SHOBNA AGARWAL, AJMER ROAD JAIPUR V. ACIT CIRCLE-2 , JAIPUR

ITA 226/JPR/2024

• Counselvise Citation: [2024] 103 COUNSELVISE.COM (IT) 3897 (ITAT-JAIPUR)
• Duration Of Justice: 6 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-09-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 29-07-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 28-02-2024
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A. S. NEHRA
• Assessee Lawyers: VEDANT AGARWAL
• Keywords: Corroborative evidences; Unexplained cash credit; Principle of natural justice; Competent authority
• Section: 143(3); 142(1); 143(2); 143(1); 153; 68; 22; 20

Judgement Text

v k;dj v i hyh; vf/kd j. k] t;iq j U ;k;i hB] t; i q j IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”A” JAIPUR J h jkBkS M+ d e ys'k t;UrHkkbZ] ys[kk l nL; , o Jh ujsUnz dqekj] U;kf;d lnL; d s l e {k BEFORE: SHRI RATHOD KAMLESH JAYANTBHAI, AM & SHRI NARINDER KUMAR, JM v k;d j v ihy l a-@ITA No. 226/JP/2024 fu/k Zk j.k o"kZ @AssessmentYear :2017-18 Shobna Agarwal, Opp. Hathroi School, Ajmer Road, Jaipur Vs. ACIT, Circle-02, Jaipur LFkk ;hy s[kk la-@ t hv k bZv k j la-@PAN/GIR No.:ABRPA 9506 B v i hy k FkhZ @Appellant i z R;Fkh Z @Respondent fu/k Z kf jrh dh v k s j ls@Assesseeby : Sh. Vedant Agarwal, Adv. jktLo dh v ks j ls@Revenue by: Sh. A. S. Nehra, Addl. CIT lq u o kb Z dh rk jh[k@Date of Hearing : 30/07/2024 mn ? k k s" k.kk dh r kjh[k@Date of Pronouncement: 02/09/2024 v kn s'k@ORDER PER: NARINDER KUMAR, JUDICIAL MEMBER. Present appeal has been filed by the assessee feeling dissatisfied with the order dated 03.01.2024, passed by the Commissioner of Income Tax (Appeals)-04,[here in after referred to as“ld. CIT(A)” ], Jaipur,pertaining to the assessment year 2017-18. Impugned order came to be passed on assessee’s appeal,whereby she had challenged the findings recorded by ACIT, Circle -02 Jaipur [ 2 ITA No. 226/JP/2024 Shobna Agarwal vs ACIT-2, Jaipur hereinafter referred to as “Assessing Officer ] in order dated 14.12.2019 passed under section 143(3) of the Income Tax Act [ for short “Act” ]. 2. Assessee has assailed the impugned order passed by Learned CIT(A) on the following grounds; “1. On the facts and circumstances of the case and in law also Ld. Lower authorities grossly erred in making and confirming additions of Rs 16,50,000/- under section 68 of the Income Tax Act, 1961 on account of cash deposit into Bank Account out of earlier cash withdrawals from the Bank. 2. On the facts and circumstances of the case and in law also Ld. Lower authorities grossly erred in invoking provision of section 115BBE of the income Tax Act, 1961 as it was her income from business. 3. On the facts and circumstances of the case and in law also Ld. A.O. grossly erred in converting limited security into deeper security without approval of superior authority. 4. On the facts and circumstances of the case and in law also Ld. CIT(A) grossly erred in holding that appellant has not submitted any copy of evidence which would show that the case was selected for limited scrutiny, ignoring the copy of notice issued u/s 143(2) which was submitted before him during the appeal proceedings. 5. That the appellant craves her indulgence to add, amend, alter or delete any or all of the ground of appeal at any time before decision of appeal.” 3. Brief facts of the case are that the assessee, engaged in the business of trading of real estate, derives income from business or profession, long term capital gains on sale of property, in addition to income from other sources. 3 ITA No. 226/JP/2024 Shobna Agarwal vs ACIT-2, Jaipur The assessee e-filed her return of income for assessment year 2017- 18 on 31.10.2017 declaring total income of Rs. 70,04,880/-. Said return was processed u/s 143(1) of Income Tax Act, 1961. Subsequently, the case was selected for scrutiny through CASS and notice u/s 143(2) of Income Tax Act, 1961 was issued on 01.09.2018 and duly served upon the assessee. Notices u/s 142(1) accompanied by letters dated 26.09.2019 & 07.12.2019 were also issued and duly served upon the assessee. In response to this notice, online responses were filed on e- proceedings portal. Necessary details and explanations are stated to have been furnished by the assessee through e-proceedings portal. 3.1 From the details so placed on record, Learned Assessing Officer noted that in between 9.11.2016 to 31.12.2016, the assessee had deposited cash in its bank account. During assessment proceedings, assessee was asked to explain the source of the cash deposit in the bank account. The assessee, vide her submission dated 04.12.2019,responded that she had deposited cash amount of Rs. 6,50,000/-on 30.11.2016 in the account with PNB &cash amount of Rs. 20,00,000/-on 17.12.2016, in the 4 ITA No. 226/JP/2024 Shobna Agarwal vs ACIT-2, Jaipur account with HDFC Bank i.e. totaling Rs. 26,50,000/- in the form of specified currency notes duringdemonetization period. In support assessee submitted cash book. The assessee also submitted that cash deposit of Rs. 26,50,000/- was made, out of cash balance of Rs. 26,79,732/- as available on 29.11.2016, as per entries in the cash book of business entity of the assessee placed on record. As regards the immediate source of cash- deposit,the assessee submitted that she had withdrawn a sum of Rs. 20,00,000/- on 20.07.2016 and Rs.10,00,000/- on 08.11.2016, for business purpose, but due to demonetization, the assessee deposited same amount again in the bank account. She claimed that necessary entries were made in the books of account, which were audited and placed on record. Learned AO did not accept the claim of the assessee due to following reasons : 1. The arguments of the assessee are too general in nature and lack any substance. 