SHRI SANJAY RAMNIWAS GUPTA,INDORE vs. THE ITO 2(4), INDORE

ITA 174/2017 Sanjay Ramniwas Gupta IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE Before Shri Kul Bharat, Hon’ble Judicial Member and Shri Manish Borad, Hon’ble Accountant Member

ITA No. 174/Ind/2017 A.Y. 1912-13

Sanjay Ramniwas Gupta Indore ::: Appellant Vs Income Tax Officer 2(4) Indore ::: Respondent Appellant by Shriram Gilda Respondent by Shri K.G. Goyal Date of hearing 25.5.2018 Date of pronouncement 31.5.2018 O R D E R PER SHRI MANISH BORAD, AM

This appeal of the assessee relating to the

assessment year 2012-13 is directed against the order of

the Commissioner of Income Tax (Appeals)-I, Indore, dated

4.1.2017 which is arising out of the order u/s 143(3) of the

Income Tax Act (in short referred as ‘Act’) Act framed by the

ITO. 2(4), Indore.

ITA 174/2017 Sanjay Ramniwas Gupta 2. The assessee has taken the following grounds :-

“1. Whether on the facts and in the circumstances of

the case, the learned Assessing Officer was

justified in extending the area of scrutiny without

obtaining the permission of higher authorities as

required by circular dt. 26.10.2006, 23rd May 2007

and 8th September, 2010 issued by CBDT for the

scrutiny of cases under AIR.

permission of Hon'ble Administrative Commissioner

/higher authorities were legal and valid in law

the case, the Assessing Officer was legal to send

the proposal of seeking permission of complete

scrutiny during the course of the assessment

ITA 174/2017 Sanjay Ramniwas Gupta proceedings on 20.2.2015 from the Hon'ble

Commissioner in view of circular dt. 08.09.2010.

giving permission in a mechanical way without

verification of facts stated in proposal for seeking

permission, without verifying case record and also

without recording his satisfaction of complete

scrutiny ?

the case, the additions made without obtaining the

prior approval of the higher authorities are liable to

be deleted.

18,56,000/- on account of short term capital gain is

illegal wrong and unjustified.

ITA 174/2017 Sanjay Ramniwas Gupta 7. That the following additions made and sustained

on account of unexplained investment are illegal

wrong and bad in law –

a. Shri Eknath Nimbore Rs.10,00,000/-

b. Unexplained credit in bank account Rs. 5,70,000/-

from record, are that the assessee is engaged in the

business of transport commission. The return of income

filed on 17.9.2012 declaring total income of Rs.3,29,332/-

and also claiming short term capital loss of Rs.21,54,100/-

The case selected for scrutiny. Notices u/s 143(2) and

142(1) of the Act were served on the assessee. During the

course of assessment proceedings the Assessing Officer on

the basis of AIR information observed that a large amount

of cash has been deposited in the savings bank account.

The case was selected for scrutiny on the basis of AIR

ITA 174/2017 Sanjay Ramniwas Gupta information. However, during the course of assessment the

Assessing Officer received approval from the CIT-I, Indore,

vide letter dated 25.2.2015 for carrying out detailed

scrutiny. The Assessing Officer accordingly carried out

detailed investigation and after making various additions,

assessed the income of Rs. 1,35,21,330/-. Aggrieved, the

assessee went in appeal before the learned Commissioner

of Income Tax (Appeals) and partly confirmed the addition

of Rs.18,56,000/- on account of short term capital gain

and also sustained the addition for unepxlained investment

of Rs. 15,70,000/-. Aggrieved, the assessee is in appeal

before the Tribunal.

the assessee submitted that the Assessing Officer was not

justified in extending the area of scrutiny without obtaining

permission of the higher authorities. He submitted that the

assessee’s case was selected for limited scrutiny as per AIR

ITA 174/2017 Sanjay Ramniwas Gupta and the Assessing Officer ought to have conducted inquiry

for the limited purpose whereas in the instant case the

Assessing Officer carried out detailed inquiry about various

other transactions which were not related to AIR

information and it was only at the fag end of completing

assessment proceedings that an approval was taken from

the CIT-I, Indore, on 25.2.2015 and then assessee was

given very little time to reply the other issues taken up by

the Assessing Officer.

