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TaxTMI 
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TaxTMI 
2023 (1) TMI 121
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....e submission of the assessee, without appreciating the details furnished and also without stating why the submission is not acceptable. Therefore the order u/s 263 is an unreasoned order and liable to be quashed. 4. For that Ld. Pr. CIT erred passing an order u/s 263 of the IT Act without' rejecting the documents furnished or recording it to be irrelevant or lacking their probative worth. Therefore the order u/s 263 is not valid and liable to be set aside. 5. For that Ld. A.O erred in not appreciating the evidences available on record and evidence furnished in course of 263 proceeding. Therefore the present order passed without appreciating the materials evidences available on record is perverse and liable to be quashed. 6. For that Ld. A.O erred in setting aside the assessment order without stating the manner in which the order of A.O is erroneous and prejudicial to the interest of revenue and what is the basis of such conclusion. Therefore the order u/s 263 an unreasoned order and is not sustainable and liable to be quashed. 7. For that the order of CIT is contrary to CBDT instruction No- 20/2015 dated 29thDec 2015 and CBDT directive in F. No- 225/402/2018/ITA.II,....
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....the grounds of appeal before the Tribunal, which reads as under :- 1. That the Assessee is Trust and the main activities of the Trust are Running Hospital and Educational Institutions. The assessee trust is registered u/s 12AA of the Income tax Act. For the financial year 2016-17 relevant to the Assessment year 2017-18 the assessee filed its return of income and other statutory forms electronically and claimed deductions and exemptions allowable under IT Act. 2. That the Assessee case was selected for limited scrutiny under CASS. By issue of Notice u/s 143(2) the assessee was intimated about the issues identified for examination. The issues identified for examinations under limited scrutiny are as under. 1. Depreciation claim 11. Refund claim 111. Cash deposit during demonetization period. 3. That thereafter by issue of Notice u/s 142(1) Ld. Assessing officer called for evidences I information in connection with the issues identified for examination. In compliance to the said notice the assessee submitted relevant Books of accounts, documents/ evidences from time to time. After verification of the, Books of accounts, Bank statements, documents/evidences furnished, ....
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....t. It is evident from the Notice issued u/s 142(1) of the IT Act as well as from the assessment order itself. Copies of the Notice u/s 142(1) and assessment order u/s143(2) furnished before Ld. CIT for verification. 7. That it is also the settled principles of law that jurisdiction u/s 263 can't be exercised on issues which are not subject matter of consideration while passing assessment order u/s 143(3) of the IT Act. Since the present issues were not subject matter of consideration and there is a stipulation on the A.O that he can't travel beyond the issues for which the case was selected for scrutiny, either by not verifying or after verification of these issues not mentioning in the assessment order no error is committed by the A.O to treat the assessment erroneous. Therefore under these facts and circumstances the present assessment can never be erroneous for exercising jurisdiction u/s 263 of the IT Act. 8. That there are two conditions precedent to be satisfied prior to exercise of jurisdiction ul s 263 of the IT Act i. e the assessment must be erroneous and it must be prejudicial to the interest of revenue. The conditions are composite and can't be segrega....
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....ver and it is very negligible. Ld. Assessing officer taking into consideration the nature of activities carried on by the assesse, exigencies of puja expenses for such activities and evidences furnished in support of the expenditure allowed the claim. While allowing the claim of the assesse in the opinion of Assessing officer it was just and proper. 11. That the assesse runs its hospital and educational institutions within the territorial jurisdiction of Bhubaneswar Municipal corporation. The Buildings in which all the activities are carried on spread over an area of 2050820 Sqft. and on the basis of the assessment of Bhubaneswar Municipal corporation, the assesse has paid the Holding tax. The holding tax is a statutory due and it has been paid on the basis of the assessment made by a statutory body. Further the payment has been made through Bank against valid receipts issued by Bhubaneswar Municipal corporation. The in support of such expenditure the assesse furnished the evidences before Ld. assessing officer and after taking into consideration the.details furnished Ld. Assessing officer allowed the claim of the assesse. Copies of the Municipal tax receipts and relevant page o....
