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TMI Blog2019 (4) TMI 366X X X X Extracts X X X X X X X X Extracts X X X X ..... of income for the AY. 2014-15 on 03-02-2015, admitting total income of Rs. 10,92,510/-. The return was processed u/s. 143(1) of the Income Tax Act [Act]. Subsequently, the case was taken up for scrutiny under CASS and notices u/s. 142(1) and 143(2) of the Act were issued to the assessee. 2.1. During the course of assessment proceedings, the assessee was asked to produce books of accounts viz., cash book, copy of bank statements, ledgers, reconciliation statement with respect to the gross collections reflected in the return of income vis-à-vis gross collections reflected in the TDS certificates etc., for verification. On verification of books of account produced and vouchers separately, it was found that majority of the expenditure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reby the trading results shown by the assessee cannot be relied upon. 2.4. In view of the deficiencies noticed in maintenance of books of account, the AO rejected the books of account maintained by the assessee by invoking the provisions of section 145(3) and estimated the net profit @5% of the 'cost of stock put for sale' for the year under consideration, following the decision of Hon'ble High Court of Hyderabad in the case of CIT Vs. Mekala Balreddy in ITTA No. 28 & 29/2013, dated 30-07-2013. 2.5. After verification of the records and information furnished by the assessee, the AO noticed that the assessee had admitted income at Rs. 2,59,056/- towards electrical business during the FY 2013-14 relevant for AY 2014-15. He further noticed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. On the facts and in the circumstances of the case, the Ld. Commissioner of Income Tax (Appeals) has erred in not to declaring in the Assessment Order as unsustainable, invalid and void as the same is made in contravention and violation of binding circular of CBDT in Instruction No.7/2014 dt.26.09.2014. He ought to have considered the fact that, the CBDT has directed that the scope of enquiry by the Assessing Officer should be limited to verification of the aspects stated in the Limited Scrutiny Order and the Ld. Assessing Officer has travelled beyond the scope stated in the CASS without the approval of Pr. Commissioner of Income Tax in writing. 4. On the facts and in the circumstances of the case, the Ld. Commissioner of Income Tax (A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vouchers. He ought to have considered the fact that the Ld. Assessing Officer had failed to identify the heads of expenditure which were considered by him for such lump sum adhoc disallowance and how he has arrived at such an amount for disallowance. Inspite of the fact that, such verification of electricity accounts were not authorized for scrutiny under CASS. 7. Such other ground/grounds that may be urged at the time of the hearing of the appeal." 4. Ld.AR submitted that the case of assessee was selected for scrutiny to verify the bank deposits whether the deposits are more than the turnover. The Assessing Officer has verified the cash deposits and turnover and found correct. The Assessing Officer completed the assessment beyond the sc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer suo motto did the extensive assessment even though the mandate was to make limited scrutiny. 6.1. Considering the facts of the case, the assessee could not submit the sales bills due to the nature of business and Assessing Officer has not found any discrepancy in the bank deposits and turnover of the assessee. We are coming across so many cases of wine business, in which assessees were not able to submit proper vouchers due to the nature of business and mostly estimated @3%. The case before us also falls in the similar category and assessee was not able to maintain proper records and shown profit @2%. For the sake of judicial precedent, we are intended to proceed with the estimation but the issue before us is not on r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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