Assessing Officer has conducted the assessment within the

provisions of law as well as the Circular issued by CBDT

which says that during the course of assessment

proceedings if the Assessing Officer wants to make detailed

inquiry then he should seek approval of the ACIT/JCIT. In

this case necessary approval was accorded by the learned

CIT on 25.2.2015 and sufficient time of around one month

ITA 174/2017 Sanjay Ramniwas Gupta was further given by the Assessing Officer to complete the

assessment.

record placed before us. This fact is not disputed that the

case of the assessee was picked up for scrutiny through

CASS on the basis of AIR information which is discernible

from the notice dated 7.8.2013 issued u/s 143(2) of the

Act. We also find that during the course of assessment

proceedings the Assessing Officer came across various

other crucial information which required wider scrutiny. A

letter was sent by him on 20.2.2014 to the CIT-U seeking

approval for carrying out complete scrutiny. In reply to

A.O.’s letter, the CIT-I, Indore, vide order dated 25.2.2015

accorded approval for carrying out complete scrutiny in the

case of the assessee. This is also a fact that the assessment

was completed on 25.3.2015 and the Assessing Officer

ITA 174/2017 Sanjay Ramniwas Gupta

after receiving approval informed the counsel for furnishing

various other informations.

8th September, 2010 wherein para 2 says that

“abovementioned guidelines have been considered by the

Board and it has been decided that the scrutiny of such

cases would be limited only to the aspects of information

received through AIR. However, the case may be taken up

for wider scrutiny with the approval of the administrative

Commissioner where it is felt that apart from the AIR

information there is a potential escapement of income more

than Rs. 10 lacs. The above instruction issued by BDT are

squarely applicable to the facts of the assessee and we are

of the considered view that the Assessing Officer has acted

well within its jurisdiction conducting wider and detailed

scrutiny in the case of the assessee after receiving approval 8

ITA 174/2017 Sanjay Ramniwas Gupta

from the administrative Commissioner. We, therefore, find

no merit in the contention of the learned counsel for the

assessee and accordingly dismiss the ground nos. 1 to 5.

additions confirmed by the learned Commissioner of

Income Tax (Appeals) of Rs. 18,56,000/- and Rs.

15,70,000/- on account of alleged short term capital gain

and unexplained investment, the learned counsel for the

assessee submitted that the assessee was not given

sufficient time to file necessary details during the course of

assessment proceedings as the assessment was getting

time barred and, therefore, one more opportunity to be

granted to go before the learned Commissioner of Income

Tax (Appeals) to file necessary details. The learned DR

raised no objection if these issues are set aside to the file of

the learned Commissioner of Income Tax (Appeals). 9

ITA 174/2017 Sanjay Ramniwas Gupta

record placed before us. Both the parties have no objection

if the issues raised in ground nos. 6 and 7 are set aside to

the file of the learned Commissioner of Income Tax

(Appeals) for de novo adjudication. We, therefore, in the

given facts and circumstances of the case and also looking

to the fact that the assessee was granted limited time to

put his case before the revenue authorities in relation to

the two issues, we restore these issue to the file of the

learned Commissioner of Income Tax (Appeals) for fresh

adjudication on merit after providing adequate opportunity

of being heard to the assessee and also to take necessary

remand report from the Assessing Officer. Ground nos. 6

and 7 are accordingly allowed for statistical purposes.

adjudication. 10

ITA 174/2017 Sanjay Ramniwas Gupta 11. In the result, the appeal of the assessee is partly

allowed for statistical purposes.

Pronounced in open Court on 31 May, 2018.

Sd/- sd/-

(KUL BHARAT) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER

31 May, 2018 Dn/- Copy to – Appellant/Respodent/Pr.CIT/CIT(A)/DR/Guard File By order Private Secretary