TMI Blog2022 (8) TMI 1460X X X X Extracts X X X X X X X X Extracts X X X X ..... shing or raving enquiry. In a case where enquiry is directed to be made by the PCIT, he must give a finding as to how the enquiry made by the AO was wrong. In the present case, the enquiry made by the AO was proper and the AO has drawn proper conclusions on material available before her. The view taken by the AO was a possible view rather a very pragmatic view. The PCIT may not agree with that view. However, the powers under section 263 of the Act cannot be exercised to substitute the view of the PCIT with that of the AO. Since we have quashed the order on merits, we do not wish to go into the question regarding VSV Scheme and its effect on the power under section 263 of the Act. We also hold that the question of invoking the provisions of section 40A(3) of the Act does not arise firstly because the limited scrutiny was only to verify cash deposit in Bank Account. Secondly, the issue was not subject matter of SCN under section 263 of the Act nor was the assessee put on notice regarding the said issue by the PCIT in the proceedings under section 263 of the Act. Appeal of the assessee is allowed. - Shri N. V. Vasudevan, Vice President And Shri Chandra Poojari, Accountant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s then cross verified for any increase in purchases curing the months of October 2016. The ledger account did not show any huge purchase during the month of October 2016. The assessee has stated that they have not maintained month-wise stock details. The cash book of the assessee also did not show any cash purchases. Therefore, it is very much evident that the assessee was inflating both purchases and sales for the purpose of inflating his cash in hand as on 08/11/2016 which obviously was unaccounted money and due to de-monetisation had to be deposited in banks. The cash deposited during demonetisation was Rs. 70,43,000/-. 8.3 From' Table 2 above, it is seen that after the month of October 2016, the aggregate highest cash received {cash sales plus cash receipts) is during the month of May 2016 which amounts to Rs. 48,90,727/-[36,92,422+11,98,305] while the cash receipts during the month of October 2016 is Rs. 88,40,436/-. Thus, the difference amount of Rs. 39,49,710/- is treated as unexplained cash credits u/s. 68 and taxed u/s. 115BBE of the IT Act, 1961 at the rate of 60%. Further, penalty u/s. 271AAC is Initiated in respect of the unexplained cash credits. 3. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uate and required enquires. The following were the conclusions of the PCIT in this regard: 3. Even after the above observations, the Assessing Officer has not taken these findings to its logical conclusion. It was necessary for the Assessing Officer to have examined the inflating of purchases and sales and the cash in hand, to determine the unaccounted money which was deposited by the assessee in her bank accounts. The Assessing Officer has not carried out necessary enquiries but has made only an estimated addition based on the aggregate highest cash received from cash sales and cash receipts. This was not appropriate in view of the findings of the AO discussed above. The Assessing Officer should instead have examined the purchases and sales and the cash in hand and conducted necessary enquiries to determine the unexplained cash deposits. When the case was selected for complete scrutiny for examining cash deposited during the demonetization period, it was necessary for the Assessing Officer to examine the source of cash deposited and carry out necessary investigation in accordance with law and CBDT guidelines. This was all the more necessary in view of the findings of the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 263 of the Act. She relied on decision of Madras High Court in the case of Gopalakrishnan Rajkumar Vs. PCIT (2022) 40 taxmann.com 349 (Mad.) wherein the Hon ble Court held that when disputes are settled under VSV Scheme, no proceedings under section 263 of the Act can be initiated on the same. Reliance was placed on decision of Bombay High Court in the case of PCIT Vs. M/s. Universal Music India Pvt. Ltd., ITA No. 238 of 2018, judgment dated 19.04.2022 for the proposition that the PCIT in exercise of his powers under section 263 of the Act cannot take up issues not stated in SCN under section 263 of the Act unless he puts the assessee on notice on the said issue. The learned DR relied on the order of the PCIT and reasons given in the impugned order. 11. We have carefully considered the rival submissions. We have already set out as to how and what enquiries the AO made while completing the assessment. The case was picked up for limited scrutiny of cash deposits in Bank Account during demonetization period. The AO examined cash purchases and sales and came to a conclusion that purchases and sales from May, 2016 to October, 2016, were inflated and to the extent of such inflatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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