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2019 (4) TMI 366

Assessing Officer has verified the expenses etc., which is not the mandate of limited scrutiny. The CBDT directives are binding on the Assessing Officer and in case, Assessing Officer finds that the assessment has to be made on extensive basis due to the reason that there are incidences of tax evasion found. Assessing Officer can extend the assessment by taking due permission from CIT/Pr.CIT. In this case, there is no issue of any tax evasion and the Assessing Officer suo motto did the extensive assessment even though the mandate was to make limited scrutiny. - Rejection of books of accounts u/s 145 - estimation of income net profit @5% of the ‘cost of stock put for sale’ - HELD THAT:- For the sake of judicial precedent, we are intended .....

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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 claimed under the heads hamali, salaries, rents, misc., and shop expenditure were not supported by proper vouchers. Most of the expenditure under these heads were supported by self-made vouchers which are not amenable for verification with reference to the expenditure booked in the Profit & .....

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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 ₹ 2,59,056/- towards electrical business during the FY 2013-14 relevant for AY 2014-15. He further noticed that in the P&L A/c for the year ending 31st March, 2014, assessee claimed expenditure on various head, namely, salaries, shop rent transport etc. When asked to furnish details for the same along with supporting evidences, the AR of the assessee furnished the evidences i .....

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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 (Appeals) has erred in sustaining the assessment order rejecting the books of accounts maintained by the Appellant" and resorting to estimation of income without pin pointing the defects in the maintenance of such books of accounts. He ought to have considered the fact .....

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hat, 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 scope of scrutiny without any approval from Pr.CIT. Widening the scope of assessment is against the CBDT directives. He prayed that assessment may be quashed. 5. On the other hand, Ld. DR submitted that Assessing Officer has completed the assessment by estimating the revenue as .....

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ncy 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 rejection of books or estimation of income. Before us, whether limited scrutiny mandate can be extended. As per the CBDT directive, Assessing Officer cannot do so without following proper procedure. In the given case, Assessing Officer has made extensive assessment without mandate .....

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