GAYTRI DEVI SHARMA,CHOMU vs. ITO WARD 7(3), JAIPUR

The appellant contends that on the facts and in the circumstances of the case and in law, the CIT(A) ought not to have upheld the action of the Assessing Officer inasmuch as the appellant has explained the source of cash/cheque deposited in his bank account(s) and hence, the impugned addition of Rs. 5,25,000/- ought to be deleted.

4. The Ld.CIT(A) has erred in confirming the addition made by the AO u/s 69A notwithstanding the fact that in case of deposits in Retail Business Account only 8% of the total deposits can be taxed in view of section 44AD.

2.1 The ld. AR of the assessee relying on the decision of the Apex Court in the case of NTPC 229 ITR 383 serviced following additional ground;

2. The initiation of proceedings by issue of notice u/s 142(1) dated 15.02.2018 is invalid and bad in law being based on incorrect facts and contrary to the Instruction No.3 of 2017 dated 21.02.2017, issued by the Board for selection of case for scrutiny, therefore the said notice and the assessment order passed in consequence thereof are void ab-initio.

verifying the data analytics and information under the “Operation Clean Money” the revenue noted that the assessee had made cash deposits of Rs. 17,15,000/- between 9th November 2016 to 30th December 2016 relevant to assessment year 2017-18. Thus, a notice u/s. 142(1) of the Act was issued to the assessee on 15.02.2018 calling upon the assessee to prepare a true and correct return of income in respect of which the assessee is assessable under the Act relevant to assessment year 2017-

As there was information of cash deposit, notice u/s 133(6) of the Act, was issued to Federal Bank Ltd. on 13.09.2019 calling the detail of cash deposits made during demonetization period, certified copy of bank account statements since opening the account, account opening form with KYC detail and current address of the assessee. In response thereto, the through registered post. Perusal of bank account statements (A/c No.

21225500000599) shows the cash deposits of Rs. 14,50,000/- (Rs.

7,50,000/- in SBN) during the demonetization period i.e. between 9th November, 2016 to 30st December, 2016. This account showed the name of Mahesh Food Industries with Joint Holders with Gaytri Devi Sharma.

Besides demonetization period, cash deposit of Rs. 38,25,000/- was also made in this account. Ld. AO noted from the bank account statements (A/c No. 212202000001484) that the cash deposit of Rs. 2,65,000/- was made during the demonetization period i,e. between 9th November, 2016 to 30st December, 2016. This account showed the name of Mahesh Trading Company and also Joint Holders with Gaytri Devi Sharma Besides demonetization period, cash deposits of Rs. 1,10,500/-was also made in this account. Ld. AO, from the Cash Transaction detail /ITS information as well as from KYC detail obtained from bank, noted that the cash was deposited in these accounts during the year under consideration under the PAN No. GUWPS0707L of Smt. Gaytri Devi Sharma, being an account holder. Besides above, Smt. Gaytri Devi Sharma also deposited cash in SBN of Rs. 50,000/- in her saving bank A/c No. 21220100005379 on 17.12.2016 during demonetization period, as per information provided by Federal Bank. assessee deposited total cash of Rs. 4,25,000 in addition to Credit of Rs. 1,00,000/-. The total credit of Rs. 5,25,000/- was considered as unexplained money as per provision of section 69A of the Act and, accordingly, the assessment was completed as per provision of section 144 of the Act.

“4. Findings & decision: The matter is being decided based on the facts available on record and the submissions made by the appellant. 4.1. During the relevant Assessment Year (A.Y.), the Assessing Officer (A.O.) had noted substantial amount of cash deposited into the bank account of the appellant. It was observed that the appellant had deposited cash of Rs.17,15,000/-(Rs. 14,50,000 and Rs. 2,65,000) with Federal Bank Ltd, Chomu in account nos. 21225500000599 and 212202000001484 respectively during the period of demonetization 1.e. from 09.11.2016 to 31.12.2016. The appellant was asked to file an explanation regarding the deposits made during the period of demonetisation. 4.2. The assessee furnished through on-line submission "that A/c No. 212255000000599 is related to his husband firm and not related to her. However, she admitted that A/c No. 212202000001484 is here firm current account and deposited amount is related to her business receipts. She further admitted that A/c No. 212201000005379 is her saving account and she had deposited her personal savings. Further, she furnished copy of trading and profit and loss account, balance sheet along with audit report along with copy of return of income for AY 2017-18 of Mahesh Food Industries in her response to notice u/s 142(1) of the Act.

