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Facts
The assessee declared 'Nil' income and was selected for limited scrutiny regarding expenses for exempt income and investments/loans. The AO issued a notice for an additional issue of abnormal cash deposits during demonetization and made an addition.
Held
The Tribunal held that the addition for abnormal cash deposits was made without converting the case to full scrutiny or obtaining approval, thus it was liable to be deleted.
Key Issues
Whether an addition for abnormal cash deposits during demonetization can be made without converting a limited scrutiny case to a full scrutiny case.
Sections Cited
250, 143(2), 142(1), 143(3), 69A, 115BBE
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI
(Assessment Year: 2017-18) Agarta Real Estate Private Limited ACIT, CC-2(3), Mumbai A-02, Mahavir Darshan CHS Ltd., Shanti Park, Mahavir Darshan Bldg.-X- Vs. 31/32, Mira Road, East, Thane – 401107. PAN/GIR No. AAHCA2834J (Appellant) : (Respondent) Assessee by : Shri Neeraj Mangla (Virtually appear) : Shri Vinod Kumar V, SR. DR Respondent by : 20.11.2025 Date of Hearing Date of Pronouncement : 27.11.2025 O R D E R Per Narender Kumar Choudhry, J M: This appeal has been preferred by the assessee against the order dated 13.08.2025, impugned herein, passed by the Ld. Commissioner of Income Tax (Appeals) 48, Mumbai (in short Ld. Commissioner) u/s 250 of the Income Tax Act, 1961 (in short ‘the Act’) for the A.Y. 2017-18.
In the instant case, the Assessee declared its total income at Rs. ‘Nil’ by filing its return of income on dated 17.03.2018, which was subsequently selected for limited scrutiny under CASS by issuing notice dated 09.08.2018, u/s. 143(2) of the Act, for the following issues:
a. Expenses incurred for earning exempt income. b. Investments/Finance/Loans.
(A.Y. 2017-18) Agarta Real Estate Private Limited 3. The Assessing Officer (AO) thereafter issued another notice dated 19.02.2019, u/s. 142(1) of the Act, wherein the he asked for furnishing of explanation along with supporting evidence in addition to the aforesaid issues, qua one more issue, which read as under: “Abnormal in cash deposit during demonetization period as compared to pre demonetization period.”
The AO, thus vide assessment order dated 09.12.2019, u/s. 143(3) of the Act ultimately made the addition of Rs. 25,73,000/- on account of cash deposits made during demonetization period in the bank account maintained with Axis bank, as unexplained income/money u/s. 69A of the Act, as per 03rd issue raised vide notice dated 19.02.2019, u/s. 142(1) of the Act and added the said amount to the total income of the assessee taxing the same u/s. 115BBE of the Act.
Admittedly, the case of the assessee was selected for limited scrutiny for two issues such as ‘firstly’ expenses incurred for earning exempt income and ‘secondly’ investments/advances/loans but not for the 3rd issue qua abnormal increase in cash deposit during demonetization period, as compared to pre demonetization period, which resulted into making the addition without converting the case into full scrutiny and/or without taking approval of the Appropriate Authority, as required as per CBDT instruction no. 20/2015. Thus, the addition made by the AO and affirmed by the Ld. Commissioner, is liable to be deleted. Resultantly, the same is deleted.