2. The assessee is engaged in the business of real estate and the common practice of this kind of business is that the one withdraw the amount depending upon the amount which is estimated for the expenses. No business entity typically holds such quantum of cash for so many months, especially in the business of real estate. 3. On perusal of the cash book of the assessee, a fact emerges that the assessee is having very low expenses in cash and rest of the cash was being accumulated in the bank itself. For 5 ITA No. 226/JP/2024 Shobna Agarwal vs ACIT-2, Jaipur instance the assessee till 07.06.2016 had cash in hand of Rs.3,51,027/- and Rs. 80,000/- was deposited in cash at same day. It is pertinent to mention here that a person who already has ampleamount of cash in hand will not by any mean withdraw the cash from his account. No expenses except minuscule amounts have been used out of this accumulated cash. This makes the credibility of the cash book very suspicious. 4. The trend in the month to month balance shows that the assessee has used the cash towards conversion fees for JDA etc. 5. The opening cash shown in the cash book is Rs. 1,46,157/- but in the previous the assesseedisclosed closing balance at Rs. 1,64,657/-. 6. There is no withdrawal in the cash book for personal expenditure. 3.2 Based on abovesaid reasons, Ld. AO noted that the cash book produced by the assessee was an afterthought to introduce its unaccounted money which could not be used by virtue of the demonization done by the Government of India. It was further observed that many defects were noticed and discussed in the assessment order,which fortified the fact that the assessee tried to create an illusionary and cinematic story by way of introducing the cash books which were found to be non- genuine and forged. Hence, the cash deposits in the bank during the period of demonetization i.e. Rs. 26,50,000/- were not accepted and by virtue of section 68 of the Act. 6 ITA No. 226/JP/2024 Shobna Agarwal vs ACIT-2, Jaipur On examining the details, the Assessing Officer also gathered that the assessee had withdrawn cash to the tune of Rs. 10,00,000/- on 08.11.2019 after which the currency of 500 & 1000 was no more a legal tender. Hence, after giving credit to this cash, the total unexplained cash credit to the extent of Rs. 16,50,000/- was added back to the total returned income of the assessee. 4. Aggrieved by the order of the Assessing Officer, the assessee preferred appeal before the ld. CIT(A). Relevant findings of Ld. CIT(A) read as follows:- “4.2 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the under year consideration. The contentions/submissions of the appellant are being discussed and decided as under:- The appellant had deposited cash of Rs. 26,50,000 in the bank during the period of demonetization. As per submissions recorded in the assessment order, cash of Rs. 6,50,000/-on 30.11.2016 in PNB & Rs. 20,00,000/- on 17.12.2016 in HDFC Bank were deposited. The appellant submitted during the assessment proceedings that such cash deposit of Rs. 26,50,000/- was made out of cash balance available at Rs. 26,79,732/ on 29.11.2016, as reflected in the cash book of business entity of the appellant as mentioned in assessment order and also submitted that the appellant fund mainly withdrew a sum of Rs. 20,00,000/- on date 20.07.2016 & 10,00,000/- on 08.11.2016 for business purpose but due to demonetization the assessce has deposited it again in bank account. It has been mentioned that books of entity of the assessee are audited for the year under consideration. The Id. AO examined the facts and circumstances of the case. The cash book was held to be unreliable in the assessment order. As the appellant had withdrawn cash of Rs. 10,00,000/- on 08.11.2016, hence, after giving this credit of this cash the total unexplained cash credit was worked out to 7 ITA No. 226/JP/2024 Shobna Agarwal vs ACIT-2, Jaipur Rs. 16,50,000/- and the same was added back to the total income of the assessee. In the appeal, the appellant has reiterated her submissions as were made during the assessment proceedings. The main contention is with respect to the withdrawal of cash of Rs. 20 lakhs on 20.07.2010. In this regard the appellant has not submitted the business purpose for which this cash was withdrawn to justify the need of withdrawal of the cash at that time and further the appellant has not explained why the cash withdrawn could not be utilized for the purpose for which it was withdrawn. The appellant is required to explain these along with the supporting evidences. However since the appellant is silent on the same and has merely claimed that the cash was withdrawn and the same is the source of deposit after 4 months is an over convenient and self-serving explanation of the matter. Merely because the cash was withdrawn it cannot be presumed that the same was available with the appellant even after 4 months. The cash in hand history of the appellant has been examined in the assessment order and it is seen that the appellant is usually not keeping very large balances of cash in hand and the opening cash in hand during the beginning of the year is Rs. 1,46,157/-. The