Gaytri Devi Sharma vs. ITO 4.3. Further analysis of bank account statements (A/c No. 212202000001484 shows cash deposit of Rs. 2,65,000/-, Rs. 52,000/- and Rs. 58,500/- during the demonetization period (from 9th November 2016 to 30th December 2016), before demonetization and after demonetization respectively. The account in question belongs to Smt. Gaytri Devi Sharma's business firm, and she has stated that the cash deposits are from her business receipts. However, she has not provided any documentary evidence or proof to support this claim during the assessment proceedings that these cash deposits of Rs. 3,75,000/- (265000+52000+58500) was her firm's business receipts. In addition to this, Smt. Gaytri Devi Sharma had also deposited cash of Rs. 50,000/- in SBN in her saving bank A/c No. 21220100005379, which also remains unexplained money for the year under consideration The data analysis of bank statement with Federal Bank, it reveals credit entry of Rs. 1,00,000/- in addition to cash deposits made during the FY 2016-17. It is evident from bank statement that the assessee received credit entry. made cash deposits, but has not filed Income Tax Return, not offered Income from its activities and not paid taxes due on. Thus, Smt. Gaytri Devi Sharma had deposited total cash of Rs. 4,25,000/- in addition to credits of Rs. 1,00,000/-, totaling to Rs. 5,25,000/-, in her bank accounts as mentioned above, which are being treated her unexplained money for the year under consideration since she has failed to establish the source of these cash deposits/credits. Hence The AO deemed the value of cash deposits of Rs. 5,25,000/- as unexplained money u/s 69A of the Income Tax Act, 1961 and added to the total income of the assessee. The appellant disagrees with this and has filed an appeal. 4.4. In this case, assessee deposited cash into her bank accounts during the demonetization period (9th November 2016 to 30th December 2016), but have neither explained the source of the deposits nor offered money for taxation. The burden of proof lies with the assessee to demonstrate that the deposits do not represent income. In the present case, the assessee has failed to establish that the cash deposited during the demonetization period constitutes normal business receipts. Therefore, I conclude that the total deposits, including those made during the demonetization period, represent income from undisclosed sources. The appellant has concealed taxable income. Further, The assessee has not filed ITR, not declared its true income and has not paid taxes due thereon.

Gaytri Devi Sharma vs. ITO 4.5. In view of the above, I am of the considered view that the Assessing Officer was justified in addition of Rs. 5,25,000/- as unexplained money u/s 69A of the Income Tax Act, in his order passed u/s 144 of the Act, and accordingly, the grounds of appeal of the appellant are" Dismissed".

5. In the result, the appeal is Dismissed.

5. As the assessee did not find any favour, from the appeal so filed before the ld. CIT(A), the assessee has preferred the present appeal before this Tribunal on the ground as reproduced hereinabove. To support the various grounds so raised by the assessee, ld. AR of the assessee, has filed the written submissions which are reproduced herein below:

The appellant respectfully begs to submit following facts and details for your honor’s kind consideration in support of grounds of appeal already submitted :

• Background and action of the Ld. Assessing Officer and CIT(A) - The appellant had not filed her return for AY 2017-18 as she did not have any taxable income. Notice u/s 142(1) was issued in the case, on the basis of information that the assessee had deposited cash of Rs.17,15,000/- in her two current accounts with Federal Bank, during the period of demonetization. The information was incorrect as the aggregate of cash deposits in the assessee’s current account was only to the tune of Rs.2,65,000/- out of which Rs.2,45,000/- was deposited in SBNs. The foundation for selecting the case being based on incorrect facts, the case did not call for scrutiny assessment, as per the Instructions issued by CBDT on the subject. The AO completed the assessment at a figure of Rs.5,25,000/- adding the entire deposits made in the alleged bank account of the assessee, as well as in her SB A/c with Federal Bank, ignoring the explanation of the assessee that the cash deposits represented her business receipts from sale of spices. The Ld.CIT(A) sustained the addition dismissing the appeal of the assessee rejecting the additional evidence filed by the assessee.

