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Income Tax Appellate Tribunal, DELHI BENCH ‘FRIDAY’ : NEW DELHI
Before: SHRI H.S. SIDHU
This appeal is filed by assessee against the Order passed by the Ld. CIT(A), Dehradun relating to Assessment Year 2012-13 on the following revised grounds:-
That on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in sustaining the addition of Rs. 18,52,600/-
on account of unexplained cash without appreciating the evidences on record.
2. That on the facts and circumstances of the case in law, the Ld. CIT(A) erred in confirming the action of AO by way of 2 converting the case of limited scrutiny to complete scrutiny without seeking any approval from the Principal CIT/DIT as mandatorily required vide CBDT
Instructions.
3. That on the facts and circumstances of the case in law, the Ld. CIT(A) erred in confirming the action of the Ld. AO of preparing the cash flow statement of the appellant without rejecting the books of accounts of the assessee.
4. That in facts and circumstances of the case, the Ld. CIT(A) has wrongly assumed
that cash to the tune of Rs. 40,00,000/- was not withdrawn from bank for his own use without bringing any evidence on record.
2. The assessee has raised as many as 04 grounds, but raised only revised/additional ground no. 2, as aforesaid. After perusing of the ground no.2, as aforesaid, it is noticed that Assessee has not raised this ground of appeal before the Ld. CIT(A), but Assessee has mentioned the following in the STATEMENT OF FACTS
3 filed with Form No. 35 before the Ld. CIT(A) at page no.
3 vide para no. 4.1.04 as under, which issue the Ld. CIT(A) has not considered/adjudicated in his appellate order.
“4.1.04 that the case was come up into scrutiny in the regard of purchase of immovable property of Rs. 95,85,000/- only.
In this regard the assessee has been submitted the sale deed and source of fund of investment.
It is relevant to mention here that the Central
Board of Direct Taxes issued a Circular, the AO should be taken action against the assessee for which the scrutiny come up.
It is further relevant to mention here that the Ld. AO did not highlight any comments over the CASS selection on scrutiny. Hence, the act of the Ld. AO is completely arbitrarily and having with malafide intention against the assessee.”
Since the following revised/additional ground no. 2 argued by the Ld. Counsel for the assessee is purely on legal basis and in accordance with the CBDT Instructions, therefore, this ground is admitted in the 4 interest of natural justice, in view of the Hon’ble Supreme Court of India decision in the case of NTPC 229 ITR 383 (SC).
That on the facts and circumstances of the case in law,
the Ld. CIT(A) erred in confirming the action of AO by way of converting the case of limited scrutiny to complete scrutiny without seeking any approval from the Principal
CIT/DIT as mandatorily required vide CBDT Instructions.
On the contrary, Ld. DR strongly opposed the admission of revised/additional ground raised by the assessee.
The facts are that the AO issued notice dated 3.4.2013 at Page 32 of APB to the assessee regarding verification of financial transaction for the purchased/sold immovable property valued at Rs. 3000000/-; page no. 33 of the APB shows the ITS DETAILS OF CIB TRANSACTION; and Page No. 34 of the APB shows the ITS DETAILS (AIR/CIB). Further Page no. 35-36 of the 5 APB which is copy of CBDT’s Instruction No. 7/2014 dated 26.9.2014 relating to scope of enquiry in cases selected for scrutiny during the financial year 2014-15 on the basis of AIR/CIB/26AS mismatch, wherein it is stipulated that the scope of enquiry should be limited for non re-conciliation with 26AS data, the scope of enquiry should be limited to verification of these particulars aspects only. Therefore, in such cases, the AO shall confine the questionnaire and subsequent enquiry or verification only to the specific point(s) on the basis of which the particular return has been selected for scrutiny. The AO in the assessment order dated 12.02.2015 passed u/s. 143(3) of the Act vide para no. 1 has specifically mentioned that the case has selected under scrutiny through CASS. However, the AO has issued notice on limited scrutiny relating to purchase of immovable property, but made the addition on account of cash deposit on the basis of statement of the bank, whereas as per CBDT Guidelines/ Instruction, scrutiny the scope of enquiry should be limited to verification of these particulars aspects only. The AO has observed vide para no. 2.6 at page no. 3 of the assessment order that on perusal of limit account CC-93, it has observed that the assessee was issued cheques to the persons for 6 the various amounts to 14 persons, during the year under reference in respect of his business. AO further observed that the assessee has deposited unexplained cash into his bank accounts for Rs. 18,52,600/- as per cash flow statement, for which no satisfactory explanation have been given by the assessee.
Accordingly, the AO added Rs. 18,52,600/- to the taxable income of the assessee treating unexplained cash deposited into his bank accounts out of undisclosed sources by completing the assessment at Rs. 26,25,330/- u/s. 143(3) of the Act vide order dated 12.02.2015. Against the aforesaid addition, the assessee appealed before the Ld. CIT(A), who vide his impugned order dated 1.1.2016 has dismissed the appeal of the assessee. Aggrieved with the impugned order, the assessee is in appeal before the Tribunal.
Ld. counsel for the assessee submitted that Ld. CIT(A) erred in confirming the action of AO by way of converting the case of limited scrutiny to complete scrutiny without seeking any approval from the Principal CIT/DIT as mandatorily required vide CBDT Instructions.
