Shri Pramod Kumar Verma vs Income Tax Officer

This appeal by the assessee is directed against the order of Commissioner of Income Tax, Appeal, Addl./JCIT(A)-2, Vadodara (hereinafter referred to as 'the CIT(A)') dated 26^th September, 2025, for assessment year 2017-18.

Shri Raghav Sharma appearing on behalf of the assessee submits that case of the assessee was selected for 'limited scrutiny' through CASS for the reason, 'Large Cash payments made for credit card purchases'. The assessee, during the course of assessment proceedings and before the CIT(A) furnished his bank account statements from which payments were made towards credit card bills. The Assessing Officer ignored the bank statements of Union Bank of India and Syndicate Bank (now Canara Bank) and made addition of ₹2,50,000/- as unexplained cash payment from undisclosed sources. The learned Counsel stated that the limited scope of scrutiny was to inquire cash payments made for credit card purchases. In the present case, the payments for credit card were made through bank which is evident from the Bank account statements placed on record. Now, the Assessing Officer has traveled back and started questioning source of cash deposits in the bank account, which is beyond the scope of limited scrutiny. The assessee carried the issue in appeal before the CIT(A) but remained unsuccessful. The learned Counsel prayed for reversing findings of the CIT(A) and deleting the addition of ₹2,50,000/-.

Per contra, Shri Manoj Kumar representing the Department, reiterated findings of the Assessing Officer and the CIT(A). He prayed for dismissing appeal of the assessee.

Both sides heard, orders of lower authorities examined. A perusal of the assessment order reveals that case of the assessee was selected for limited scrutiny through CASS to examine, 'Large Cash payments made for credit card purchases'. The assessee has placed on record bank statements of Union Bank of India at page 10 to 13 of the paper book and copy of bank statement of account maintained with Syndicate Bank at page 14 to 20 of the paper book. A perusal of the said bank statements reveal that the credit card payments were made through bank. No material is available on record nor it is emanating from the assessment order that any cash payment was made for credit card purchases. In any case, the Assessing Officer cannot make addition on account of unexplained cash payment from undisclosed sources as this is beyond the scope of reason for which case of the assessee was selected under limited scrutiny. For the reasons stated above, the impugned order is set aside and appeal of the assessee is allowed.

In the result, appeal of the assessee is allowed.