• Facts of the case- The assessee is a small time trader of spices carrying on business as proprietor of M/s Mahesh Trading Company. She Gaytri Devi Sharma vs. ITO ventured into this business in July, 2016, i.e. during the current financial year only. The income being below taxable limit, no ITR for the relevant year was filed by her. It was alleged that the assessee had deposited cash of Rs.17,15,000/- in her bank account with Federal Bank, during the period of demonetization. As a matter of fact, she had deposited cash aggregating Rs.2,65,000/- only in her current with Federal Bank, Chomu (A/c No. 212202000001484) Total cash deposits made by her in her current account during the year aggregated Rs.3,75,500/- This entire cash had come on account of sales made by her. Apart from cash, her account had deposit in the form of NEFT received from Ram Lal. Before the AO, she contended that the entire deposits (cash and NEFT) in her bank account are her business receipts accruing from sales made by her. The AO, dismissing her stand arbitrarily added the entire deposits as unexplained money u/s 69A. The Ld.CIT(A) confirmed the addition ignoring the evidence filed by the assessee in support of the grounds of appeal.

Before embarking upon to file written submission on the grounds of appeal as per Form-36, the appellant requests to raise additional ground of appeal, which may kindly be admitted u/s 250(6). The ground is bonafide and the omission was not willful or unreasonable and it is requested that the same may be admitted. It is further requested that the issue raised is purely legal in nature, goes to the root of the matter and no new facts are required to be invoked, and the same may kindly be admitted in view of the dictum laid by Supreme Court in the case of NTPC Ltd. 229 ITR 383. The ground is as under -

3. The initiation of proceedings by issue of notice u/s 142(1) dated 15.02.2018 is invalid and bad in law as the notice has been issued by a non- jurisdictional AO.

4. The initiation of proceedings by issue of notice u/s 142(1) dated 15.02.2018 is invalid and bad in law being based on incorrect facts and contrary to the Instruction No.3 of 2017 dated 21.02.2017, issued by the Board for selection of case for scrutiny, therefore the said notice and the assessment order passed in consequence thereof are void ab-initio.

Submission on the additional ground of appeal - Since the additional ground raised by the appellant being a legal issue which goes to the root of the matter and challenges the very assumption of jurisdiction by AO, it is paramount to take up this issue for adjudication before deciding the case on other issues.

Gaytri Devi Sharma vs. ITO 1. The initiation of proceedings by issue of notice u/s 142(1) dated 15.02.2018 is invalid and bad in law as the notice has been issued by a non- jurisdictional AO and in the absence of any mandatory order U/s.127 of the I.T. Act, the transfer of proceedings from ITO Ward-7(1) Jaipur to ITO Ward-7(3) Jaipur, cannot provide a valid jurisdiction to ITO Ward-7(3) Jaipur, consequentially, the impugned assessment order framed by ITO Ward-7(3) Jaipur is without jurisdiction and illegal.

The assessee lives in Chomu and has also carried out business in Chomu. The territorial jurisdiction of Chomu lies with ITO, Ward-7(3), Jaipur (Page-1 of PB). But the notice u/s (1) for filing the return of income was issued by ITO, Ward-7(1), Jaipur (Page 2 of PB) The Assessing Officer (AO) who issued the notice was not vested with the jurisdiction over her case, therefore, the notice issued by him was devoid of any force of law. The AO in his assessment order at Para-11 has mentioned that notices u/s 142(1)/SCN were issued on 28/05/2019, 04/06/2019, 20/06/2019, 27/06/2019, 26/06/2019 but no compliance was made. This is a mis- statement made by the AO. The screenshot of ITBA portal for the proceedings for AY 2017-18 (Page 3 of PB) shows that for the first time, a notice u/s 142(1) was issued by the ITO, Ward-7(3), Jaipur, on 15.10.2019 calling for accounts and documents. How the case got transferred to ITO, Ward-7(3), Jaipur from ITO, Ward-7(1), Jaipur, is neither mentioned in the assessment order nor is available on the record of the AO.

It is submitted that as per sub-section (1) to Section 120 of the Act, the income tax authorities exercise powers and perform functions conferred/assigned by the Act or in accordance with directions of the CBDT. Thus, it is by virtue of the section 120, that an AO as per subsection (1) to Sec.124 assumes jurisdiction in respect of an assessee who is carrying on a business or profession or is residing within a specific area. It is further submitted that, the power to transfer cases is contemplated in Section 127 of the Act. Under sub-section (2) to Section 127, a case can be transferred from one assessing officer to another, subject to satisfaction of twin conditions viz. (i) the assessee is afforded a reasonable opportunity of being heard in the matter, wherever it is possible to do so; and (ii) the reasons for transfer of the case have to be recorded at the time of passing of the order of transfer of the case. It may be noted that as per sub-section (3) to Section 127, the requirement of giving an opportunity to the assessee where the transfer is from one assessing officer to another assessing officer, wherein the office of the said officers are situated in the same city, locality or place, had been dispensed with. However, the statutory requirement of recording of reasons for transfer of the case, before passing the Gaytri Devi Sharma vs. ITO order of transfer has not been dispensed with by the legislature in all its wisdom. It is obligatory on the part of the appropriate authorities envisaged in sub-section (2) to Section 127 to record the reasons for affecting the transfer of the case from one assessing officer to another.

