TaxTMI 
TaxTMI 
2021 (7) TMI 202
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....come and high loans/advances/investment loans, iv) low income and high interest rates. The AO completed the assessment u/s 143(3) of the Act on 13.12.2017 determining total income at Rs.42,48,781/-. 3. The facts of the case are brought out in the 263 order which is extracted for ready reference: "The assessee filed return of income for the assessment year 2015-16 on 11.01.2016 declaring total income at NIL. The case was selected for scrutiny and the assessment was completed u/s 143(3) of the I T Act, 1961 on 13.12.2017 determining total income at NIL. 2. The Assessment Record of the assessee for the A.Y.2015-16 was called for and examined. On examination of the assessment record, it is found that the case was selected for limited scrutiny and following issues were identified for verification:- (i) Interest Expenses (ii)Investment in Unlisted Equities (iii)Low income and high loans/advances/investments (iv)Low income and high investments. 3. The examination of record further revealed that the assessment was completed without verifying the issues identified for verification. The Assessment Order passed u/s 143(3) dated....
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....s a result of conversion, the erstwhile company's asset of Rs. 12,84,16,940/- were transferred to the balance sheet of newly formed assessee LLP. The AO did not deemed it appropriate to examine the source of introduction of the assets worth Rs. 12.84 crore in the newly born assessee. The A.O. has not even verified the reason for low income with high investments and whether the interest component credited of Rs. 45.43 Lakh has any viable and cogent relationship with the Investment shown in its Balance sheet. 3.2. It is also seen that one of the issues which was flagged for verification in limited scrutiny was Investment in Unlisted Equities. The assessee has shown a reserve on account of security premium of Rs. 12.14 crore in its account. The AO neither made any enquiry on the valuation of the unlisted securities nor made any verification for the source of the premium received. I find that the A.O. has not made any adequate and proper inquiry in the matter of comparison of investment in unlisted equities nor he has made any adequate examination on the issues of comparison of high loans/advances shown in the accounts of the erstwhile company and that of the present LLP. It i....
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....the relevant provisions of law." 5. Aggrieved, the assessee is in appeal before us. 6. The ld. Counsel for the assessee submitted that adequate opportunity was not given to the assessee and the order u/s 263 of the Act passed ex-parte. 6.1. On merits, he submitted that though the case of the assessee was selected for limited scrutiny on four issues, the Pr. CIT made revision invoking his powers u/s 263 of the Act on eight issues. He argued that the Pr. CIT cannot enlarge or extend the scope of enquiry, from the issues on which the case was selected for limited scrutiny. On the four issues that were identified and selected for limited scrutiny, the ld. Counsel for the assessee filed a paper book to demonstrate that the AO has examined each of these issues. He filed a copy of the order-sheet-entry at pages 11-12 of the paper book,to demonstrate that the AO had, in fact called for the explanations on each of these issues and after considering the documents and written submissions of the assessee, he accepted the claims of the assessee. He issued notice u/s 142 of the Act on 19.09.2017 to the assessee on the various points, which specifically cover the issues on which the case....
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.... which is prejudicial to the interest of the Revenue. He referred to para-3.2 of the order passed u/s 263 of the Act by the Pr. CIT and submitted that the AO neither made any enquiry on the valuation of the unlisted securities nor made any verification of the sources of the premium received. He pointed out that the AO has failed to examine the loss and the submissions made by the assessee on all these investments were accepted by the AO, simply because these were carried forward by the assessee from its earlieravatar. He submitted that the fact is that the AO called for and just kept the replies on the record without any enquiries, which shows nonapplication of mind. He submitted that non-application of mind and not making enquiries or verifications is an error which is prejudicial to the interest of the Revenue and as per Explanation 2 to Section 263 of the Act, he submitted that the ld. Pr. CIT has powers to pass revisionary order u/s 263 of the Act. Under these circumstances, he prayed that this order be upheld. 8. In reply the ld. Counsel for the assessee submitted that this is not the case where a limited company was converted into an L.L.P. He submitted that this was a cas....
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....case of Binod Kumar Mahato vs. Pr. CIT in ITA No. 2173/Kol/2018, AY 2014-15, order dated 24.02.2021 has considered the issue and held as follows: "7. The reasons for scrutiny selection through CASS, is to examine the cash deposits in savings bank account, as these are more than the turnover. The Assessing Officer stuck to these reasons and completed the assessment u/s 143(3) of the Act. Aggrieved with this order, the assessee carried the matter in appeal before the ld. First Appellate Authority. The ld. CIT(A) considered this order and granted part relief. On these facts, the question is whether the ld. Pr. CIT is empowered to invoke his powers u/s 263 of the Act for revising the order passed u/s 143(3) of the Act dt. 25/08/2016 and direct verification, examination and determination of income as per the order of the ld. CIT(A) on the issue which is admittedly not the reason scrutiny selection through CASS. The ld. D/R admits that the issue on which the ld. Pr. CIT has invoked his powers u/s 263 of the Act is beyond the scope of reason based on which the case was selected for limited scrutiny. The Assessing Officer could not have travelled beyond these reasons without obtai....
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.... of the Act on the basis of regular scrutiny under the Act was bad in law. The proceedings under section 143(3) of the Act should have been limited to the extent of the information gathered through AIR. Accordingly the proceedings u/s 263 of the Act cannot be expanded beyond the issue raised in AIR. Thus the order u/s 143(3) of the Act beyond the points of AIR is invalid in law and so the same is with the order passed u/s 263 of the Act. It is the further contention of the assessee that in the items which are not subject matter of AIR cannot subject matter of scrutiny. Such matters include salary of the assessee, loans & interest on loans, payment of LIC, Commission & brokerage income etc. It is the case of the assessee that in the assessment order passed u/s 143(3) of the Act, the AO has travelled beyond the points of the AIR on the basis of which the case of scrutiny was selected under CASS module. It is the plea of the assessee that when no addition/disallowance can be made beyond the points mentioned in AIR in the assessment proceedings then same is the case with proceedings initiated u/s 263 of the Act. 4.1 The first aspect which needs to be examined is as to....
