TMI Blog2016 (4) TMI 909X X X X Extracts X X X X X X X X Extracts X X X X ..... y on the basis of the AIR information, the CBDT Instruction has to be strictly abided by. Herein, since the AIR information was only with regard to cash deposits of ₹ 25 lakhs and the assessee had duly and adequately explained the source thereof, the AO, it cannot be gainsaid, transgressed his competency in issuing the further query and in asking the assessee to produce Smt. Balbir Kaur and Smt. Kamaljit Kaur, the executants of the other agreement to sell which had nothing to do with the cash deposits. Moreover, it cannot, in view of the above discussion, at all be said that the objections raised by the assessee were merely to divert the attention of the AO to come to a logical conclusion. The objections taken by the assessee are well raised and the AO, at the cost of the repetition, could not have gone beyond the specific CBDT Instruction. It is held that since the assessment order, passed ex-parte by the AO, was in violation of specific CBDT Instruction, the same is not legally sustainable. - Decided in favour of assessee - ITA No. 87(Asr)/2016 - - - Dated:- 24-3-2016 - A. D. Jain, JM For the Appellant : J. S. Bhasin, Adv For the Respondent : Shri Tarsem Lal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to the assessee, a notice (APB-9) dated 15.07.2013 under section 142(1) of the Act, asking the assessee to produce accounts/or documents and information as per the questionnaire (APB-10) accompanying the said notice, as follows: In connection with your assessment year 2011-12, you are requested to file the following information, details and evidence in support to your claim: 1. Nature of business. 2. Statement of liabilities and assets as on 01.04.2010 to 31.03.2011. 3. History of the family with complete details of month wise withdrawal for household expenses in your name and in the name of your wife/Husband and family members. 4. Details of education expenses of your children. 5. Electricity meter no. alongwith details of expenses on electricity. 6. Details of telephones installed at your residence as well as on business premises with details of expenses on telephones. 7. Details of bank accounts in your name, in the name of your husband and children in the following proforma:- Sl.No. Name of the bank with address Account Number ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Singh R/o 11 .No. 359- 13, St. No.13 , Jaswant Nagar, Jalandhar and Smt. Kamaljit Kaur W/ o Sh. Lakhwinder Singh R/ o 11. No. 76 Golden Avenue, Jalandhar. The assessee also received ₹ 3,00,000 /- at the 1 lime of agreement and ₹ 9,00 ,000/- had to be received by 15. 07. 2009, as advance. The balance amount had to be received at the lime of registration deed and the date fixed for registration was fixed 05 .10 .2010 . The assessee vide this office letter dated 13. 12. 2013 was requested to produce Suit. Balbir Kaur W/o Sh. Balwinder Singh and Smt. Kamajit Kaur W/ o Sh. Lakhwinder for examination. The counsel of the assessee vide letter dated 27. 12.2015 again explained that as per CBDT guidelines/instruction bearing F. No. 224/ 26/2006 ITA. 11 (Pt.) dated 08 .09 .2010 scrutiny of such cases was limited only to the aspect of information received through AIR. The present proceedings limited to extent of AIR information. 3.2. Keeping in view the above reply of the assessee, it is clear that the assessee is not ready to furnish the requisite information. Thus it is evident that the plot purchased in the earlier year does not have not any relation with the residentia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Total cost of acquisition. 13,94,348/- Balance. 21,30,652/- Less Deposit in the Capital Gain Scheme 6,50,000/- Balance Taxable Capital Gain 14,80,652/- 8. The AO refused to grant benefit of section 54 of the I.T. Act, 1961. 9. The ld. CIT(A) upheld the assessment, holding as follows: 5.2. I have carefully considered the submissions of the assessee as made by her vide letter dated 23.11.2015 on the issues under reference. I have also considered various judicial pronouncements relied upon by the assessee in connection with the issue under reference. In my opinion, the AO has not violated the instructions issued by the CBDT governing AIR cases in any way as he has limited his enquiries to the source of cash deposits in the bank account of the assessee and further logical conclusion. I am also of the opinion that although the cash deposits in the bank account of the assessee were found to be explained with the help of sale proceeds of house property but the AO is also duty bound to see whether the assessee has correctly declar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee had raised objection just to divert the attention of the AO to arrive at a logical conclusion. 13. The question is whether, firstly, the AO is bound by the CBDT Instruction F.No.225/26/2006-ITA-II(Pt.) dated 08.09.2010 and as to whether in the present case, while computing capital gain and denying benefit of section 54 to the assessee, the AO has contravened the said instructions, thereby rendering the assessment order invalid; and secondly, as to whether the ld. CIT(A) is correct in upholding the assessment order. 14. Section 119(1) of the Act reads as follows: The Board may, from time to time, issue such orders, instructions and directions to other income-tax authorities as it may deem fit for the proper administration of this Act, and such authorities and all other persons employed in the execution of this Act shall observe and follow such orders, instructions and directions of the Board. 15. In 'Crystal Phosphates Ltd. vs. ACIT', 34 CCH 136 (Del. Trib.), it has been held that once the CBDT had issued instructions, the same have to be followed in letter and spirit by the AO. 14. In 'Amal Kumar Ghosh vs. Addl. CIT', 361 ITR 458 (Cal.), it ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... merely a repetition of Entry No.1). According to para-3 of the assessment order, the details of this are deposits of ₹ 9.5 lakhs on 07.05.2010, ₹ 9.5 lakhs on 08.05.2010 and ₹ 6 lakhs in cash by the assessee in her savings bank account with OBC, Jalandhar. 20. Para 2 of the CBDT Instruction states that the scrutiny of cases selected on the basis of information received through AIR returns would be limited only to the aspects of information received through AIR. 21. As seen, the AIR information in the present case was regarding cash deposits of ₹ 25 lakhs by the assessee in her savings bank account with OBC. Meaning thereby, that the assessee was required to explain the source of such cash deposits. The assessee explained the same as sale proceeds of her residential house amounting to ₹ 32.25 lakhs received from Smt. Naunihal Kaur, the purchaser. Her this assertion was duly supported by a copy of the concerned sale deed. 22. Now, as per the CBDT Instruction, nothing further was to be gone into by the AO, since the information received through AIR was the cash deposits. However, the AO as noted in paras 3.1 3.3 of the assessment order itself a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A) has erred in confirming the assessment order. The ld. CIT(A) had erred in view of the above observation of the Bench, in holding that the AO has not violated the CBDT Instruction. The ld. CIT(A) has gone wrong in observing that the AO has limited his enquiries to the source of cash deposits. True, the AO is duty bound to see whether the assessee has correctly declared taxable value of the long term capital gains from the sale of her residential house. However, as noted, in a case like the present one, where it has been picked up for scrutiny on the basis of the AIR information, the CBDT Instruction has to be strictly abided by. Herein, since the AIR information was only with regard to cash deposits of ₹ 25 lakhs and the assessee had duly and adequately explained the source thereof, the AO, it cannot be gainsaid, transgressed his competency in issuing the further query and in asking the assessee to produce Smt. Balbir Kaur and Smt. Kamaljit Kaur, the executants of the other agreement to sell which had nothing to do with the cash deposits. Moreover, it cannot, in view of the above discussion, at all be said that the objections raised by the assessee were merely to divert the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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