appellant is in real estate business and it may not be out of place to note that receipt or repayment of cash above Rs. 20,000 as advance of otherwise in connection with transfer of an immovable property (defined as 'specified sum) is prohibited as per section 269SS and 269T of the Act and penalties are prescribed u/s 271D/271E of the Act. Other transactions of cash as mentioned in the respective sections are also not allowed u/s 269SS and 269T of the Act. In such a scenario, onus is even greater and larger on the appellant to show with better evidences for what purposes the cash was withdrawn and whether the same remained unutilized or was received back as it is expected that appellant would not withdraw cash for a purpose which is prohibited, However the appellant is silent on the same. The appellant is silent on the finding in the assessment order that "The above trail shows that the assessee has used major of its cash towards conversion fees for JDA etc. The assessee had many privileges to withdraw cash in a day or two if such conversion is in need, he need not accumulate for these kinds of expenses for such a long period i.e. from July, 2016 which was done. This also shows that the cash book of the assessee cannot be relied upon by any means". As discussed in paragraph above the appellant has not shown the purpose for which the cash was withdrawn in July and similarly has also not explained when there was a ready facility to withdraw the cash why the cash was withdrawn in 8 ITA No. 226/JP/2024 Shobna Agarwal vs ACIT-2, Jaipur advance by almost 4 months or more as the cash still remained in hands of the appellant and not yet utilized and ultimately claimed to be deposited in bank. The appellant is silent on the findings in the assessment order that "On perusal of the cash book of the assessee, a fact emerges that the assessee is having very low expenses in cash and rest of the cash was being accumulated in the bank itself. For instance the assessee till 07.06.2016 had cosh in hand of Rs.3,51,027/- and Rs. 80,000/- was deposited in cash at some day. It is pertinent to mention here that a person who already has ample amount of cash in hand will not by any mean withdraw the cash from his account. No expenses except minuscule amounts have been used out of this accumulated cash". The appellant has not explained about her personal expenses and the source of meeting the reasonable levels of such expenses. The appellant has disclosed drawings only in one month which is June 2016 and no other drawings have been shown in the cash book. The appellant has also not said anything in the appeal on the finding of the assessment order that "Further the assessee has shown opening cash balance of Rs. 146157/-but on perusal of the balance sheet of the preceding previous year the assessee has disclosed cash balance of Rs. 164657/-". In such a scenario why the appellant kept such a large sum of money in hand (as per the cash book) for such a long period is not explained with supporting and is beyond human probabilities, It is also noticed that the appellant has deposited even very small sums or larger sums like few lakhs of cash in the bank account on a regular basis which further fortifies the view that the appellant is not in the habit of keeping large sum of cash in hand. Some of such deposits have taken place on 2 April 2016, 11th April 2016, 25th may 2016, 7th June 2016, 21 July 2016, 15 September 2016, 28 September 2016 24th October 2016. The appellant has been regularly withdrawing the cash from the bank account and some of the dates on which the cash has been withdrawn from the bank are 4th June 2010, 6th June 2016, 10th June 2016, 16th June 2016, 1 July 2016, 20th July 2016, 22 July 2016, 27th July 2016, 11th August 2016, 16th August 2016, 19 August 2016, 29th October 2016 and 8th November 2016. The appellant has not explained why further cash were being withdrawn regularly whereas already the cash in hand was much higher as projected and shown in the books. 9 ITA No. 226/JP/2024 Shobna Agarwal vs ACIT-2, Jaipur The appellant has been regularly withdrawing and regularly depositing cash in the bank account even for the small sums of few thousands. Even on the date of 29th October 2016 the appellant withdrew a sum of rupees 20,000 from the bank account And similarly a sum of rupees 20,000 was withdrawn on the date of 16th October 2016 from the bank similarly a sum of rupees 10,000 was withdrawn from the bank account on the date of 20th July 2016. When even for such small sums of few thousands the appellant is required to make a withdrawal from the bank account this shows that the appellant was in reality not having the large sum of cash in hand which otherwise is being projected in the submissions and in the cash book. Why the withdrawals were being made even for small amounts in case in reality the appellant was actually having such large sums of cash in hand is unexplained. The Hon'ble Supreme Court in the case of Sreelekha Banerjee v. CIT [1963] 49 ITR 112 has observed as under: "If there is an entry in the account books of the assessee which shows the receipt of a sum on conversion of high denomination notes tendered for conversion by the assessee himself, it is necessary for the assessee to establish, if asked, what the source of that money is and to prove that it does not bear the nature of income. The department is not at this stage required to prove anything. It can ask the assessee to