2021 (5) TMI 958
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....ase, the Worthy CIT(A) in Appeal No. 10519/17-18 has erred in passing that order in contravention of the provisions of S. 250(6) of the Income Tax Act, 1961. 2. That on law, facts and circumstances of the case, the Worthy CIT(A) has erred in confirming the action of Ld. AO in converting the impugned assessment from limited scrutiny to complete scrutiny even when there did not exist circumstances justifying the said conversion and also there was no incriminating or credible material in the hands of the Ld. AO which justified the above referred conversion and therefore the impugned assessment deserve to be quashed. 3. That on law, facts and circumstances of the case, the Worthy CIT(A) has erred in confirming the action of Ld. AO in disall....
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....me." 2. At the outset, the ld. counsel for the assessee inviting our attention to the impugned assessment order has submitted that the Assessing Officer (in short 'AO') was directed to carry on limited scrutiny in respect of real estate business of the assessee with high closing stock. Ld. counsel has further submitted that in respect of the above limited issue, no addition has been made by the AO. However, the AO converted the limited scrutiny into the full scrutiny assessment and made certain disallowance on account of disallowance of expenditure on estimation basis in respect of following items: Particulars Amount (in Rs.) i. Various Expenses 15,45,176/- ii. Advertisement expenses 3,70,579/- iii. TDS Penalty 3,51,836....
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....e view, the Assessing Officer would ensure that: a. there exists credible material or information available on record for forming such view; b. this reasonable view should not be based on mere suspicion, conjecture or unreliable source; and c. there must be a direct nexus between the available material and formation of such view." 5. A perusal of the above instruction of the CBDT shows that to convert the limited scrutiny into complete scrutiny, the Assessing Officer shall be required to form a reasonable view that there is a possibility of under statement of income and that view should be based on credible material or information available on record and such a view should not be based on mere suspicion, conjecture or unreliable reso....