TMI Blog2021 (4) TMI 451X X X X Extracts X X X X X X X X Extracts X X X X ..... limited scrutiny - Estimating the income at 15% of cheque deposit to bank account - contention of the AR is that the assessee received cheque from the prospective customers and the same was deposited into bank account and it cannot be treated as income of the assessee - HELD THAT:- Whenever assessee deposits money into bank, it is the duty of the assessee to furnish the name, address and PAN to show that it is towards the advance received from the customers. In this case, the assessee failed to establish the identity of the parties from whom it has been received. Being so, the AO having no alternative, has estimated the income at 15% as offered by the assessee in its return of income. We do not find any infirmity in this action of the lower authority. The assessee made one more plea by way of additional ground that the AO cannot extend the limited scrutiny towards the estimation of income on cheque deposited in bank account In the present case, the tax liability on the impugned issue is less than ₹ 10 lakhs. Being so, the AO is within jurisdiction to take up the issue relating to cheque deposit into bank account. Accordingly, in the result this ground as well as additiona ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and thereafter withdrawn and paid by cash or by cheque to the customers when the deals did not go through. 5.2 The learned CIT[A] failed to appreciate that the appellant had taken only the net of the turnover after deducting the refunds made to the customers when the deals did not go through and consequently, he ought to have accepted the turnover reported by the appellant under the facts and in the circumstances of the appellant's case. 6. Without prejudice to the above the additions made by the A.O. and sustained by the learned CIT[A] is highly excessive and deserves to be reduced substantially. 7. For the above and other grounds that may be urged at the time of hearing of the appeal, your appellant humbly prays that the appeal may be allowed and Justice rendered and the appellant may be awarded costs in prosecuting the appeal and also order for the refund of the institution fees as part of the costs. 2. The assessee filed the following additional ground: The Learned Income Tax Officer, Ward 7(2)(l ) Bangalore ought not to have passed the impugned order u/s 143(3) of the Income Tax Act, 1961 in the manner in which it was done. The Learned Income T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee has received a sum of ₹ 87.34 lakhs by way of cheques and ₹ 111.06 lakhs by way of cash in his ICICI Bank account during the year. The assessee explained that his total turnover was only ₹ 27.25 lakhs which is arrived at after taking into account total receipts in the form of cash and cheques and amount refunded in the event of unsuccessful deal. But the assessee could only submit the list of persons from whom cash has been received amounting to ₹ 74,29,800/-. Therefore, the AO treated the balance amount of ₹ 36,76,750/- (₹ 111.06 lakhs ₹ 74,29,800/-) as undisclosed business turnover of the assessee and applied profit rate of 15% to determine income of ₹ 5,51,512/-. Similarly, the AO calculated income of ₹ 9,01,350/- at the rate of 15% on the turnover received by cheque (₹ 87.34 lakhs ₹ 27.25 lakhs) where the declared turnover was ₹ 27.25 lakhs by the assessee. 5. The CIT(A) observed that assessee has shown a total turnover of ₹ 27,25,0001- for the year and declared income of ₹ 4,08,8701- u/s 44AD of the Act. Thus, the profit rate declared is 1 5% of the turnover. No books of account were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irming the addition of ₹ 5,51,512/- as income under section 44AD of the Act estimating the income at 15% of cash deposit to the tune of ₹ 36,76,750/- as undisclosed business turnover of assessee. According to learned AR, this cash deposit was from earlier cash withdrawals from bank account. Learned DR submitted that the assessee has not established that earlier cash withdrawals was available to assessee being so, no credit to be given to the earlier cash withdrawals. 7. We have heard both the parties and perused the material on record. In the present case, assessee deposited ₹ 111.06 lakhs into bank account. Assessee gave a list of persons from whom cash has been received to the tune of ₹ 74,29,800/-. The assessee has claimed before the lower authority that earlier cash deposit was available to assessee to redeposit into account. Therefore, it is the duty of the assessee to establish that earlier cash was not spent by the assessee and is kept with him to redeposit it into bank account. In the absence of such evidence to show that the assessee kept the earlier cash withdrawals with him as idle, it is not possible to give any benefit of earlier withdrawals ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5% as offered by the assessee in its return of income. We do not find any infirmity in this action of the lower authority. The assessee made one more plea by way of additional ground that the AO cannot extend the limited scrutiny towards the estimation of income on cheque deposited in bank account. He relied on the order of Co-ordinate Bench in the case of H. N. Ravindra Vs. ITO in ITA No.1065/Bang/2019 dated 10.01.2020 and submitted that in the limited scrutiny, AO cannot make any further addition beyond the matter for which he has selected for limited scrutiny. In our opinion, this decision was delivered by the Co-ordinate Bench without considering the CBDT Circular No.20/2015. It is clearly mentioned in the CBDT Circular No.20/2015 in para 3d as follows: d. During the course of assessment proceedings in Limited Scrutiny cases, if it comes to the notice of the Assessing Officer that there is potential escapement of income exceeding Rs. five lakhs (for metro charges, the monetary limit shall be Rs. ten lakhs) requiring substantial verification on any other issue(s), then, the case may be taken up for Complete Scrutiny with the approval of the Pr. CIT/CIT concerned. Howeve ..... X X X X Extracts X X X X X X X X Extracts X X X X
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