In a recent decision rendered on 29 April, 2024 by ITAT Delhi in the case of YKM Holdings Pvt. Ltd., Gurgaon vs. ACIT the Hon’ble Bench has quashed the assessment observing In view of the aforesaid observations and respectfully following the judicial precedent relied upon hereinabove, we have no hesitation to hold that the assessment framed under section 143(3) of the Act deserves to be quashed in the instant case as the initial scrutiny notice issued under section 143(3) of the Act dated 12.04.2016 by ITO was without jurisdiction as he did not possess jurisdiction over the assessee for the A.Y. 2015-16. Consequently, assessment framed under section 143(3) of the Act is hereby quashed as void ab initio. In view of the above facts, legal position and the case law cited by the appellant, it is humbly prayed that the assessment order passed by the AO may kindly be quashed.

The impugned notice dated 15.02.2018 is invalid and bad in law being issued deliberately ignoring the records and mis-stating and twisting the facts so as to include the case in the scrutiny basket. CBDT, in order to counter tax evasion resulting from demonetization, in which huge SBNs was deposited into the banks, came up with a SOP, through Instruction No.3 dated 21.02.2017 (Page 1-8 of PB) in exercise of its powers given under section 119 of the Act. The said notification clearly stated that it was issued for verification of cash transactions relating to demonetization. The purpose of this Instruction was to scrutinize cases in which SBNs had been deposited in the bank accounts by assesses and they could offer no proper explanation as regards the source of these SBNs. The Board, however, exempted persons in whose case such deposits did not exceed Rs.2,50,000/-, which meant that if the amount of SBNs deposited by the assessee in his/her bank account did not exceed Rs.2,50,000/-, the case was not to be scrutinized. The case of the assessee clearly fell in this exception.

Gaytri Devi Sharma vs. ITO The AO stated that Perusal of bank account statements (A/c No. 21225500000599) shows the cash deposits of Rs. 14,50,000/- (Rs. 7,50,000/- in SBN) during the demonetization period i.e. between 9th November, 2016 to 30st December, 2016. He further stated that Perusal of bank account statements (A/c No. 212202000001484) shows the cash deposits of Rs. 2,65,000/- during the demonetization period i.e. between 9th November, 2016 to 30st December, 2016. For this account, he conveniently ignored the amount deposited in SBN. The department had obtained the information u/s 133(6) from the bank. A/c No. 21225500000599 clearly did not pertain to the assessee. A copy of the relevant bank account clarifies the issue (Page 9 of PB), but the department clubbed it as belonging to the assessee, as it contained deposits of SBNs of Rs.7,50,000/- It may be mentioned that only A/c No. 212202000001484 with Federal Bank, Chomu, pertained to her (Page 10-11 of PB) in which she had deposited an amount of Rs.2,65,000/- during the demonetization period. Out of this amount, only Rs.2,45,000/- was in SBNs which was deposited on 15.11.2016 (Page 12 of PB). The other deposit of Rs.20,000/- on 29.12.2016 was not made in SBN as is evident from the counterfoil of deposit issued by the Bank (Page 13 of PB) The department, in spite of having complete details of SBNs deposited in this account as well, did not mention it. So, the deposited SBNs in the assessee’s bank account being less than Rs.2,50,000/-, the case ought not to have been taken up for scrutiny. The mis-statement and twisting of the facts for taking up the case for scrutiny is apparent in this case. The action of the department in picking up the case for scrutiny is against the Instruction issued by the Board, and therefore calls for quashing of the impugned notice dated 15.02.2018 and the assessment order passed in consequence thereof. The CBDT has issued these instructions in its powers given under section 119 of the Act. In this context it becomes pertinent to read the provisions:

“Instructions to subordinate authorities- 119. (1) The Board may, from time to time, issue such orders, instructions and directions to other income-tax authorities as it may deem fit for the proper administration of this Act, and such authorities and all other persons employed in the execution of this Act shall observe and follow such orders, instructions and directions of the Board”

From the reading of the above, it becomes very clear that the orders, instructions are meant to be used only for administrative convenience.

