounts during the demonetization period by manipulating their books of accounts and filing revised or belated ITR and in this regard, the CBDT issued various directions for scrutiny assessment in the case of an assessee who had filed belated return during post demonetization period. Therefore, the Assessing Officer was required to examine as to whether belated ITR is filed just to build an explanation for cash deposits in bank account during the demonetization period. It is a fact that in this case the appellant had deposited cash during demonetization period and the return of income of earlier assessment year was filed belatedly after demonetization period. 5.2 It is seen from the assessment order that the Assessing Officer has sought the information related to the asset side of the Balance Sheet which includes cash in hand and sundry debtors. These details were called for in order to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... amounting to Rs. 8,50,000/- deposited in the bank account. In spite of giving an opportunity, the appellant has not submitted the evidence of source of cash amounting to Rs. 8,50,000/- deposited in the bank account during the financial year relevant to the Assessment Year 2016-17. The appellant has submitted a copy of cash book and on perusal of the same it is seen that the appellant has credited every month systematically around Rs. 1 lakh and has shown narration as 'commission received without adducing any evidence in support of the same. It is also seen that the Gross commission received shown by the appellant is around Rs. 4 lakh only in two previous years. Under these circumstances it is beyond understanding that how come appellant is showing commission received in cash amounting to Rs. 10 lakh plus or so in the year under consideration. The copy of Balance sheet filed also shows that to justify the cash received the appellant has reduced Sundry Debtors balance without giving any documentary evidences in support of it. There are negligible withdrawals have been shown by the appellant against the commission received in cash which creates doubt about the genuineness of the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed by the Hon'ble High Court. In the case of the appellant, the appellant failed to submit the source of cash deposited in the bank account with supporting evidence and therefore, the Hon'ble High Court decisions relied upon by the appellant cannot be applied in this case. Therefore, the addition made on account of cash deposited in the bank account amounting to Rs. 8,50,000/- by the Assessing Officer is confirmed. 5.5 The second amount added to the total income is the difference between opening cash and closing cash appearing in the Balance Sheet. During the assessment proceedings, the Assessing Officer found that the cash in hand of the appellant as on 31.03.2015 was at Rs. 12,45,770/- as against the opening cash in hand of Rs. 23,150/-. During the assessment proceedings the Assessing Officer requested the appellant to provide the source of increase in cash in hand and as the appellant had not given any satisfactory explanation, the difference of cash in hand of Rs. 10,48,737/- after adjusting the cash income was added to the total income. During the appellate proceedings the appellant stated that the Assessing Officer has ignored the receipts from advances given....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o record any evidence to prove that the sundry debtors shown in the Balance Sheet is non- genuine. Accordingly, the addition made on account of sundry debtors amounting to Rs. 3,75,400/- is deleted. 6. In the result, the appeal is partly allowed.'' 2.2 During the course of hearing, the ld AR of the assessee has filed the following written submission that the additions confirmed by the ld. CIT(A) are not justified which deserves to be deleted. Grounds of Appeal No.1 & 2: In ground of appeal No.1, assessee has challenged the action of ld.AO in making additions of Rs. 8,50,000/- and Rs. 10,48,737/- on account of cash deposited in bank and excess cash in hand respectively, none of which was covered by the reason for selection of Limited scrutiny. Whereas in ground of appeal No.2, assessee has challenged the action of ld.AO in making addition of Rs. 8,50,000/- being cash deposits made during the year under consideration prior to even announcement of Demonetization (which again is not in the scope of reason for limited scrutiny). Since both the grounds of appeal are interconnected, the same are canvassed together for the sake of convenience. In this....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... on 18.12.2018". In this regard, it is submitted that, no notice dated 18.12.2018 as stated above, was communicated to the assessee, which is evident from the screenshot of Income Tax portal of assessee, where in E-proceeding Window (APB 39), no notice dated 18.12.2018 is seen and after notice dated 4.12.2018, assessment order is appearing. However, ld.AO has completed assessment on the basis of such additional queries stated to have been raised vide aforesaid notice dated 18.12.2018, which was not communicated and thus without providing assessee with opportunity of being heard. Therefore, addition made on account of cash deposit of Rs. 8,50,000/- and Excess Cash of Rs. 10,48,737/- vide assessment order passed without communicating show cause notice, i.e. without giving opportunity is not in accordance with law. It is further submitted that cash worth Rs. 8,50,000/- was deposited by assessee during the year under consideration in his bank account no. 2967000100284199 with PNB on following dates: Date Amount 05/02/2016 4,00,000/- 02/10/2015 1,10,000/- 06/10/2015 1,60,000/- 02/09/2015 1,80,000/- 8,50,000/- From per....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... At this juncture, kind attention of your goodself is invited to the CBDT Instruction No.05/2016 dated 14.07.2016 (APB 40-42) which was issued in partial modification to Instruction No.20/2015 dated 29.12.2015 defines the "Direction regarding scope of enquiry in cases under "Limited Scrutiny" selected through CASS 2015 & 2016". Para 4 of such instruction clarifies that "........in cases under Limited Scrutiny, the scrutiny assessment proceedings would initially be confined to issues under Limited Scrutiny and questionnaires, enquiry, investigation etc. would be restricted to such issues. Only upon conversion of case to Complete Scrutiny after following the procedure outlined above, the AO may examine the additional issues besides the issue(s) involved in Limited Scrutiny. The AO shall also expeditiously intimate the taxpayer concerned regarding conducting Complete Scrutiny in such cases." Further, para 2 of such Instruction lays down procedure for conversion of Limited Scrutiny cases in Complete Scrutiny, which reads as under: 2. In order to ensure that maximum objectivity is maintained in converting a case falling under "Limited Scrutiny" into a "Complete S....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ash in hand is also not covered under "Limited Scrutiny" as stated above and deserves to be deleted. Ground of Appeal No.3: In this ground of appeal, assessee has challenged the action of ld. CIT(A) in confirming the addition of Rs. 10,48,737/- made by ld.AO by alleging the difference between cash in hand as on 31.03.2016 and 31.03.2015 as undisclosed cash. In this regard, it is submitted that during the course of assessment proceedings as well as in appellate proceedings before ld.CIT(A), assessee furnished copies of Commission ledger, Sales and Purchase ledger, Cash book and also explained how opening balance of Capital was arrived at. Since, closing cash in hand as shown in balance sheet as on 31.03.2016 was computed according to cash book so furnished, wherein no discrepancy whatsoever was pointed out by lower authorities, the same deserves to be accepted as such. Also, as submitted above that, since show cause notice raising queries in this regard was not communicated to the assessee, no further clarification could be given by assessee. During the course of appellate proceedings before ld.CIT(A), it was submitted that assessee had also recei....