He further stated that the AO had issued notice on limited scrutiny relating to purchase of immovable property, but made the addition on account of cash
7 deposit on the basis of statement of the bank. However, in the assessment order it has been clearly mentioned that “The case has selected under scrutiny through CASS.” In support of his contention he filed a Paper Book containing Pages 29-64 in which he has attached the Annexure-1: copy of notices issued by the AO to the Appellant for initiation of assessment proceedings; Annexure-2: Copy of CBDT Instruction No. 7/2014 dated 26.9.2014; Annexure-3 : Copy of CBDT Instruction No. 20/2015 dated 29.12.2015; Annexure-4: copy of Form 35 alongwith Statement of facts and grounds of appeal raised before CIT(A); Annexure-5 : copy of order sheet obtained from the assessment records for AY 2012-13 and in support of his contention, he also filed the Annexure 6 which is a copy of decision of ITAT, Amritsar Bench in the case of Smt. Gurpreet Kaur vs. ITO in ITA No. 87(Asr.)/2016 dated 24.3.2016 by which the case of the assessee is squarely covered.
On the contrary, Ld. DR relied upon the orders of the authorities below on the merit of the case, but no contrary decision has been filed by him on the legal issue as argued by the Ld. Counsel for the assessee.
8 8. I have heard both the parties and perused the records, especially the impugned order and the Paper Book filed by the assessee and the case law relied upon by him. After perusing the Page No. 30 of the APB it is found that the ITO concerned has asked to produce the source of investment purchase in property. On perusal of page no. 32 of APB which is a Notice dated 03.4.2013 the AO issued to the assessee regarding verification of financial transaction for the purchased/sold immovable property valued at Rs. 3000000/-. After perusing the page no. 33 of the APB shows the ITS DETAILS OF CIB TRANSACTION; Page No. 34 of the APB shows the ITS DETAILS (AIR/CIB). After perusing the page no. 35 para no. 2 of the CBDT’s Instructions dated 26.9.2014 relating to scope of enquiry in cases selected for scrutiny during the financial year 2014-15 on the basis of AIR/CIB/26AS mismatch, it has been stipulated that the scope of enquiry should be limited for non re-conciliation with 26AS data, the scope of enquiry should be limited to verification of these particulars aspects only. Therefore, in such cases, the AO shall confine the questionnaire and subsequent enquiry or verification only to the specific point(s) on the basis of which the particular return has been selected for scrutiny. I further note that Assessee
9 has mentioned in the STATEMENT OF FACTS of APB Page No. 39-44 filed with Form No. 35 before the Ld. CIT(A) at page no. 3 vide para no. 4.1.04 as under:-
“4.1.04 that the case was come up into scrutiny in the regard of purchase of immovable property of Rs. 95,85,000/- only.
In this regard the assessee has been submitted the sale deed and source of fund of investment.
It is relevant to mention here that the Central
Board of Direct Taxes issued a Circular, the AO should be taken action against the assessee for which the scrutiny come up.
It is further relevant to mention here that the Ld. AO did not highlight any comments over the CASS selection on scrutiny. Hence, the act of the Ld. AO is completely arbitrarily and having with malafide intention against the assessee.
8.1 In view of above, I find considerable cogency in the contention of the assessee’s counsel that the ground no. 2 argued by the assessee is for limited scrutiny relating to purchase of immovable property, but made the addition on account of cash deposit on the basis of 10 statement of the bank. I further find that AO in the assessment order dated 12.02.2015 passed u/s. 143(3) of the Act vide para no. 1 has specifically mentioned that the case has selected under scrutiny through CASS.
However, the AO has issued notice on limited scrutiny relating to purchase of immovable property, whereas as
per CBDT Guidelines/ Instruction, scrutiny the scope of enquiry should be limited to verification of these particulars aspects only. In view of above, I am of the considered view that Ld. CIT(A) has wrongly erred in confirming the action of AO by way of converting the case of limited scrutiny to complete scrutiny without seeking any approval from the Principal CIT/DIT as mandatorily required vide CBDT Instructions. Therefore, the assessment order passed by the AO, was in violation of specific CBDT Instructions, the same is not legally sustainable, hence, the same is accordingly reversed and ground no. 2 raised by the assessee is allowed. In this regard, I draw support from the decision of the ITAT, Amritsar Bench in the case of Smt. Gurpreet Kaur vs. ITO in ITA No. 87(Asr.)/2016 dated 24.3.2016 wherein the Tribunal has dealt with similar issue and observed as under:-
11 “29. Apropos the Ld. CIT(A)’s order, obviously the Ld. CIT(A) has erred in confirming the assessment order. The Ld. CIT(A) had erred in view of the above observation of the Bench, in holding that the AO has not violated the CBDT Instruction. The Ld. CIT(A) has gone wrong in observing that the AO has limited his enquiries to the source of cash deposits. True, the AO is duty bound to see whether the assessee has correctly declared taxable value of the long term capital gains from the sale of her residential house. However, as noted, in a case like the present one, where it has been picked up for scrutiny on the basis of the AIR information, the CBDT Instruction has to be strictly abided by. Herein, since the AIR information was only with regard to cash deposits of Rs. 25 lakhs and the assessee had duly and adequately explained the source thereof, the AO, it cannot be gainsaid, transgressed his competency in issuing the further query and in asking the assessee to produce Smt. Balbir Kaur and Smt. Kamaljit Kaur, the executants of the other agreement to sell which had nothing to do with the cash deposits. Moreover, it cannot, in view of the above discussion, at all be said that the objections raised by the assessee were merely to divert the attention of the AO to come to a logical conclusion. The objections taken by the assessee are well raised and the AO, at the 12 cost of the repetition, could not have gone beyond the specific CBDT Instruction.
For the above, finding, merit in the grievance sought to be raised by the assessee by way of Ground Nos. 1 & 2, the same are accepted. it is held that since the assessment order, passed ex-parte by the AO, was in violation of specific CBDT Instruction, the same is not legally sustainable. The same is accordingly reversed.
Accordingly, nothing else remains ripe for adjudication and all the remaining grounds are rendered merely academic.”
In the result, the Appeal filed by the Assessee is allowed.
Order pronounced on 18.04.2019.