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2023 (8) TMI 141 - AT - Income TaxAddition u/s 69A/68 - cash deposits in bank account maintained with SBI unexplained - assessee case has been selected under limited scrutiny to verify the cash deposit during the demonetization period - HELD THAT:- Admittedly, it is a case of limited scrutiny as evident from the notice issued u/s 143(2) - The notice issued u/s 132 of the Act states that case has been selected under limited scrutiny to verify the cash deposit during the demonetization period. Thus, to our understanding, the scope was limited to the extent of cash deposited during the demonetization period. We find that the AO under the assessment order has treated the cash deposits made by the assessee during the entire year as unexplained money/ cash credit under section 69A/68 - The action of the AO is clearly in violation of the instruction issued by the CBDT Circular No. 5 dated 17/07/2016. In view of the above, we hold that the AO while framing the assessment has exceeded his jurisdiction by making an addition of the cash deposit of the entire year as income of the assessee. We note that the cash has been deposited during the demonetization period by the assessee which can only be considered for the purpose of determining the income. Admittedly, there were also withdrawals of cash deposit from the bank account as evident from the submission made by the assessee before Ld. CIT(A). We are of the view that the entire cash deposit cannot be treated as income of the assessee. Computation of income - The dispute before us relates to the cash deposits during the demonetization period which to our understanding represents business receipts and therefore only a percentage of such deposits should be taken for calculating the income of the assessee. Thus, in the interest of justice and fair play, we are of the view that a lumpsum addition of Rs. 82,825.00 being 5% of Rs. 16,56,500 over and above the income declared, will serve justice to the assessee as well as revenue. Hence, the ground of appeal of the assessee is partly allowed.
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