Tribunal Confirms Reassessment for 2015-16 Over Discrepancies in Share Loss and Property Expenses Claims.

The Tribunal upheld the Principal Commissioner's decision under section 263, dismissing the assessee's appeal. The assessment order for A.Y. 2015-16 was set aside for fresh enquiry and assessment due to discrepancies in expenses claimed, such as 'Loss on shares' and 'Expenses on let out property,' which were not in compliance with the Income Tax Act. The Tribunal rejected the argument that the case was limited to scrutiny, affirming that the issues identified were within the scope of the initial scrutiny, and the acceptance of such claims by the Assessing Officer was erroneous.

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Issues involved:
The appeal against the order of the Principal Commissioner of Income Tax under section 263 for A.Y. 2015-16.

Issue 1 - Power of Principal Commissioner under section 263:
The assessee contested the assumption of power under section 263 by the Principal Commissioner, challenging the setting aside of the assessment order passed under section 143(3) of the Income Tax Act. The Principal Commissioner found the assessment order erroneous and prejudicial to the interest of revenue due to discrepancies in expenses claimed by the assessee.

Details for Issue 1:
The assessee filed the return of income declaring total income, and the case was selected for limited scrutiny. The scrutiny assessment was conducted by the Assessing Officer. The Principal Commissioner identified discrepancies in expenses claimed by the assessee, such as 'Loss on shares' and 'Expenses on let out property' not in compliance with relevant provisions of the Income Tax Act. The Principal Commissioner set aside the assessment order for fresh enquiry and assessment on these issues, as the assessee did not respond to the notice.

Issue 2 - Limited scrutiny and conversion to complete scrutiny:
The assessee argued that the case was for limited scrutiny and could not be converted to complete scrutiny. The counsel referred to relevant circulars and case law to support the contention that the items in question should not have been examined by the Principal Commissioner.

Details for Issue 2:
The counsel for the assessee contended that the case was for limited scrutiny and could not be converted to complete scrutiny. However, the Tribunal observed that the items in question fell within the issues identified for limited scrutiny, specifically related to income from heads of income other than business/profession mismatch. The Tribunal noted that the expenses claimed were not in accordance with the Income Tax Act, and the acceptance of such claims by the Assessing Officer was erroneous. The Tribunal found no merit in the appeal, as the assessee did not provide any explanation for the discrepancies identified by the Principal Commissioner.

Conclusion:
The Tribunal upheld the decision of the Principal Commissioner under section 263, dismissing the appeal of the assessee. The assessment order was set aside for fresh enquiry and assessment on specific issues related to expenses claimed by the assessee, which were found to be in contravention of the Income Tax Act. The Tribunal rejected the argument that the case was for limited scrutiny only, as the identified issues were within the scope of the initial scrutiny.

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