produce any books of account or other documents or evidence pertinent to the explanation if one is furnished, and examine the evidence and the explanation. If the explanation shows that the receipt was not of an income nature, the department cannot act unreasonably and reject that explanation to hold that it was income. If however, the explanation is unconvincing and one which deserves to be rejected, the department can reject and draw the inference that the amount represents income either from the sources already disclosed by the assessee or from some undisclosed source. The department does not then proceed on no evidence, because the fact that there was receipt of money is itself evidence against the ossessee. There is thus, prima facie, evidence against the assessee which he foils to rebut, and being unreported, that evidence can be used against him by holding that it was a receipt of an income nature. The very words 'on undisclosed source' show that the disclosure must come from the assessee and not from the department. In cases of high denomination notes, where the business ond the state of accounts and dealings of the otsessee justify a reasonable inference that he might have for convenience kept the whole or a part of a particular sum in high denomination notes, the assessee, prima facie, discharges his initial burden when he proves the balance and that it might reasonably have been kept in high denomination notes. Before the department rejects such evidence, it must either show an inherent weakness in the explanation or rebut it by putting to the assessee some information or evidence 10 ITA No. 226/JP/2024 Shobna Agarwal vs ACIT-2, Jaipur which it has in its possession. The department cannot by merely rejecting unreasonably a good explanation, covert good proof into no proof. It is further observed in this case by the Hon'ble Supreme Court as under- In the present come, the owessee claimed that the high denomination notes were a part of the cash balance at the head-office. The Income-tax Office found that at first the cash on hand was sold to be Rs. 1,62,022, but on scrutiny, it was found to be wrong. Indeed, the assessee himself corrected it before the Appellate Assistant Commissioner and stated there that the balance was Rs. 121,875. Ordinarily, this would have prima facie proved that the assessee might have kept a portion of this balance in high denomination notes. But the assessee failed to prove this balance, as books of the assessre did not contain entries in respect of banks. Though cash used to be received from banks and sent to the various places where works were carried on and vice versa, no central account of such transfers was disclosed. There was also no account of personal expenses of the assessee and he had failed prove why such large sums were kept in one place when eat each of the places where work was carried on, there were fonts with which he had accounts. The Appellate Assistant Commissioner also went into the question and found that on the same day when the high denominates were encashed, a sum of Rs. 45,000 was drawn by cheque. The next remittance immediately afterwards was of Rs. 16,000 to Bokaro, but Rs. 17,000 were withdrawn a few days before to meet this expense. A withdrawal of Rs. 8,000 was made a day later and Rs. 20,000 were withdrawn ten days later to finance the business. It appears that the money on hand (Rs. 45,000) was not touched at all, but on January 30, 1946, a further sum of Rs. 6,0005 was withdrawn and not utilized, which made up the sum of Rs. 51,000 for which the high denomination notes were encashed. On these facts, the Tribunal come to the conclusion that the high denomination notes represented not the cash balance but some other money which remained unexplained, and the Tribunal treated it as income from some undisclosed source. The High Court held on the above facts and circumstances that there were materials to show that Rs. $1,000 did not form part of the cash balance, and the source of money not having been satisfactorily proved, the department was justified in holding it to be the assessable income of the assessee from some undisclosed course. In this conclusion, the High Court was justified, regard being had to the principles we have explained above." Some of the important factual-legal relevant questions emerging from the above judgement are as under:- Question of justification of keeping large sums on hand whereas the facility of withdrawing cash was available at the time and place it was required. 11 ITA No. 226/JP/2024 Shobna Agarwal vs ACIT-2, Jaipur The above question arises from the observation "failed to prove why such large sums were kept on hand in one place when at each of the places where work was carried on, there were banks with which he had accounts" Question of justification of withdrawing further sums when the earlier withdrawn sums were claimed by the assessee to be available in hand. The above question arises from the observation "on the same day when the high denomination notes were encashed, a sum of Rs. 45,000 was drawn by cheque. The next remittance immediately afterwards was of Rs. 16,000 to Bokaro, but Rs. 17,000 were withdrawn a few days before to meet this expense. A withdrawal of Rs. 8,000 was made a day later and Rs. 20,000 were withdrawn ten days later to finance the business. It appears that the money on hand (Rs. 45,000) was not touched at all, but on January 30, 1946, a further sum of Rs. 6,005 