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....t, once such fetters are placed on the AO in respect of limited scrutiny, the AO is barred from looking into any other issues other than those issues which are the subject matter in the limited scrutiny. Accordingly, ld. AR submitted that the order passed by the ld. Pr.CIT deserves to be quashed. 7. On the other hand, ld. CIT-DR relied on the order of the ld. Pr.CIT and submitted that the AO should have converted the limited assessment in this case to a complete scrutiny assessment by taking approval/permission from the Pr.CIT/DIT concerned. This inaction on the part of the AO has made the assessment order erroneous and prejudicial to the interest of revenue. Further the ld. CIT-DR has filed his written submissions which reads as under :- This is an assessee's appeal against the order of CIT(Exemptions), Hyderabad u/s.263 of the Act. The gist of the assessee's arguments is that the case was selected under limited scrutiny. The issues raised under limited scrutiny were verified by the A.O. But subsequently the CIT (Exemptions) has passed revision order on the issues which were not the part of limited scrutiny. i.) It was held by the Hon'ble Cochin Tribunal in the c....
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....udiciously on the basis of materials collected by him as also those produced by the assessee before him. The Assessing Officer was statutorily required to make the assessment under Section 143(3) after scrutiny and not in a summary manner as contemplated by Sub-section (1) of Section 143. The Assessing Officer is therefore, required to act fairly while accepting or rejecting the claim of the assessee in cases of scrutiny assessments. The Assessing Officer should protect the interests of the revenue and to see that no one dodged the revenue and escaped without paying the legitimate tax. The Assessing Officer is not expected to put blinkers on his eyes and mechanically accept what the assessee claims before him. It is his duty to ascertain the truth of the facts stated and the genuineness of the claims made in the return. The order passed by the Assessing Officer becomes erroneous when an enquiry has not been made before accepting the genuineness of the claim which resulted in loss of revenue. 7.1 In the present case, the first issue for our consideration is whether the Assessing Officer having failed to convert limited scrutiny into a complete scrutiny, the assessment order would....
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....ed in giving direction to rework MAT income after adding back the provision for doubtful debts. Now, the argument of the Ld. AR that in case of limited scrutiny assessment, the Pr. CIT could not exercise jurisdiction u/s, 263 of the Act, is devoid of merit. Accordingly, the ground relating to challenging of the exercise of jurisdiction by the Pr. CIT u/s, 263 is rejected". ii.) The Hon'ble Cuttack IT AT in the case of Sushant Kumar Chaudhry in ITA No.226/CTK/20I9 has decided the issue in favour of the Revenue by holding in para-I I as under: 11. In our opinion, the contention of Id. AR regarding revisionary power exercised by the Pr.CIT in case of limited scrutiny, is not accepted on the basis of recent decision of the coordinate bench of the Tribunal in case of Baby Memorial Hospital Ltd. (supra). If there is an escapement of income or potentiality of income involved in the issues which has not been done by the AO while completing the limited scrutiny assessment the AO could have obtained the permission from the Id. Pr.CIT if he finds that there is a potentiality of the income. The case law relied on by the Id. DR is for the assessment ,ear 2014-2015 and the assessee'....
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....re is no any whisper regarding revisonary powers that the Pr.CIT/CIT cannot exercise within the statutory limit as prescribed by the Income Tax Act, 1961. If the Pr.CIT/CIT cannot interfere with the limited scrutiny done by the AO, then there mus be any clarification in the CBDT Circular in this regard, which is not found in the Circular. Considering the above case laws and factual aspects, we are of the view that the Id. Pr.CIT has rightly exercised his powers and we do not find any reason to interfere with the same. Accordingly, we dismiss the appeal of the assessee". iii.) Reliance is also placed on the decision of Hon'ble Cuttack ITA T in the case of Maa Tarini Industries Ltd., ITA No.292/CTK/2019, dated 17.03.2020, wherein the issue of limited scrutiny was involved which is similar to the present case. The Hon'ble Cuttack ITAT held in paras-25,28, 29 to 32 as under: "25. On careful consideration of the rival submissions, we are of the view that admittedly and undisputedly, from the copy of the notice by the AO u/s, 142(1) of the Act dated 13.1.2015, it is ample clear that the case of the assessee for assessment year 2014-15 was selected for Limited Scrutiny only ....
