GOPAL AGGARWAL,FARIDABAD V. ITO(OSD)-FARIDABAD , FARIDABAD

ITA 1678/DEL/2025

AI Insights

The case involves Gopal Aggarwal, the appellant, who contested the assessment order for the Assessment Year 2017-18 issued by the AO, which was upheld by the CIT(A). The primary contention was the improper exercise of jurisdiction by the AO, who expanded the scope of scrutiny beyond the limited parameters set for the case without following the necessary procedural requirements as outlined in various CBDT instructions. The appellant argued that this led to an erroneous assessment, including double taxation and incorrect inclusion of certain receipts as business turnover. The Tribunal, after reviewing the submissions and the procedural lapses, decided in favor of the appellant, emphasizing adherence to procedural norms in tax assessments.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 824790 (ITAT-DELHI)
• Duration Of Justice: 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-12-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2017-2018
• Appeal Filed On: 19-03-2025
• Laws Referred To: CBDT Instruction dated 26/09/2014, CBDT Instruction dated 29/12/2015, CBDT Instruction dated 14/07/2016, CBDT Instruction dated 30/11/2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANISH GUPTA
• Assessee Lawyers: MANISH KUMAR
• Keywords: Additional evidence; Principle of natural justice; Competent authority

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL, “G”, BENCH, DELHI BEFORE: SHRI ANUBHAV SHARMA, JUDICIAL MEMBER & SHRI. KRINWANT SAHAY, ACCOUNTANT MEMBER ITA No. 1678/Del/2025 Assessment Year : 2017-18 Gopal Aggarwal 1498, Sector 7E, Faridabad Haryana-121006 Vs. The ITO (OSD) Faridabad PAN NO: ATYPA3078P Appellant Respondent Assessee by : Manish Kumar, Advocate Revenue by : Shri Manish Gupta, Sr. DR Date of Hearing : 25/09/2025 Date of Pronouncement : 30/12/2025 Order PER KRINWANT SAHAY, A.M: This is an appeal filed by the Assessee against the order of the Ld. CIT(A)/ NFAC, Delhi dt 28/01/2025 for the Assessment Year 2017-18. 2. In the present appeal Assessee has raised the following grounds: 1. The Ld. ClT(A) erred in not appreciating that the assessment order passe by the A'O is bad in law due to erroneous exercise of jurisdiction as the case of the assessee was only selected for limited scrutiny but the A.O passed the order without complying with mandatory requirements of the relevant CBDT instruction dated 26/09/2014, 29/12/2015, 14/07/2016 & 30/11/2017. 2. The Ld. ClT(A) erred in not appreciating that the impugned best judgement assessment order passed by the A.O is void-ab-initio for exceeding and erroneous exercise of jurisdiction as the case of the assessee was selected for limited scrutiny with respect to examination of cash deposit only , but the A'O in utter violation of CBDT Instruction and circulars by rejecting the books passed the best judgment assessment order arbitrarily by treating the entire credit receipts as trading receipts for the purpose of tax without fulfilling prescribed instruction of CBDT. Printed from counselvise.com 2 3. The Ld. ClT(A) erred in not appreciating that the order passed by the A'O is legally not sustainable as the same has been passed in violation of principles of natural justice on account of the fact that neither any notice nor any respective alert message either by way of e-mail or SMS was directly communicated to the assessee as a result of which assessee remained unrepresented during the entire assessment proceedings. 4. That in the facts and circumstances of the case the Ld. CIT(A) erred in arbitrarily rejecting the application for admission of additional evidence under rule 46A allegedly on the ground of non-specification of additional evidence despite the fact that assessee had specifically requested to admit the document as additional evidence which were brought on record along with written submission dated 18th May 2024 except CBDT circulars or case laws. 5. That in the facts and circumstances of the case, the Ld. CIT(A) erred in not appreciating that an appeal is a continuation of original proceedings and what the Assessing Officer could have done, the appellate authority also could do and contrary to this legal principle erred in passing the perverse order contrary to the material on record. 6. The Ld. CIT(Appeal) contrary to the material on record erred in not appreciating that out of the total alleged credit entries of Rs 5,59,92,274/- an amount of Rs 1,55,84,193/, has duly a been accounted for the purpose of tax by the assessee itself while filing the income tax return and hence the addition to this extent is legally not sustainable as the same amounts to double addition. 7. The Ld. CIT(A) contrary to the material on record erred in not appreciating that cash deposit to the tune of Rs72,42,979/- which is aggregate of Rs 68,81,639/- as declared turnover by way of cash vide Sales Tax Return + Rs 3,61 ,286/- as proportionate sales tax received in cash which had already been accounted for while arriving at the declared turnover as well as proportionate sells tax and therefore, the same is not liable to be included as business turnover for the purpose of tax and in fact amounts to double taxation in the facts of the case. 8. That in the facts and circumstances of the case, the Ld. CIT(A) contrary to the material on record erred in not appreciating that out of the total alleged credit receipts of Rs 5,59,92,274/- as determined by the A.O, a credit receipts of Rs 18,07,677/- is as a result of bouncing of cheques issued to various parties and hence the same is not liable to be accounted for as business turnover for the purpose of tax. 9. That in the facts and circumstances of the case, the Ld. CIT(A) contrary to the material on record erred in not appreciating that out of the total alleged credit receipts of Rs 5,59,92,274/- as determined by the A.O, a credit receipts of Rs 28,80,000/- was in fact a returnable loan liability from his own brother and hence the same is not liable to be accounted for as business turnover for the purpose of tax. 10. That in the facts and circumstances of the case, the Ld. CIT(A) contrary to the material on record erred in not appreciating that out of the total alleged credit receipts of Rs 5,59,92,2741- as determined by the A.O, a credit receipts of Rs 60,07,000/- was in fact a returnable loan liability from his deceased father and hence the same is not liable to be accounted for as business turnover for the purpose of tax. Printed from counselvise.com 3 11. That in the facts and circumstances of the case, the Ld. CIT(A) contrary to the material on record erred in not appreciating that out of the total alleged credit receipts of Rs 5,59,92,274/- as determined by the A.O, a credit receipts of Rs 5,01,800/- was in fact a chit fund receipt from the chit fund company in which the assessee is one of the members. 12. That in the facts and circumstances of the case and on the basis of material on record, the Ld. CIT(A) erred in not appreciating that the chit fund receipt to the extent of Rs 5,01,800/- is out of assessee's own contribution/subscription and therefore, the same credit receipt is not liable to be accounted for as business turnover for the purpose of tax. 13. That in the facts and circumstances of the case, the Ld. CIT(A) contrary to the material on record erred in not appreciating that out of the total alleged credit receipts of Rs 5,59,92,274/- as determined by the A.O, a credit receipts of Rs 58,000/- is as a result of self-transfer from one bank account to another bank account and therefore, the same credit receipt is not liable to be accounted for as business turnover for the purpose of tax. 14. That in the facts and circumstances of the case, the Ld. CIT(A) contrary to the material on record erred in not appreciating that out of the total alleged credit receipts of Rs 5,59,92,274/- as determined by the A.O, a credit receipts of Rs 40,100/- is as a result of capital transfer from one bank account to another bank account and therefore, the same credit receipt is not liable to be accounted for as business turnover for the purpose of tax. 15. That in the facts and circumstances of the case, the Ld. CIT(A) contrary to the material on record ened in not appreciating that out of the total alleged credit receipts of Rs 5,59,92,274/- as determined by the A.O, a credit receipts of Rs 20,33,809/- is in fact a returnable loan liability and has also been returned to respective parties and therefore, the same credit receipt is not liable to be accounted for as business turnover for the purpose of tax. 16. That in the facts and circumstances of the case, the Ld. CIT(A) erred in not appreciating that the total alleged credit receipt of Rs 5,59,92,274/- is inclusive of cash credit receipts of Rs 42,37,000/- and respective explanation in this regard was sought by the department during demonetization and the same had also been accepted by the department and therefore, not liable to be included as a part of business turnover for the Purpose of tax. 17. That in the facts and circumstances of the case, the Ld CIT(A) erred in not appreciating that the total alleged credit receipt of Rs 5,59,92,274/- is inclusive of cash receipts of Rs 2,44,24,415/-which is infact belonged to the deceased father of assessee and the same has also been returned through banking channels and therefore, not liable to be included as a part of business turnover for the purpose of tax. 18. That in the facts and circumstances of the case Ld. ClT (A) erred in not appreciating that the assessee had received the loan amount from his father through banking channel only for Rs 60,07,000/, but had returned to his father through banking channel for a larger amount i.e for Rs 3,04,90,000/- and the differential amount was in fact on account of cash receipt belonged to his father. Printed from counselvise.com 4 19. That in the facts and circumstances of the case the Ld. ClT(A) erred in not appreciating that the cash deposit to the extent of Rs 2,44,24,415/- although deposited in bank account of assessee but the same was not owned by the assessee as it belongs to M/S Agarwal Associates a business concern of his deceased father and therefore, the same cannot be taxed in the hands of assessee on the basis of presumption only on the ground that it was deposited in bank account of assessee. 20. That in the facts and circumstances of the case and concerning the cash deposit of Rs 244,24,415/- lying deposited in the bank account of assessee, the Ld' CIT (A) erred in not appreciating that income can only be taxed in the right hand and not in the wrong hand on the basis of Presumption. 3. At the very outset, the learned Counsel for the assessee brought to the notice of the Bench that the present case was selected for limited scrutiny. However, the Ld. AO proceeded to pass the assessment order as if it were a case of complete scrutiny, without obtaining the mandatory approval of the competent authority for conversion of the limited scrutiny into complete scrutiny. The Ld.AR thus submitted that the AO failed to comply with the instructions issued by the Central Board of Direct Taxes (CBDT) dated 26.09.2014, 29.12.2015, 14.07.2016, and 30.11.2017 issued on this issue. 4. Against the order of the AO the assessee filed the appeal before the Ld.CIT(A). The Ld. CIT(A) has not appreciated the fact discussed above and therefore confirmed the order of the AO. 5. Against the order of the Ld. CIT(A) the assessee preferred in appeal before the Tribunal. 6. During the proceedings before us, the Revenue could not rebut the argument raised by the Ld. Counsel for the Assessee, rather the Ld. DR relied on the order of the authorities below. 7. We have considered the findings given by the AO in the assessment order and the Ld.CIT(A) in the appellate order, we find that though it was a limited scrutiny case but the AO has converted it in to a full scrutiny case without taking mandatory approval of the competent authority. Therefore in our considered Printed from counselvise.com 5 view the assessment order is liable to be quashed. Accordingly, the appeal of the assessee is allowed. 8. In the result, appeal of the assessee is allowed. Order pronounced in the open Court on 30.12.2025 Sd/- Sd/- (ANUBHAV SHARMA) (KRINWANT SAHAY) JUDICIAL MEMBER ACCOUNTANT MEMBER AG Copy of the order forwarded to : 1. The Appellant 2. The Respondent 3. CIT 4. The CIT(A) 5. DR, ITAT, Assistant Registrar ITAT, NEW DELHI Printed from counselvise.com "