2022 (5) TMI 1715

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.... 2. It was submitted by the ld. AR that the assessee is a partnership firm which is doing the business of construction work of residential complexes, service & renting of immovable property and consultancy services. It was the submission that the return filed by the assessee for the assessment year 2015-2016 was the subject matter of a limited scrutiny as the same was selected under CASS. The limited scrutiny was specifically for the purpose as mentioned below :- "i) High turnover reported in Service Tax Return compared to ITR; ii) Large increase in sundry creditors with respect to turnover as compared to preceding year; iii) Higher turnover reported in Service Tax Return compared to ITR; and iv) the a....

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....ived by the assessee. These were also not the loan creditors. It was the submission that the ld. Pr. CIT, in para 14 of his order, was of the view that, "the AO had failed to make necessary verification and inquiry before passing the assessment order. He has failed to consider the issue of sundry creditors in proper perspective. The onus to prove the identity, creditworthiness of the creditors and genuineness of transactions was with assessee itself, but the assessee was not confronted on the issue to reach a logical conclusion. The AO had failed to apply the correct provisions of law. Thus, the assessment order so passed by the AO on 04.07.2017 under section 143(3) of the I.T. Act, 1961, is found erroneous and prejudicial to the interests ....

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....issions. 6. At the outset, a perusal of the balance sheet clearly shows that there is nothing in the balance sheet of the assessee under the term "sundry creditors". We are alive to the fact that this is a limited scrutiny assessment, which is done under CASS. In the limited scrutiny direction, the direction was to verify the large increase in the sundry creditors with respect to the turnover as compared to the preceding year. The hands of the AO are, at the outset, tied when the terms sundry creditors were used in the limited scrutiny. The interpretation of the "advance from the customers" as "sundry creditors" cannot be done when the limited scrutiny direction was given. When an assessment is under limited scrutiny, the powers of the C....