was withdrawn and not utilised, which made up the sum of Rs. 51,000 for which the high denomination notes were encashed. The above questions and observations as emanating from the judgment of honorable Supreme Court are very much relevant to the facts of the present case and the appellant-has not explained the same even after these issues have been mentioned in the assessment order and accordingly adverse inference is naturally to be drawn against the appellant. It is also important to note that in the present case the cash was not deposited in the bank account immediately or shortly immediately after the announcement of demonetization but after a very long gap as the cash of rupees 6 lakhs 50 thousand was deposited on 30th November 2016 and major sum of the cash which was of rupees 20 lakhs was deposited on 17th December 2016. The delay or the long time taken to deposit the claimed cash in hand further indicates that in reality the appellant was not having the cash in hand as claimed on the eve of demonetization otherwise the same would have been deposited much earlier within next few days of announcement of demonetization and the real source of the cash deposited in the bank account during the demonetization is something else. In view of the above discussion it is clear that the cash book presented by the appellant is not giving a true and fair picture of the cash in hand and the same is not reliable and is thus rejected. It is settled law that, where the assessee has failed to prove satisfactorily the source and nature of a credit entry in his books, and it is held that the relevant amount is the income of the assesse, it is not necessary for the department to locate its exact source-CIT v. M.GanapathiMudalior [1964] 53 ITR 623 (SC)/A. Govindarajulu Mudaliar v. CIT [1958] 34 ITR 807 (SC). 12 ITA No. 226/JP/2024 Shobna Agarwal vs ACIT-2, Jaipur In the case of Roshan Di Hatti v. Commissioner of Income-tax [1977] 107 ITR 938 (SC)[08-03-1977] it is held by the Hon'ble Supreme Court as under:- x x x x In the case of Kale Khan Mohammad Hanif v. Commissioner of Income-tax [1963] 50 ITR 1 (SC)[08-02-1963] it is held by the Hon'ble Supreme Court as under:- "It seems to us that the answer to this question must be in the affirmative and that is how it was answered by the High Court. It is well established that the onus of proving the source of a sum of money found to have been received by the assessee is on him. If he disputes liability for tax, it is for him to show either that the receipt was not income or that if it was, it was exempt from taxation under the provisions of the Act. In the absence of such proof, the Income-tax Officer is entitled to treat it as taxable income. see A. Govindarajulu Mudaliar v. Commissioner of Income-tax [1958] 34 ITR 807 (SC)". The appellant has not submitted the cogent explanations to explain the cash deposited by her in the bank account during the period of demonetization and the explanation submitted by her are not acceptable in view of the detailed discussions on the facts of the case and in terms of the law. Accordingly the action of the learned assessing officer in adding the unexplained cash to the income of the appellant is hereby upheld and this ground of Appeal is dismissed. 5. Ground of Appeal No. 2 relates to the AO applying the provisions of section 115BBE of the Act. 5.1 The submissions of the applicant as per the statement of facts enclosed with Form No. 35 and reiterated during the appellate proceedings are summarized as under: Vide dt., 15/12/2023 GOA No. 2:- Unlawful invoking provision of section 11588E of the Income Tax Act 1961 Since the cash deposit in bank is well explained is out of previous withdrawals, application of section 1158lE is wrong and unlawful. 5.2 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:- 13 ITA No. 226/JP/2024 Shobna Agarwal vs ACIT-2, Jaipur The Id. assessing officer has rightly applied the section 115RBE for working out the tax payable by the appellant. The appellant has not made any substantive submissions in this ground of appeal and the submissions are in the nature of consequential submissions only. As on merits the addition of the cash deposited during the demonetization to the extent discussed and added in the assessment order has been upheld in the ground of Appeal no.1 in paragraphs above and the present ground of appeal being consequential in nature, the same is hereby dismissed. 6. Ground of Appeal No. 3 relates to convert limited scrutiny into deeper scrutiny. 6.1 The submissions of the appellant as per the statement of facts enclosed with Form No. 35 and reiterated during the appellate proceedings are summarized as under: Vide dt. 15/12/2023 GOA No. 3: Unlawful converting limited scrutiny deeper scrufiny without approval of superior authority • That case of the assessee was selected for limited scrutiny through CASS on the issue of "Deduction against income from other source.” • However, the AD sued notice els 142/11 of the Act dated 14,11,2019 calling for Information and details as requited for 1. details of opening and closing stock Identity and address of all the purchases and sellers 2. Month wise details of sales and purchases . 