Earlier, way back in 1988, Rajasthan High Court in CWT vs. Sanwarmal Shivkumar (1988) 171 ITR 377 (Raj) had held that the Income-tax and Wealth

The Kerala High Court in CIT v. Malayala Manorama & Co Ltd. (1983) 143 ITR 29 (Ker) has observed that circulars of general directions issued by the CBDT are binding under section 119 of the Act on all officers and persons employed in the execution of the Act. Nature of a CBDT circular can be summarised in the words of hon’ble Supreme Court in the case of Catholic Syrian Bank Vs. CIT (2012) 343 ITR 270 (SC): “18. Now, we shall proceed to examine the effect of the circulars which are in force and are issued by the Central Board of Direct Taxes (for short, `the Board’) in exercise of the power vested in it under Section 119 of the Act. Circulars can be issued by the Board to explain or tone down the rigors of law and to ensure fair enforcement of its provisions. These circulars have the force of law and are binding on the income tax authorities, though they cannot be enforced adversely against the assessee. Normally, these circulars cannot be ignored. A circular may not override or detract from the provisions of the Act but it can seek to mitigate the rigor of a particular provision for the benefit of the assessee in certain specified circumstances. So long as the circular is in force, it aids the uniform and proper administration and application of the provisions of the Act.” In view of the binding nature of Instruction No.3 of 2017 dated 21.02.2017, the cash deposited in SBNs in her account by the assessee, i.e. Rs.2,45,000/- only, the information relating to which was on record of the Department, the selection of case for scrutiny was erroneous and uncalled for. It is therefore requested that the notice issued u/s 142(1) and the assessment made in consequence thereof may kindly be quashed. Submission on the grounds of appeal -

Ground No.1 The Ld. CIT(A) erred in upholding the action of the AO in making an addition of Rs. 4,25,000/- under section 69A of the Act as alleged unexplained cash deposited in bank account(s).

1.1 The AO made the addition of the impugned amount observing as under - During the assessment proceedings, Smt. Gaytri Devi Sharma has admitted that this account is her firm current account and cash deposited is related to her business receipts. In support of her contention, Smt. Gaytri Devi Sharma has not furnished any documentary proof / evidence from which it could be established that these cash deposits of Rs. 3,75,000/- (265000+52000+58500) were her firm’s business receipts. Therefore, cash deposits of Rs. 3,75,000/- remained unexplained money for the year under consideration.

Gaytri Devi Sharma vs. ITO 1.2 The assessee in her reply filed during the course of assessment had submitted that she is doing the business of retail trade of spices and items of daily household needs, under the name and style of Mahesh Trading Company. As a matter of fact, she ventured into this business during the year (July, 2016). Initially, she was making the purchases and sales entirely in cash. From August, 2016, she started using her current account for the purpose of record. She had deposited Rs.2,45,000/- on 15.11.2016 the source of which was cash sales and accumulated Pin money. A number of judicial pronouncements have well settled the legal proposition that Pin money is not in the nature of income and therefore cannot be subjected to tax. It is pertinent to note that at the time of demonetization, this aspect came to be also logically accepted by the Income-tax Department, which is duly supported by the issuance of the CBDT Circular clarifying that cash deposit of demonetized currency notes to the tune of Rs. 2.5 lakhs in a bank account would not be questioned. So, in any case, this amount could not have been considered the income of the assessee. The payment for all the purchases has been made through cheques as is evident from the bank account of the assessee.

1.3 For the purpose of her business, she opened a current account on 26.07.2016, with Federal Bank, Chomu, in the name of her proprietory concern, M/s Mahesh Trading Company. The assessee already had a SB A/c with the same Branch A/c. Obviously, what necessitated the opening of a current account was the carrying on of a business. As was evident from this bank account of the assessee, the payments have been made through banking channel to the following parties – (i) Mahesh Paint (ii) Sant Enterprises (ii) Maheshwari Company (iii) Mahesh Food Industries

All the above parties deal in food items and items of daily household use. The pattern of deposits and withdrawals from the current account of the assessee clearly reflects the business nature. The assessee is consistently depositing the sale proceeds realized by way of cash. The cash proceeds from sales were immediately utilized to make payment to vendors on regular basis. The cash balance was not accumulating in her account. When it was explained to the AO that the entries in the current account of the assessee pertained to business carried on by her, which was bonafide, the AO, if not satisfied with the explanation, it was incumbent upon him to conduct necessary inquiries to come to the conclusion that the deposits/withdrawals did not pertain to business. It was Gaytri Devi Sharma vs. ITO mandatory for the AO to provide robust and concrete evidence when alleging unexplained income. In any case, a higher evidentiary standard for disallowing legitimate business-related cash deposits is required.

