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TMI Blog2023 (12) TMI 1117X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) has erred in law and on facts in confirming the action of ld. AO in making aggregate addition of Rs. 4,96,00,000/- on account of unsecured loan by treating it as alleged unexplained cash credit u/s 68 and that too by recording incorrect facts and findings and without observing the principles of natural justice. 4. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of ld. AO in making aggregate addition of Rs. 4,96,00,000/- on account of unsecured loan by treating it as alleged unexplained cash credit u/s 68, is bad in law and against the facts and circumstances of the case. 5. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making addition of Rs. 11,52,000/- on account of alleged commission paid u/s 69C of the Income Tax Act, 1961. 6. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making addition of Rs. 36,66,823/- on account of interest paid on the said loans u/s 36(l)(iii) and that too by recording incorrect facts and findings and without ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epartmental Representative submitted that the Ld. A.O. has passed the assessment order in accordance with law which has been rightly confirmed by the CIT(A), therefore, the orders of the Lower Authorities requires no interference, thus sought for dismissal of the Appeal filed by the Assessee. 7. We have heard the parties and perused the materials. The case of the assessee was selected for limited scrutiny for the examination of the issues i.e. "Large interest expenses relatable to exempt income (u/s 14A) and High interest expense as compared to business turnover. But the Ld. A.O. has travelled beyond the reasons recorded for scrutiny selection and made the additions in following manners:- "7. Based on the above discussion it can be inferred that assessee company has saken bogus joans in lieu of cash for routing unaccounted income in its books of account from established entry operators Sh. Deepak Agarwal and Sh. Mukesh Kumar who were utilizing several companies for providing accommodation entries including above mentioned company, traces of which are also found from the seized material mentioned above. It is also apparent from the movement of funds passed through the bank accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id interest on unsecured loan and deducted the TDS and deposit into central Government account and paid the interest." Further, in the preceding Para it has also been established that the entities from where the assessee company has raised unsecured loans are bogus companies/paper entities engaged in providing accommodation entries in lieu of cash in the disguise of unsecured loans, bogus purchases, expenses etc and as such question of payment of any interest thereon merely a tool to minimize the taxable income of the assessee. Therefore, in view the above discussion interest expenses amounting to Rs. 36,66,823/- is disallowed and added back to the total income of the assessee as discussed above.. [Disallowance: Rs. 36,66,823/-] Penalty u/s 271(1)(c) of the I.T. Act, 1961 has also been initiated separately for furnishing inaccurate particulars of income by the assessee. 10. Subject to the discussion in forgone paras, total income of the assessee for the Assessment Year 2015-16 is computed as under:- Returned income Rs. 41,80,240/- Add: Disallowance as per para 7 above Rs. 4,96,00,000/- Addition as per para 8 above Rs. 11,52,000/- Disallowance as per Para 9 above R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y in these cases can only be conducted as per the guidelines and procedures stated in Instruction No. 7/2014. iv. Reason for selection: In cases under scrutiny for verification of AIR/CIB/26AS data, the Assessing Officer has to intimate the reason for selection of case for scrutiny to the assessee concerned. 3. As far as the returns selected for scrutiny through CASS-2015 are concerned, two type of cases have been selected for scrutiny in the current Financial Year- one is 'Limited Scrutiny' and other is 'Complete Scrutiny'. The assessees concerned have duly been intimated about their cases falling either in 'Limited Scrutiny' or 'Complete Scrutiny' through notices issued under section 143(2) of the Income-tax Act, 1961 ('Act'). The procedure for handling 'Limited Scrutiny' cases shall be as under: a. In 'Limited Scrutiny' cases, the reasons/issues shall be forthwith communicated to the assessee concerned. b. The Questionnaire under section 142(1) of the Act in 'Limited Scrutiny' cases shall remain confined only to the specific reasons/issues for which case has been picked up for scrutiny. Further, the scope of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... number, Board has laid down Standard Operating Procedure for handling of cases under 'Limited Scrutiny' which were selected through Computer Aided Scrutiny Selection in 'CASS Cycle 2015'. In these cases, it was stated that the general scope of enquiry in scrutiny proceedings should be restricted to the relevant parameters which formed the basis for selecting the case for scrutiny. However, in revenue potential cases, it was further provided that 'Complete Scrutiny' could be conducted, if there was potential escapement of income above a prescribed monetary limit, subject to the approval of administrative Pr. CIT/CIT/Pr. DIT/DIT. 2. In order to ensure that maximum objectivity is maintained in converting a case falling under 'Limited Scrutiny' into a 'Complete Scrutiny' case, the matter has been further examined and in partial modification to Para 3(d) of the earlier order dated 29.12.2015, Board hereby lays down that while proposing to take up 'Complete Scrutiny' in a case which was originally earmarked for 'Limited Scrutiny', the Assessing Officer ('AO') shall be required to form a reasonable view that there is possi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions are summarized as under: i. The questionnaire u/s 142(1) of the Act shall be confined only to the issue of limited scrutiny. ii. Approval of PCIT/CIT concern iii. PCIT/CIT concern shall grant approval in writing and after being satisfied on the merits of the case. iv. Such cases shall be monitored by range head. v. In limited scrutiny cases enquiry shall be restricted only on the issues of limited scrutiny. vi. Only after conversion of case to complete scrutiny and after following the procedure outlined above the A.O. may examine the issues other than limited scrutiny issues. v. The A.O. shall intimate the assessee regarding conducting complete scrutiny. vi. The provisions of Sec. 144A of the Act should be invoked in suitable cases. vii. To prevent the roving and fishing enquiries, such cases should be picked up for review and inspection by administrative authorities. 12. Reliance is also being placed in the order of the Co-ordinate Bench of ITAT in the case of CBS International Projects Pvt. Ltd. Vs ACIT, New Delhi in ITA No. 144/Del/2019 and order of the Hon'ble Jurisdictional High Court in the case of Best Plastics Pvt. Ltd. 295 ITR 256, wherein it was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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