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2023 (6) TMI 1345 - ITAT VISAKHAPATNAMScope of limited scrutiny proceedings - disallowance U/s. 40A(3) as beyond the scope of limited scrutiny - AR argued that the AO has travelled beyond his powers in verifying the cash withdrawals where the case was selected under CASS for Limited Scrutiny for the purpose of verifying the cash deposits into the bank account of the assessee, thus AO has no jurisdiction to make disallowance U/s. 40A(3) without converting the assessment into complete scrutiny proceedings - HELD THAT:- We find that the Ld. AO has not taken approval from the Ld. Pr. CIT for verification of the cash withdrawals which is beyond the scope of the limited scrutiny for which the assessee’s case is opened for the purpose of verification of the huge cash deposits into the bank account of the assessee. There is no dispute by the Ld. AO regarding the satisfaction of the cash deposits for which the limited scrutiny purpose was initiated. As far as the limited scrutiny proceedings are concerned, the scrutiny has to be limited to the parameters selected for the purpose of scrutiny only to the specific issues and not beyond that under any circumstances. In case, if the Ld. AO wants to take up the case for complete scrutiny, first the Ld. AO has to convert the limited scrutiny into complete scrutiny case and then he may take up the case for complete scrutiny with the prior approval of the Ld. Pr. CIT / CIT concerned after being satisfied about the issue of converting it into a complete scrutiny. In the instant case, we find that no such approval has been granted to the Ld. AO to travel beyond the verification of the cash deposits. AO also not found any material against the assessee with respect to the cash deposits into the bank accounts of the assessee. In view of the above discussions, we find that the Ld. AO has travelled beyond his jurisdiction in disallowing the cash withdrawals being payments made to various fishermen by invoking the provisions of section 40A(3) of the Act is not valid in law and therefore we are inclined to quash the order passed by the Ld. AO U/s. 143(3) r.w.s 144B and allow the Grounds raised by the assessee.
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