1.4 Reliance is placed on the judgment delivered by the Hon'ble Supreme Court in the case of Lakhmichand Baijanath vs. CIT [1959] 35 ITR 416 (SC) where it was held that "when an amount is credited in business books, it is not an unreasonable inference to draw that it is a receipt from business". Though this decision is in respect of an assessee maintaining books, but its ratio can be applied in the instant case as here the assessee is not required to maintain the books but at the same time, the bank statement serves the purpose of books for filing return under the presumptive tax scheme. It is argued that when the amount is credited in the current account of M/s Mahesh Trading Company, it is not an unreasonable inference to draw that it is a receipt from business. 1.5 She told the AO that her sales were very meager and had her income exceeded the threshold limit, she would have filed her ITR under the Presumptive Tax Scheme. It is a well-established legal principle that 44AD returns do not require the maintenance of books of account and vouchers. Consequently, no adverse inference should be drawn from the absence of cash book/vouchers. It was also stressed that the income under the presumptive tax scheme being below the taxable limit, no ITR was filed by the assessee. Reliance is placed on a decision of the Visakhapatnam Bench of ITAT in the matter of Polepalli Srinivasulu Gupta vs. DCIT, which ruled that sale proceeds invariably deposited in the bank are legally valid and not subject to addition.

1.6 Simply brushing aside a legally valid explanation of the assessee as regards the source of cash deposits in her bank account, without even making any enquiries from the parties from whom purchases were stated to have been made and more so in view of the fact that the payments were made to these parties through banking channel, the action of holding the cash deposits to be unexplained, without assigning any reason and adding it as income of the assessee, is arbitrary. In CIT v. Jeet Construction Company (2021) 278 Taxman 293 : 124 taxmann.com 527 (SC)] the Hon’ble Supreme Court dismissed the SLP filed against the impugned order of holding that in absence of supporting evidence, additions based merely on presumption that assessee had earned undisclosed income and incurred expenses outside books of account would not be sustainable.

Gaytri Devi Sharma vs. ITO Ground No.2 The Ld. CIT(A) erred in upholding the action of the AO in making an addition of Rs. 1,00,000/- under section 69A of the Act as alleged unexplained deposit in bank account, notwithstanding the fact that the amount was received through cheque.

2.1 During the course of assessment, the AO issued the first SCN on 1.11.2019 (Page 14-16 of PB) proposing to add the cash deposits made in A/c No. 21225500000599 and A/c No. 212202000001484 respectively, of Federal Bank, Chomu, aggregating Rs.57,00,500/- as unexplained income/money. The compliance to this notice was made on 12.11.2019, stating that A/c No. 21225500000599 does not pertain to her. Once again, the AO issued another SCN dated 15.11.2019 (Page 17-18 of PB) proposing same addition to which the assessee duly responded on 20.11.2019, reiterating that A/c No. 21225500000599 does not pertain to her and belongs to her husband’s firm. Finally, he issued a SCN on 01.12.2019 (Page 19 of PB) asking the assessee to file evidence in respect of A/c No. 21225500000599, which was duly filed on 03.12.2019.

2.2 As is evident from the perusal of the Show Cause Notices, the issue relating to deposit of Rs.1,00,000/- was never put to question. In neither of the SCNs issued by the AO, he ever sought any explanation with regard to the entry of Rs.1,00,000/- credited through NEFT in her account. However, while finalizing the assessment, the AO added this amount u/s 69A as well.

2.3 The addition on account of any issue in the assessment order, without putting any question in respect thereof to the assessee during the assessment proceedings, is against the principles of natural justice, as the assessee had no occasion to put forth his explanation. Earlier, the assessee had already submitted that the entire deposits in her bank account represents her sale. Here, there was no occasion for the AO to doubt the impugned amount, particularly when it was through banking channel. Simply on the basis of presumptions, the AO can not hold a particular deposit to be unexplained.

2.4 It is a trite law that the scope of Limited Scrutiny is confined, and it can not be extended. The case of the assessee was taken up for verification of cash deposited during demonetization. So addition could validly have been made only in respect of cash deposits. Any addition holding deposit through banking channel as unexplained was outside its scope. ITAT Jaipur, in Baljeet Yadav vs. PCIT quashed Revision since Original Assessment was initiated to verify Cash Deposits during Demonetization. Quashing the revision order passed under section 263 of the Income Tax Act, 1961, the Tribunal has held that the scope of Gaytri Devi Sharma vs. ITO limited scrutiny is confined to its purpose and such an assessment cannot be treated as “erroneous” in order to invoke revisional jurisdiction. A bench of Dr. M.L. Meena, AM & Dr. S. Seethalakshmi, JM held that the assessee’s case was selected for scrutiny under CASS for examination of cash deposits made in the bank during the demonetization period. It is prima facie not clear whether it was a limited scrutiny case or a detailed scrutiny case with the approval of the competent authority.