3. month wise Cash sales and cash deposits during the F.Y. 2016-17 and 7015-16 • That assessee duty complied with the notices issued by the AO by filing the details/ evidences, complete books of accounts, audited accounts etc desired by the AO. • That Ld. A.O. made the addition on account of cash deposited into bank account which was not subject matter of limited scrutiny. • That since the issue on which the addition was made was not the subject matter of the limited scrutiny, therefore, Ld. AO has apparently crossed the boundaries without seeking any approval from the competent authority to convert the limited scrutiny into complete scrutiny and therefore, the assessment framed is in violation of the CBDT Circular No. 5/2016 dated 14.07.2016. • Assessing Officer travelled beyond his jurisdiction to frame the assessment order, therefore assessment order is bad-in-law and should be quashed. 6.2 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:- 14 ITA No. 226/JP/2024 Shobna Agarwal vs ACIT-2, Jaipur The appellant has raised the issue that the assessment was selected for limited scrutiny but the learned assessing officer exceeded the brief and made addition on the issue which was not part of the limited scrutiny. The appellant has not submitted any evidence to show that the case was selected for limited scrutiny and that the issue on which the addition has been done in the assessment order was not connected with the grounds on which the case was selected for scrutiny. Even in the assessment order there is no reference that the case was selected for limited scrutiny. Appellant has not submitted any copy of evidence which would show that the case was selected for limited scrutiny and was not converted into full scrutiny in case it was selected for limited scrutiny. The appellant has made some legal submissions and made reference to the circular's issued on the subject however the first and foremost condition of showing that the case was actually selected for limited scrutiny has not been met by the appellant and hence the legal submissions on the same cannot be considered. In the appeal the appellant is required to substantiate the ground of Appeal along with supporting which has not been done in the present ground of Appeal. Accordingly this ground of Appeal is hereby dismissed. 7. The last ground of appeal is that the appellant craves indulgence to add. amend, alter or delete any or all grounds of appeal at anytime before the final decision of the appeal. 7.1 The appellant has not added or altered any of the above mentioned grounds of appeal. Accordingly, such mention by the appellant in its ground is treated as general in nature, not needing any specific adjudication and is accordingly treated as disposed off. 8. In the result, the appeal of the appellant is dismissed.” 5. As the appeal of the assessee stands dismissed by CIT(A), assessee is before this Appellate Tribunal. In support of the grounds raised in the memorandum of appeal, ld. AR appearing on behalf of the assessee has submitted written submissions, and same are extracted herein below:- 15 ITA No. 226/JP/2024 Shobna Agarwal vs ACIT-2, Jaipur “1. That the present appeal has been filed against the order passed by the Ld. Commissioner of Income Tax (Appeal) dated 3.01.2024, which was served upon the Assessee on 16.01.2024. 2. That there is no delay in filing of this appeal as the order was served on 16.01.2024 and the present appeal has been filed on 28.02.2024 i.e., within 60 days of the communication of the order. 3. That the present Appeal has been filed on four grounds of appeal and one general ground of appeal. 4. One, Ld. Lower Authorities Grossly erred in confirming addition of Rs. 16,50,000/ on account of cash deposit during demonetization. 5. Two, wrongly invoked provisions of Section 115BBE of the Income Tax Act, 1961. 6. Three, grossly erred in converting limited scrutiny to complete scrutiny without obtaining prior approval. 7. Four, Ld. CIT(A) grossly erred in holding that no evidence for establishing that is was a limited scrutiny has been provided by the Assessee whereas notices were submitted before him during the Appellate proceedings. Ground of Appeal No.1 & 2: A. Cash Deposited through Available Cash Balance • The Assessee, Shobna Agarwal, deposited cash in her bank account during the demonetization period. This cash was deposited from her available cash balance. • It is crucial to highlight that the Assessee had made significant cash withdrawals prior to demonetization period. These withdrawals the are documented and can be verified through bank statements and cash books, which have been duly maintained by the Assessee. • The Assessce is engaged in the real estate business, which inherently involves substantial cash transactions. The nature of the real estate business necessitates having cash on hand for day-to-day transactions such as labor payments, material purchases, and miscellaneous expenses. Therefore, it is both practical and necessary for the Assessee to maintain a substantial cash balance. • Given these facts, the cash deposited during the demonetization period was a part of the regular business cycle and was drawn from the cash reserves accumulated from earlier withdrawals. There is no question of these deposits being unaccounted for or unexplained cash credits. B. Wrong Assumption of Cash Credit by Lower Authorities • The lower authorities have incorrectly assumed that the cash deposited by the Assessee during the demonetization period should be treated as 'cash credit. 