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Income Tax Appellate Tribunal, CIRCUIT ‘SMC’ BENCH, VARANASI
Before: SHRI.VIJAY PAL RAO
PER SHRI VIJAY PAL RAO, JUDICIAL MEMBER:
This appeal by the assessee is directed against the order dated 25.07.2019 of CIT(A) for the assessment year 2015-16. The assessee has raised the following grounds .
1. Because the Ld. Commissioner of Income Tax (appeals) has erred in law as well as on facts in dismissing the appeal in utter disregard to the factual and legal position of the case.
2. Because the Ld. Commissioner of Income Tax (appeals) has erred in law as well as on facts in not appreciating the fact that the case was selected for ‘Limited Scrutiny’ and the learned Assessing Officer had transgressed his limits by making additions on issues other than the one on which the limited scrutiny was sanctioned.
3. Because the Ld. Commissioner of Income Tax (appeals) has erred in law as well as on facts in not appreciating the fact that the assessee had filed return u/s 44AD with profit above the statutory 8% and hence there was no scope for any further scrutiny of the case.
4. Because the Ld. Commissioner of Income Tax (appeals) as well as the Assessing Officer have made irrelevant adverse averments about facts relating to period out of the year under consideration to injudiciously build up case against the assessee.
Gopal Ji Jaiswal 5. Because the Ld. Commissioner of Income Tax (appeals) has erred in law as well as on facts in confirming the addition of opening cash balance of Rs. 256500/- made by the Assessing Officer on protective basis.
Because the Ld. Commissioner of Income Tax (appeals) has erred in law as well as on facts in confirming the addition of Rs. 12,30,208/- which is the figure of ‘Sundry creditors’ by wrongly assuming it to be ‘sundry debtors’.
Because the order of the learned CIT(A) is bad in law as well as on facts and is liable to set aside.”
The learned AR of the assessee has submitted that the case of the assessee was taken up under CASS for limited scrutiny of cash deposited during the demonetization period. However, the Assessing Officer while passing the assessment order has made the additions in respect of the claims and matters which were not part of the limited scrutiny by the Assessing Officer. Therefore, the additions made by the Assessing Officer on protective basis on account of opening cash balance as well as opening balance of Sundry Creditors is not sustainable and liable to be deleted. The learned AR has pointed out that the Assessing Officer has not made any addition in respect of the deposits made in the bank account of the assessee but has made only protective additions on account of opening cash balance and brought forward balance of Sundry Creditors which are otherwise not sustainable being beyond the scope of limited scrutiny as well as in the absence of any substantive addition.
On the other hand, learned DR has submitted that the opening cash balance as well as so called brought forward Sundry Creditors balance are not found to be genuine and therefore, to that extent, the source of the cash available to the assessee for depositing in the bank account is liable to be added. Therefore, the additions made by the Assessing Officer are well within the scope of limited scrutiny. He has relied upon the orders of the authorities below.
I have considered the rival submissions as well as relevant material on record. The assessee is a Trader in Desi Ghee and filed his return of income on 31st March, 2017 declaring total income of Rs. 2,56,500/- under section 44AD of the 2 Gopal Ji Jaiswal Income Tax Act. The Assessing Officer taken up the limited scrutiny under CASS in respect of the cash deposited in the bank account of the assessee. While framing the assessment, the Assessing Officer has made two additions of Rs. 2,50,195/- on account of opening balance of cash and Rs. 12,30,208/- on account of brought forward balance of Sundry Creditors. Both these additions were made by the Assessing Officer on protective basis. It appears that the Assessing Officer has made these additions on protective basis because the substantive addition could be made only in the preceding assessment years. However, after these protective assessments were made, no substantive additions have been made by the Assessing Officer in the preceding year. The learned Assessing Officer as well as learned DR has not brought any material on record to show that the Assessing Officer reopened the preceding assessment year and made any addition on account of these two items of the closing cash balance and sundry creditors balance. The impugned order of the CIT(A) is completely silent on the sustainability of protective addition in the absence of any substantive additions made by the Assessing Officer. Even otherwise the protective additions are without any tax incident for the year under consideration and therefore in the absence of any substantive addition, these protective additions made by the Assessing Officer are not sustainable in law. Accordingly, the protective additions made by the Assessing Officer for the year under consideration are deleted.