2.5 The assessee would once again like to rely on the Supreme Court judgement dismissing the SLP of the Revenue in Jeet Construction Company (supra) on the issue that in the absence of supporting evidence, AO can not make addition merely on the presumption that the assessee has earned undisclosed income.

Ground No.3 & 4 The appellant contends that on the facts and in the circumstances of the case and in law, the CIT(A) ought not to have upheld the action of the Assessing Officer inasmuch as the appellant has explained the source of cash/cheque deposited in his bank account(s) and hence, the impugned addition of Rs. 5,25,000/- ought to be deleted. The Ld.CIT(A) has erred in confirming the addition made by the AO u/s 69A notwithstanding the fact that in case of deposits in Retail Business Account only 8% of the total deposits can be taxed in view of section 44AD. 3.1 Before the AO, the assessee had submitted that the amount deposited in her current account by the assessee are her business receipts. Before the CIT(A) detailed written submission along with evidence was provided (Page 20-23 of PB). But the Ld.CIT(A) did not consider the same in the right perspective and dismissed the appeal of the assessee. 3.2 The observation of the CIT(A) is reproduced herewith - In this case, assessee deposited cash into her bank accounts during the demonetization period (9th November 2016 to 30th December 2016), but have neither explained the source of the deposits nor offered the money for taxation. The burden of proof lies with the assessee to demonstrate that the deposits do not represent income. In the present case, the assessee has failed to establish that the cash deposited during the demonetization period constitutes normal business receipts. Therefore, I conclude that the total deposits, including those made during the demonetization period, represent income from undisclosed sources. The appellant has concealed taxable income. Further, The assessee has not filed ITR, not declared its true income and has not paid taxes due thereon.

Gaytri Devi Sharma vs. ITO 3.3 The assessee had duly explained the source of deposits being on account of business receipts of her firm Mahesh Trading Company, engaged in trading of spices and goods of daily household needs. She had filed a chart correlating the cash deposits with the payments made via cheques towards corresponding purchases. The Ld.CIT(A) did neither call for any further clarification nor made any enquiries on his own, though he had coterminous powers with that of AO or call for a remand report from the AO. He followed the footsteps of the AO in holding the deposits to be unexplained and arbitrarily upheld the addition made by the AO. It is further submitted that in view of the quantum of total sales during the relevant year being only in the vicinity of Rs.6,00,000/- and no books being maintained, the assessee profits u/s 44AD worked out to Rs.48,000/- which being below the threshold limit, no ITR was filed by the assessee. So, there arose no question of offering the income comprised in these sales for taxation, as alleged by the Ld.CIT(A). The assessee had given an explanation regarding the source of deposits in her bank account and discharged the onus which lay on her and in such circumstances, the onus had shifted to the AO/CIT(A) to disprove it and establish that the source of the said deposits was income of the assessee from undisclosed sources. Both the authorities, only on presumptions and assumptions can not hold the deposits to be unexplained and add them under section 69A.

In view of the position of law, facts of the case and the decisions cited by the appellant, it is prayed that the addition made by the AO and confirmed by the CIT(A) may kindly be deleted.

S.No. Particulars Page No.

1. Chart showing jurisdiction of ITO, Ward-7(3) Jaipur 1 2. Copy of notice issued u/s 142(1) dated 15.02.2018 2 3. Screenshot of ITBA portal showing notices for 3-5 assessment proceedings 4. Copy of Instruction No.3 of 2017 6-13 5. Copy of details of A/c No.21225500000599 14 6. Bank statement of A/c No.21220200001484 15-16 7. Copy of counterfoil of cash deposited on 15.11.2016 17 Gaytri Devi Sharma vs. ITO 8. Copy of counterfoil of cash deposited on 29.12.2016 18 9. Copy of First SCN issued by AO 19-21 10. Copy of Second SCN issued by AO 22-23 11. Copy of Third SCN issued by AO 24 12. Copy of submission made to CIT(A) 25-28 13. Bank statement of A/c No.21220100005379 29-30

Even on merits, he submitted that the assessee is doing the food business in small scale and if the income is estimated as per provision of section 44AD of the Act the total income being below the maximum amount not chargeable to tax, no addition was required to be made.