16 ITA No. 226/JP/2024 Shobna Agarwal vs ACIT-2, Jaipur This assumption is fundamentally flawed and does not take into account the complete financial picture of the Assessee. • The substantial cash withdrawals made by the Assessee before the demonetization period support the claim that the deposited cash was from the available cash balance. These withdrawals were made in the ordinary course of business and were used for various business-related purposes. • The Hon'ble ITAT Chennai in the case of [2023] 153 taxmann.com 180 (Chennai Trib.) has categorically held that deposits made from available cash balances cannot be treated as cash credits u/s 68 of the Income Tax Act, 1961. This judgment underscores the principle that if the source of the cash deposit is from previously withdrawn and accounted cash, it cannot be considered as unexplained income. • Therefore, the addition made by the AO under the presumption that the cash deposits are 'cash credits' is not only incorrect but also contrary to established judicial precedents. C. Department's Failure to Prove Contrary • The Department has failed to provide any evidence to counter the Assessee's claim that the cash deposited during the demonetization period was from the available cash balance. The onus of proving that the cash deposits were from undisclosed sources lies with the Department, and they have not discharged this burden. • The Hon'ble ITAT Mumbai in [2023] 147 taxmann.com 222 (Mumbai Trib.) has held that mere presumption or suspicion that the cash was utilized elsewhere cannot be the basis for making additions. There must be concrete evidence to support such claims, which is absent in this case. • The Department's failure to bring any contrary evidence on record further strengthens the Assessee's position that the cash deposits were from the legitimate cash balance available and were not unexplained credits. D. Business Necessity of Holding Cash • The Assessee's involvement in the real estate business necessitates maintaining a significant amount of cash on hand. The nature of the business involves various cash transactions that cannot always be carried out through banking channels. • Payments for labor, transactions of purchase of property, purchase of raw materials, and other incidental expenses often require cash transactions. Therefore, holding cash is a practical and necessary aspect of the Assessee's business operations. • The cash book provided by the Assessee clearly shows the transactions and the cash balance held. This cash book is maintained as per standard accounting practices and provides a transparent record of all cash- related transactions. • Hence, the Assessee had a genuine reason to hold significant cash, which was subsequently deposited during the demonetization period. This fact should be duly considered while adjudicating the matter. E. 115BBE Not Applicable 17 ITA No. 226/JP/2024 Shobna Agarwal vs ACIT-2, Jaipur • Since the cash deposit is well explained i.e., it is from prior withdrawals, application of Section 115BBR is unlawful. GOA 3 AND 4: Legal Ground: Improper Notice Issuance for Limited Scrutiny • The AO issued three notices u/s 143(2) dated 18.08.2018, 1.09.2018, and 25.09.2018. It is pertinent to note that the first two notices did not mention scrutiny for 'cash deposited during demonetization. period. Only the third notice, dated 25.09.2018, specified limited scrutiny for this issue. • As per CBDT Circular No. 5 of 2016 dated 14.07.2016, the AO cannot convert limited scrutiny into full scrutiny without obtaining approval from the superior authority. This circular aims to prevent arbitrary expansion of scrutiny scope without due process. • The AO should have sought proper approval before expanding the scope of limited scrutiny. By not doing so, the AO has violated the procedural requirements laid down by the CBDT. • The principle that what cannot be done directly cannot be done indirectly is well established in law. In this case, the AO indirectly expanded the scope of scrutiny through subsequent notices without following the proper procedure, which is against the principles of natural justice and fair play. • Furthermore, a bare perusal of the provisions specified within the Income Tax Act shows no authority allowing the Assessing Officer to issue multiple notices u/s 143(2). Once jurisdiction was assumed vide notice u/s 143(2) dated 18.08.2018, any further notices u/s 143(2) are to be treated as invalid, arbitrary, and without the authority of law. • The coordinate bench's judgment in the case of Radha Govind Lashkari, Jaipur vs PCIT-2, Jaipur (ITA 32/JP/2021) supports this contention. It was held that once limited scrutiny has been initiated, it cannot be converted into full scrutiny without proper approval and following due process. • The coordinate bench in the aforementioned case also held that what cannot be done directly, cannot be done indirectly.” 6. To support the contentions so raised in the written submission reliance has also been placed on the following documents/record: S. No. Particulars Page No. 1. Copy of notice issued u/s 143(2) dated 18.08.2018 1-4 2. Copy of notice issued u/s 143(2) dated 01.09.2018 5-8 3. Copy of notice issued u/s 143(2) dated 25.09.2018 9-12 4. Copy of reply filed by the assessee dated 04.12.2019 before Ld. A.O. 13-14 5. Copy of cash book for the F.Y. 2016-17 15-21 6. Copy of bank statement for the F.Y. 2016-17 22-36 7. Copy of computation of income for the A.Y. 2017-18 37-40 18 ITA No. 226/JP/2024 Shobna Agarwal vs ACIT-2, Jaipur 8. Copy of written submission filed with Ld. CIT(A) 41-44 7. Ld. AR for the assessee has submitted that the case of the assessee was selected for limited scrutiny, but the scope was expanded while issuing another notice, without demonstrating legality of the other notice issued u/s. 143(2) of the Act. So, it has been contended that the scope as per the first notice issued to the assessee was not to examine the issue of cash deposits. Further, it has been submitted that the source of the deposits made stands duly reflected in the cash book filed and placed on record. 