Shri Tejas Mahendra Sanghavi, Jamnagar V. The ITO, Ward-3 (1), Jamnagar

ITA 193/RJT/2019

AI Insights

The case involves an appeal by Tejas Mahendra Sanghavi against the order of the Commissioner of Income-Tax (Appeals), Jamnagar, which confirmed the addition of Rs.1,43,040 to the assessee's income under section 68 of the Income Tax Act, 1961. The addition was made on account of unexplained cash deposits in the assessee's bank account, which were discovered during a limited scrutiny assessment. The Tribunal noted that the scope of the limited scrutiny did not extend to examining cash deposits, and thus, the addition was not justified.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 133701 (ITAT-RAJKOT)
• Duration Of Justice: 3 year(s) 6 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 14-02-2023
• Assessment Year: 2016-2017
• Appeal Filed On: 15-08-2019
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 68; 133(6)

Judgement Text

आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरणआयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण, राजकोट 瀈यायपीठ 瀈यायपीठ瀈यायपीठ 瀈यायपीठ, , , , राजकोट IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT (Conducted Through Virtual Court) BEFORE SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND SMT. MADHUMITA ROY, JUDICIAL MEMBER ITA No.193/RJT/2019 Assessment Year :2016-17 Tejas Mahendra Sanghavi 1-Zaveri Zapo, Chandi Bazar Jamnagar. PAN : BGTPS 0538 R Vs. ITO, Ward-3(1) Jamnagar. अपीलाथ / (Appellant) यथ /(Respondent) Assesseeby : Shri Mehul Ranpura,ld.AR Revenue by : Shri B.D.Gupta, Ld.Sr.DR स ु नवाई क तार ख/ Date of Hearing : 15/02/2023 घोषणा क तार ख /Date of Pronouncement: 28/02/2023 आदेश/O R D E R PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER This appeal has been filed by the assessee against order passed by the ld.Commissioner of Income-Tax (Appeals), Jamnagar[hereinafter referred to as “ld.CIT(A)”] dated 27.6.2019 under section 250(6) of the Income Tax Act, 1961 ("the Act" for short)pertaining to Asst.Year 2016-17. 2. The grounds raised by the assessee are as under: “1. The Income Tax officer has erred on facts and in law in examining the issue which was out of the preview of limited crutiny and not following instruction No 20/2015 (F. No. 225/269/2015-ITA-II) dated 29/12/2015 and instruction No 5/2016 (F. No. 225/269/2015-ITA-II) dated 14th July, 2016 which clearly instruct the AO to make only specific enquiry and stick to the specific issue. ITA No.193/RJT/2019 2 2. The issue for examination under limited scrutiny was "whether the investment and income relating to security transactions are duly disclosed ". Thus, the Income Tax officer has erred on facts and in law in making addition u/s 68 for cash deposited in bank account, which was not at all in scope of limited scrutiny. 3. The Income Tax officer has erred on facts and in law in making addition of Rs.1,43,040/- u/s 68 of the Income Tax Act, 1961. 4. The Commissioner of Income Tax (Appeals) has erred on facts and in laws in confirming action of the AO to verify transactions beyond the scope of limited scrutiny. 5. The Commissioner of Income Tax (Appeals) has erred on facts and in laws in confirming the addition of Rs. 1,43,040/- u/s 68 of the Income Tax Act, 1961.” 3. The issue in appeal before us relates to the addition made of Rs.1,43,040/- on account of cash deposits in the bank account of the assessee remained unexplained. The contention of the ld.counsel for the assessee before us was that the case was limited scrutiny assessment case and examination of cash deposits was not the scope of limited scrutiny; that no addition was made on account of the issues for which limited scrutiny was directed, and therefore, the addition made on account of cash deposits being beyond the scope of scrutiny of the AO, was unsustainable and ought to be deleted. In this regard, he drew our attention to the facts, stated above, from the assessment order. From page no.1 of the assessment order, he pointed out that the case of the assessee was selected for limited scrutiny through CASS for the reason of large valued sale of shares or units in security transaction tax returned which was settled otherwise than actual delivery or transfer and the investment and income relating to the security transactions were duly disclosed. ITA No.193/RJT/2019 3 He thereafter drew our attention to the para-4 of the order wherein he pointed out that the AOnoted his satisfaction with respect to the issues for which limited scrutiny was done as under: 4. Thereafter, he pointed out from para-5 of the assessment order that the AO called for details of bank accounts by issuing notice under section 133(6) of the Act and on verification thereof found therein cash deposits of Rs.14,04,900/- which he asked the assessee to justify; that after considering the explanation of the assessee the cash deposits to the extent of Rs.1,43,040/- was – held as remaining unexplained and addition made of the same to the income of the assessee. Our attentionwas drawn to para-9 of the assessment order in this regard. It was also brought to our notice that it was only addition of this amount which was made in the case of the assessee. 5. The ld.DR on the other hand drew our attention to pra-10 of the assessment order pointing out that the AO had justified the examination of cash deposits in the bank account of the assessee during the assessment proceedings, though no reason for limited scrutiny, as under: ITA No.193/RJT/2019 4 6. We have considered the contentions of both the parties. It is an admitted fact that the assessee’s case was selected for limited scrutiny assessment for the reason of largevalue of shares/units in STT, which is settled otherwise than the actual delivery or transfer and the investment income relating to the security transactions. It is also fact on record that the AO had examined all documents furnished by the assessee in relation to the security transactions, and found them to be in order calling for no addition/disallowance to be made. Undoubtedly, the addition in the present case of cash found deposited in the bank account of the assessee, which remained unexplained to the extent of Rs.1,43,040/-, was not thescope of limited scrutiny and was discovered by the AO on calling for bank account of the assessee under section 133(6) of the Act and verification of the same. The AO has given justification for limited scrutiny scope being extended at para-10 of his order which is reproduced above. On going through the contents of the same, we are not able to understand the justification given by the AO. The AO mentions in the first sentence that the case was not selected under CASS for the reason of security transaction. Thus, the first sentence ITA No.193/RJT/2019 5 itself is incorrect. Thereafter, he goes onto state that on verification of the bank account, cash deposits undeclared were noted. Entire paragraph does not explain or justify why the AO expanded his scope of scrutiny during the assessment to the cash deposited in the bank account, when it was to be limited only to the security transactions undertaken by the assessee which he was satisfied with on going through all details/evidence furnished by the assessee. In view of the above, it is clear that the addition made on account of cash deposits in the bank account of Rs.1,43,040/- was beyond the scope of assessment of the AO, and therefore, the same is not sustainable. For the aforesaid reasons, the addition of Rs.1,43,040/- is directed to be deleted. The ground of the appeal of the assessee is allowed. 7. In the result, the appeal of the assessee is allowed. Order pronounced in the Court on 28 th February, 2023 at Ahmedabad. Sd/- Sd/- (MADHUMITA ROY) JUDICIAL MEMBER (ANNAPURNA GUPTA) ACCOUNTANT MEMBER Ahmedabad, dated 28/02/2023