7.1 Vide submission dated 31.07.2025 the ld. AR of the assessee submitted as under :

Appeal No. ITA 512/JPR/2025

Respected Sir,

In compliance with the direction issued by the Hon'ble Bench during the course of hearing in the above appeal, we respectfully submit That, the Hon'ble Bench had directed to furnish the document basis on which the Current Account in the name of "Mahesh Trading Company" was opened with the bank. In this regard, it is respectfully submitted that the said Current Account was opened on the basis of the "Udyog Aadhaar" issued by the MSME, Government of India. A copy of the Udyog Aadhaar is enclosed herewith for your kind perusal and record.

Further, a confirmation letter from the concerned bank, clearly stating that the Current Account was opened solely on the basis of the Udyog Aadhaar, is also enclosed herewith in support of the above submission.

I request that the Hon'ble Bench may kindly take the above documents on record and consider the same while adjudicating the appeal.

Enclosures: 1. Copy of Udyog Aadhaar, 2. Copy of Bank Confirmation, Letter 3. Revised Index of Paper Book”

Record reveals that the the assessee lives in Chomu and has also carried out business in Chomu. The territorial jurisdiction of Chomu lies with ITO, Ward-7(3), Jaipur (Page-1 of PB). Whereas record also reveals that the notice u/s 142(1) for filing the return of income was issued by ITO, Ward-7(1), Jaipur (Page 2 of PB). Thus, the AO who issued the notice was not vested with the jurisdiction over her case. Therefore, the notice issued by him was devoid of any force of law and the consequential assessment framed has no leg to stand. The fact related to the issue of notice find mentioned in para 11 of the assessment order that notices u/s 27/06/2019, 26/06/2019 but no compliance was made. Against said set of facts it is a fact that for the first time, a notice u/s 142(1) was issued by the ITO, Ward-7(3), Jaipur, on 15.10.2019 calling for accounts and documents.

There is no record as to how the case got transferred from ITO, Ward-7(3), Jaipur to ITO, Ward-7(1), Jaipur, is neither mentioned in the assessment order nor is available on the record of the AO. This fact was also not controverted by the ld. DR till 11.08.2025 the time allowed to him. As argued, as per sub-section (1) to Section 120 of the Act, the income tax authorities exercise powers and perform functions conferred/assigned by the Act or in accordance with directions of the CBDT. Thus, it is by virtue of section 120, that an AO as per subsection (1) to Sec.124 assumes jurisdiction in respect of an assessee who is carrying on a business or profession or is residing within a specific area. Since the fact that the notice u/s. 142(1) dated 15.02.2018 was issued by the Income Tax Officer, Ward 7(1), Jaipur, whereas the jurisdictional chart submitted vide paper book page 1 shows the jurisdiction to issue notice in the case of the assessee rested with the ITO ward 7(3), and that is why, the assessment was completed by him i.e ITO Ward 7(3). This aspect of the matter was confronted to the Revenue Officer, for which he sought time upto 11.08.2025. revenue accepts that the assessment was completed, based on the notice issued by ITO, ward 7(1) for which he had not acquired the jurisdiction and thereby the consequential assessment by ITO, Ward 7(3), Jaipur lacks the jurisdiction. Since this aspect of the issue is not challenged by the revenue, we accept the contention and hold that assessment order passed in this case lacks jurisdiction and thereby the same is quashed.

Since we have dealt with the technical ground raised by the assessee other ground raised by the assessee becomes academic at this stage and thereby is not required to be decided.

In the result, the appeal of the assessee is allowed.

Order pronounced in the open court on 20/08/2025.

Sd/- Sd/- ¼ujsUnz dqekj½ ¼jkBkSM+ deys'k t;UrHkkbZ½ (NARINDER KUMAR) (RATHOD KAMLESH JAYANTBHAI) U;kf;d lnL;@Judicial Member ys[kk lnL; @Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 20/08/2025 *Ganesh Kumar, Sr. PS आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू Gaytri Devi Sharma vs. ITO 1. The Appellant- Gaytri Devi Sharma, Jaipur izR;FkhZ@ The Respondent- Income Tax Officer, Ward- 7(3), Jaipur 2. 3. vk;dj vk;qDr@ The ld CIT 4. vk;dj vk;qDr¼vihy½@The ld CIT(A) 5. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 6. xkMZ QkbZy@ Guard File (ITA No. 512/JP/2025) vkns'kkuqlkj@ By order,

सहायक पंजीकार@Aेेज. त्महपेजतंत