8. Ld DR hasrelied on the findings of the lower authorities and advanced the very contentions as find recorded in the impugned order passed by Learned CIT(A). He also submitted that the contention on behalf of the assessee is that she had withdrawn cash, but, the record reveals cheque- paid entry for withdrawal of Rs. 20 lacs, and that this fact be also taken into consideration. 9. In the rejoinder the ld. AR stated that though there is a cheque paid entry, actually, it pertains to cash withdrawal. In this regard, Ld. AR for the assessee sought adjournment to submit supporting evidence in the form of certificate from the bank. 19 ITA No. 226/JP/2024 Shobna Agarwal vs ACIT-2, Jaipur At the time of hearing of the appeal, AR of the assessee was also asked to append correct verification to the index of the paper book filed as regards the documents filed before the authorities below. ld. AR of the assessee was given 7 days’ time. The abovesaid certificate verification filed by the assessee reads as under : “It is certified that the above said documents are part & parcel of records of lower authority.” On 06.08.2024, ld. AR has submitted a certificate from the bank certifying the fact that the entry regarding payment did not pertain to payment by way of cheque, but cash was paid. In view of said certificate, the issue of availability of cash on the given date, needs to be decided by the Assessing Officer. He is also required to verify as to whether the cash was paid to assessee or to someone else, through the bearer cheque. Significant to note that it has not been certified by the assessee as to which of the record shown in the index submitted here, was filed by the assessee before the Assessing Officer, and as to which records were filed by the assessee before Ld. CIT(A). 20 ITA No. 226/JP/2024 Shobna Agarwal vs ACIT-2, Jaipur In the given situation, we find that it would be in the interest of justice that the matter is remanded to the Assessing Officer so as to verify the availability of cash with the assessee at the given time during the year under consideration. The assessee has not filed any submission regarding mistake in the opening balance and has not placed on record any material to justify the claim of the assessee. 10. Ground no. 3 & 4 raised by the assessee pertain to the claim of the assessee that its case was selected for limited scrutiny, but the scope was extended by issuing two other notices. Ld. CIT(A) has held that the assessee could not substantiate these grounds by placing on record any supporting evidence. Even before us, despite specific direction to file correct index certifying that such and such records, shown in the index, were before the ld. AO and that such and such records were before the ld. CIT(A). Therefore, the assessee and his AR has failed to substantiate said contention by not filling the correct certification/verification to demonstrate that the notices issued to the assessee were placed before the ld. CIT(A), or not. 21 ITA No. 226/JP/2024 Shobna Agarwal vs ACIT-2, Jaipur Once, ld. CIT(A) observed in the impugned order that he was not provided by the assessee-appellant, records to substantiate the contention on the issue of scope, and the assessee has not filed any such record even before this Bench, despite opportunity, we do not find any infirmity in the impugned order as regards said legal grounds raised by the assessee. In the light of the above discussion, there is no merit in grounds no. 3 & 4 raised in the appeal by the assessee. Therefore, the contention raised on behalf of the assessee is rejected. 11. Ground no. 5 being general in nature does not require adjudication. Result 12. Resultantly, the appeal filed by the assessee is disposed of for statistical purposes, and in the interest of justice, matter is remanded to the Assessing Officer so as to take into consideration the certificate placed before this Appellate Tribunal, to verify the availability of cash with the assessee at the given time during the year under consideration and decide the matter in accordance with law, as regards framing of assessment for the year under consideration. 22 ITA No. 226/JP/2024 Shobna Agarwal vs ACIT-2, Jaipur Of course, Learned Assessing Officer shall provide an opportunity of being heard to the appellant-assessee. File be consigned after the needful is done by the office. Sd/- Sd/- ¼ jkBkS M+ d e ys'k t;UrHkkbZ ½ ¼ujsUnz dqekj½ (RATHOD KAMLESH JAYANTBHAI) (NARINDER KUMAR) y s[kk lnL; @Accountant Member U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 02/09/2024 * Ganesh Kumar, Sr. PS vkns'k dh izfrfyfi vxzsf’kr@Copy of the order forwarded to: 1. The Appellant- Shobna Agarwal, Jaipur 2. izR;FkhZ@ The Respondent- ACIT, Circle-02, Jaipur 3. vk;djvk;qDr@ The ld CIT 4. vk;dj vk;qDr¼vihy½@The ld CIT(A) 5. foHkkxh; izfrfuf/k] vk;djvihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur 6. xkMZQkbZy@ Guard File (ITA No. 226/JP/2024) vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar