TaxTMI 
TaxTMI 
2022 (6) TMI 225
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....interest of revenue and direction of the Ld. Assessing Officer to make fresh assessment, by passing the Order U/s 263 of The Income Tax Act, 1961 dated 25/03/2020." 3. The brief facts of the case are that the assessee is a doctor (Gynecologist) by profession and has been running a hospital in Ahmedabad. The assessee had purchased an immovable property being sub-plot No. A/23 admeasuring 1371 sq.mtrs along with 194.07 sq.mtrs undivided share in the land used for internal common roads and common plots. Thus, the plot area has been worked out to 1565 sq. mtrs located in the scheme known as "Gala Auram". The said plot has been purchased by the assessee through registered sale deed bearing No. AHD-04-PLD/3042 of 2014 dated 02.05.2014 for a total sale consideration of Rs. 1,42,27,200/-. The jantri value as per the stamp duty authority has been worked out to Rs. 2,59,34,694/- as the assessee has paid the stamp duty of Rs. 12,70,800/- on the jantri value. Thus, there has been difference of Rs. 1,17,07,495/- between the jantri value of Rs. 2,59,34,694/- and the apparent sale consideration of Rs. 1,42,27,200/-. The Assessing Officer ought to have taxed this difference as income by virtue ....
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....asked to attend the hearing on 03.02.2020 either in person or through an authorized representative. In response to this notice, the reply to the show cause notice was submitted as under: i) The/tfasd was selected for limited scrutiny purpose as per the first notice issued u/s. 142(1) of the Act dated 26.07.2016 for verification of 7 different issues listed in the said notice and the points relating to verification of "purchase & sale of immovable property" was not covered or mentioned in the said notice. Therefore, the A.O. was not supposed to verify the said details. He could have examined these issues only after taking due permission from the CIT/Pr. CIT which was not done. ii) The assessee had agreed to purchase the residential plot of 1565.07 sq. mtrs (i.e. 1,872 sq. yards) for which an agreement to sale was made on 07.07.2010 and reference to this agreement has also been made in the registered sale deed dated 02.05.2014. iii) The assessee had already paid an amount of Rs. 1,42,27,200/- towards purchase consideration through various cheques during the period 06.07.2010 to 15.10.2011 for which complete details had also been furnished to the A.O. vide l....
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....e of property was not covered/mentioned in the said notice. 5.1. In the case of Balvinder Kumar vs. PCIT [2021] 125 taxmann.com 83 (Delhi-Trib.), it was held as under: Section 263 of the Income-tax Act, 1961 - Revision - Order prejudicial to interest of revenue (Scope of) - Assessment year 2015-16 - Assessee's return was selected for limited scrutiny through CASS on issue of substantial increase in capital - Assessing Officer after considering requisite details filed by assessee, passed assessment order without finding any discrepancy on issue under consideration * Subsequently, Principal Commissioner held that Assessing Officer accepted computation of capital gains by assessee without considering any details related to working of indexed cost of acquisition - Principal Commissioner invoked section 263 and passed revisionary order setting aside matter to Assessing Officer for making fresh assessment - Whether in view of CBDT Instruction No. 7/2015, 20/2015 and 5/2016 and CBDT letter dated 30-11-2017, it was established that Assessing Officer could not go beyond reason for selection of matter for limited scrutiny - Held, yes - Whether thus, it would not be open for P....
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....iction by issuing SCN itself is bad in law and therefore it is quashed. Consequently all further actions/proceeding including the impugned order of Ld. PCIT is non-est in the eyes of law. For this we rely on the decision of this Tribunal in Sanjib Kumar Khemka in ITA No. 1361/Kol/2016 for AY 2011-12 dated 02.06.2017 wherein it has been held that: "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 also failed to bring anything contrary to the argument of the ld. AR. Therefore in our considered view the scrutiny should have been limited only to the information emanating from the AIR. Admittedly, the assessee has claimed to have filed an appeal before Ld. CIT(A) challenging the jurisdiction exceeded by the AO while framing the assessment order u/s. 143(3) of the Act. We find that the impugned issue being legal in nature and goes to the root of the matter therefore we are inclined....
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....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. 9. This tribunal's yet another decision in ITA No. 1011/Kol/2017 in Sri Hartaj Sewa Singh vs. DCIT, (IT), Circle-1(1), Kolkata decided on 27.04.2018 also decides the instant issue in assessee's favour on identical reasoning. We conclude in these facts and circumstances that the PCIT has erred in law and on facts in holding the impugned assessment as erroneous causing prejudice to the interest of Revenue on the ground which nowhere formed subject-matter of the CASS scrutiny as it is evident from the case records. We reiterate the learned coordinate bench's detained reasoning hereinabove that the sec. 263 revision proceedings ought not to have been set into motion for expanding the jurisdicti....
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....der 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 enquiry shall be restricted to the 'Limited Scrutiny' issues? " c. These cases shall be completed expeditiously in a limited number of hearings, d. During the course of assessment proceedings in limited Scrutiny' cases, if it comes to the notice of the Assessing Officer that there is potential escapement of income exceeding Rs. five lakhs (for metro charges, the monetary limit shall be Rs. ten lakhs) requiring substantial verification on any other issue(s), then, the case may be taken up for 'Complete Scrutiny' with the approval of the Pr. CIT/CIT concerned. However, such an approval shall be accorded by the Pr. CIT/CIT in writing after being satisfied about merits of the issue(s) necessitating 'Complete Scrutiny' in that particular case. Such cases shall be monitored by the Range Head concerned. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx "2, In order to ensure that maximum objectivity is maintained in con....
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....eration. It is because if we admit the contention of the learned DR then the same will be beyond the scope of limited scrutiny as there was no question raised in the notice issued for the limited scrutiny under section 143(2) of the Act for the cash balance. The right course of action for the AO was to take the approval from the competent authority for expanding the scope of Limited Scrutiny to the regular assessment but he failed to do so. Thus, in our considered view inaction of the AO should not cause any harassment to the assessee. 9.4 In holding so we draw support and guidance from the order of the Hon'ble Chandigarh Tribunal in case of Rajesh Jain vs. ITO reported in 162 taxman 212 where it was held as under: The jurisdiction of the Assessing Officer in such cases where the notices are issued for limited scrutiny is confined to the claims he has set out in the notice for verification. This position of law was further elaborated by the CBDT in its Circular No. 8/2002, dated 27-8-2002, The CBDT Circular clarifies that the Assessing Officer does not have the powers to make the entire assessment of income in limited scrutiny cases. Now question had to be dec....
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....vidual and claimed to have earned income under the head capital gain and other sources. The assessee during the year under consideration along with 4 other co-owners sold a piece of land admeasuring 4234 square meters in which he held his share for 30%. The assessee declared capital of Rs. 1,48,86,543/- after claiming deduction of Rs. 2,03,58,578/- under section 54 of the Act. 5. Subsequently, the return of the assessee was selected for limited scrutiny and the notice was issued under section 143(2) of the Act for examining the issues as detailed under: (i) Sale of property mismatch (ii) Mismatch in income/capital gain on sale of land or building (iii) Deduction claimed under the head capital gain (iv) Increase in capital During the proceedings the AO observed from the submission of the assessee and information received from the Revenue authority that the impugned land was purchased by the assessee along with co-owner as agricultural land bearing 3 different survey numbers. Later on such land was converted as NA and different survey numbers merged as single survey no. Thereafter the assessee and co-owner made application for plo....
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....mine the mismatched figures of sales, capital gain income for the sold property and capital gain income shown in the return of income. It has been noticed that the case was selected for limited purpose for sale of property and consequent capital gain and deduction form capital gain. Therefore, the A.O. has examined these issues revolving around the charging of capital gain, claim deduction there from u/s. 54F of the Act and the A.O. did not even touch the issues beyond these issues such as income from house property, profit of the business etc. Thus, he has not travelled beyond the limited jurisdiction and not contravened the instructions of the Board issued from time to time and quoted by the appellant through paper book. The appellant's contention that the AO has treated the land transaction as an adventure in the nature of trade instead of allowing the capital gain without obtaining the approval of the competent authority and thus expanded the scope of scrutiny is also not legally tenable as the AO has every right to look into the nature of transaction within the limited space given for scrutiny. Just because the AO has treated the land transaction as adventure in the nature....
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.... with the facts of the relied upon case. Similarly, the reliance placed on the case of Rajesh Jain v/s ITO [2007] 162 Taxman 212 (Chandigarh) is also not of any help to the appellant as the facts are clearly distinguishable. Considering the factual and legal aspects of the issue of limited scrutiny assessment, the ground no. 1 is rejected." 9. Being aggrieved by the order of the Ld. CIT(A) the assessee is in appeal before us. 10. The Ld. AR before us filed 3 paper books namely paper book-I, II and III running from pages 1 to 74, pages 1 to 94 and pages 1 to 130 and drew our attention on page 1 to 2 of the paper book-I where the notice for "Limited Scrutiny" issued u/s. 143(3) of the Act was placed. The Ld. AR further claimed that the Assessing Officer has converted the "Limited Scrutiny" to the normal/regular scrutiny u/s. 143 of the Act, on the basis of document received from Revenue authority without taking necessary approval from the appropriate authority. 11. On the other hand the Ld. DR submitted that the AO has examined the property sold during the year and arrived at the conclusion that the assessee is carrying out the business of property developm....
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....it shall be Rs. ten lakhs) requiring substantial verification on any other issue(s), then, the case may be taken up for 'Complete Scrutiny' with the approval of the Pr. CIT/CIT concerned. However, such an approval shall be accorded by the Pr. CIT/CIT in writing after being satisfied about merits of the issue(s) necessitating 'Complete Scrutiny' in that particular case. Such cases shall be monitored by the Range Head concerned. XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXX "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 possibility of under assessment of income if the case is not examined under 'Complete Scrutiny'. In this regard, the monetary limit....
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....e Ld. DR before us has not brought anything on record justifying that the "Limited Scrutiny" was converted by the Assessing Officer under normal scrutiny after obtaining necessary approval from the appropriate authority. 17. We are also not convinced with the argument of the learned DR that the issue raised by the AO is limited to the activity of the sale of the property only. It is because if we admit the contention of the learned DR then the head of income from capital gain will also get change to the business income despite the fact that there was no question raised in the notice issued for the limited scrutiny under section 143(2) of the Act. The right course of action for the AO was to take the approval from the competent authority for expanding the scope of Limited Scrutiny to the regular assessment but he failed to do so. Thus, in our considered view inaction of the AO should not cause any harassment to the assessee. 18. In holding so we draw support and guidance from the order of the Hon'ble Chandigarh Tribunal in case of Rajesh Jain vs. ITO reported in 162 taxman 212 where it was held as under: The jurisdiction of the Assessing Officer in suc....