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....ch of the Tribunal in this regard has placed reliance on several decisions, the principal decision being that of the Hon'ble Supreme Court in the case of Kiran Singh & Ors. V. Chaman Paswan & Ors. [1955] 1 SCR 117(SC) wherein the Hon'ble Supreme Court observed as follows :- "It is a fundamental principle well-established that a decree passed by a Court without jurisdiction is a nullity, and that its invalidity could be set up whenever and wherever it is sought to be enforced or relied upon, even at the stage of execution and even in collateral proceedings. A defect of jurisdiction, whether it is pecuniary or territorial, or whether it is in respect of the subject-matter of the action, strikes at the very authority of the Court to pass any decree and such a defect cannot be cured even by consent of parties." Now coming to the facts of the instant case, we find that the instant case was selected on the basis of AIR Information as evident from the order of AO under section 143(3) of the Act. There is also no whisper in the order of the AO for expanding the scope of limited scrutiny after obtaining the permission from the Administrative CIT. The ld. DR has als....
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....d thus the entire amount was liable to be added to the total income of assessee but the AO has added only a sum of Rs.2,98,225/- to the total income of assessee. Thus, there was under assessment of income by Rs.78,000/-; (iv) The assessee during the year has sold property for Rs.36 lakh and exemption of Rs.19,74,763/- was claimed by assessee u/s. 10(38) of the Act. This fact was not verified by the AO at the time of assessment proceedings. In view of above, the Ld. CIT found the order of AO is erroneous in so far as prejudicial to the interest of Revenue and therefore show-cause notice was issued u/s. 263 of the Act vide dated 13.10.2015 for the clarification of the above transactions. In compliance thereto, the assessee submitted as under : i) The deposit in HDFC bank account No. 03151930000609 was duly reflected in his IT return. Therefore, no cause has happened to the Revenue which is prejudicial to the interest of Revenue. ii) The deposit of Rs.19,73,750/- was duly reflected in the IT return and therefore there was no error which is prejudicial to the interest of Revenue. iii) Regarding the credit card payment, the ....
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....r dated 29/03/2014 passed by ACIT, Circle-43, Kolkata is found to be erroneous and prejudicial to the interest of revenue and hence it is set aside with the direction to pass fresh assessment order after examining the evidences and documents in respect of the above issues raised after giving opportunity to the assessee and in accordance with law." Being aggrieved by this order of Ld. CIT assessee is in appeal before us on the following grounds:- "(1) For that the L'd Pr. Commissioner of Income Tax erred in exercising the power of revision for the purpose of directing the AO to hold another investigation when the order passed by the AO was neither erroneous nor prejudicial to the interest of revenue. (2) For that the L'd Pr.CIT erred and exceeded jurisdiction by giving direction in respect of the matters which are subject matters of appeal before the CIT(A), therefore order passed by Pr. CIT-15 is unlawful, beyond provision of law and therefore liable to be quashed. (3) For that the L'd Pr. CIT had alleged arbitrarily irrelevant matters, factual and untrue position in the show cause notice u/s. 263 and therefore order passed by Pr. CIT....
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....it. Therefore, the allegation of the ld. CIT-A that the order of AO is erroneous and prejudicial to the interest of Revenue is not true. c) Credit card payment of Rs.3,76,225/- From the order of AO, we find that the AO has made the addition of Rs.2,78,225/- out of total credit card payment of Rs.3,76,225/-. Therefore, it is clear that AO has applied his mind while framing the assessment proceedings u/s. 143(3) of the Act. Thus, the allegation of the AO in the impugned order or Ld. CIT u/s. 263 of the Act that there was no proper enquiry conducted by AO at the time of assessment proceedings is not true. d) Sale of property for consideration of Rs. 36 lakh. On perusal of AIR information which is placed on page 1 of the paper book, we find that no immovable property has been sold by assessee in the year under consideration. Besides the above, there is also no whisper in the assessment order for any addition on account of capital gains. Therefore, we find that the allegation of Ld. CIT that AO has not conducted sufficient enquiry in relation to sale of immovable property is not true. 5.1 In view of the above we find that Ld. CIT has....
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....s the relief, accordingly. 6. In the result, assessee's appeal stands allowed." 7. We have perused the letter dated 09.11.2016 addressed by the DDIT (Inv.), Mumbai to ITO- 29(3)(4), Mumbai wherein the details of on money in the case of Runwal Green (shops) were given and we find that on money was determined by taking the rate @ Rs. 26,000/- per sqr. ft. while agreements were for lower amounts. However, in the case of the assessee we observe that the agreement value was executed @ Rs. 26,000/- per sqr. ft. Thus we find merits in the contention of the assessee that there is no question of on money as the agreement value was even Mrs. Sonali Hemant Bhavsar higher than the maximum rate which was taken by the DDIT (Inv.), Mumbai to ascertain the amount of on money received by the builder. Moreover, the case of M/s. Runwal Homes Pvt. Ltd. vs. DCIT in ITA No.5621/M/2017 A.Y. 2015-16 the issue of on money has been decided in favour of the M/s. Runwal Homes Pvt. Ltd. by deleting the addition on account of on money. In view of the aforesaid facts, we are of the view that the revisionary order passed by the Ld. Pr. CIT(A) is without jurisdiction and has to be quashed on ....