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....otice u/s.142(1) initiated enquiry on this issue but after filing reply of the assessee in compliance to the said notice, the AO as an adjudicator and investigator did not bother to deliberate this issue in the assessment order and in our humble opinion, until and unless inquiry started by the AO is terminated to a logical and plausible end, such kind of enquiry has to be held as inadequate and insufficient inquiry on the issues, which makes the assessment order as erroneous and prejudicial to the interest of the revenue. 31. From the material placed before us, we also observe that from the service tax return of the assessee, the assessee had shown Rs. Rs.8,45,95,617/- as gross value of service provided under the head 00440262 (transport of goods by road) and a sum of Rs.15,69,31,397/- as gross value of service provided under the head 00440402 (service provided in relation to mining of minerals, oil or gas) as is revealed from service tax return. However, the assessee had not accounted for the receipt of Rs.8,45,95,617/- in its income. Moreover, this amount of Rs.8,45,95,617/- had been grouped in "note 19"under the head "cost of materials consumed". Thus, the income credited t....
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....ame as appearing in the assessment year 2002-03 except change in figures and it is also true that the very same Members decided the issues for assessment year 2002-03 in favour of the assessee. In such circumstances, the only course left to the Bench was to follow the earlier decision in order to gain confidence of public in the judicial system. In case the learned Accountant Member wanted to deviate from the earlier order, the only course left was to refer the matter to the larger bench with the concurrence of the learned Judicial Member which, in this case had not happened. Hence, I am of the view that the learned Accountant Member should have restrained from dissenting or he should have persuaded the learned Judicial Member for referring the matter to the larger Bench. For the sake of uniformity, at least, the very same Bench should have followed its own order. The Bench should not come to a conclusion contrary to the conclusion reached in the earlier order of the Tribunal. In this case, the Bench being the same, definitely contrary view should not have been taken. In this view of the matter, I totally concur with the view of the Learned Judicial Member in respect of two issues ....
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....sons for scrutiny selection in cases. This functionality is expected to be operationalised by 15th October, 2014. Further, the Assessing Officer while issuing notice under section 142(1) of the Act which is enclosed with the first questionnaire would proceed to verify only the specific aspects requiring examination/verification. In such cases, all efforts would be made to ensure that assessment proceedings are completed expeditiously in minimum possible number of hearings without unnecessarily dragging the case till the time-barring date. 4. In case, during the course of assessment proceedings it is found that there is potential escapement of income exceeding Rs. 10 lakhs (for nonmetro charges, the monetary limit shall be Rs. 5 lakhs) on any other issue(s) apart from the information based on which the case was selected under CASS requiring substantial verification, the case may be taken up for comprehensive scrutiny with the approval of the Pr.CIT/DIT concerned. However, such an approval shall be accorded by the Pr. CIT /DIT in writing after being satisfied about merits of the issue(s) necessitating wider and detailed scrutiny in the case. Cases so taken up for detailed scruti....
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....al in the case of Baby Memorial Hospital Ltd., 111 taxmann.com 189, which was followed by the coordinate bench of this Tribunal in the case of Sushant Kumar Chaudhury, in ITA No.226/CTK/2019, has decided the issue in favour of the revenue. Similar finding was given by this Tribunal in the case of Maa Tarini Industries Ltd., ITA No.292/CTK/2019, order dated 17.03.2020, wherein the issue of limited scrutiny was involved and the same was decided in favour of the revenue. It was also submitted that if this bench is unwilling to follow the decisions rendered in the case of Sushant Kumar Chaudhury (supra) and Maa Tarini Industries Ltd. (supra), the matter should be referred to the larger bench in view of the decision of the ITAT Cochin Third Member in the case of ACIT Vs. Chandragiri Construction Co., 21 taxmann.com 167 (TM). Ld.CIT-DR prayed that the order of the ld.Pr.CIT be upheld or the matter may be referred to larger bench. 10. In view of the above facts, the issues in the present case, is as to whether the Pr.CIT could use his revisonary power to direct to make the addition by holding the assessment order erroneous and prejudicial to the interest of the revenue on the issues whic....
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....ck. This issue is nowhere connected to the issue of excess liability shown or disallowance u/s.40A(3) of the Act. This is absolutely fresh unconnected issues, which the Pr.CIT has picked up. A revision u/s.263 is permissible when an assessment order is shown to be erroneous and prejudicial to the interest of the Revenue. Both the conditions are compulsorily to be there. In the present case, admittedly, the assessment order is a limited scrutiny assessment and no error in respect of the said assessment order passed in respect of limited scrutiny issues have been pointed out by the Pr. CIT for the purpose of invoking the powers u./s.263 of the Act. On this ground itself, the order passed by the Pr. CIT u/s.263 is liable to be quashed and we do so. 12. Coming to the issue of the decision of Co-ordinate Bench of this Tribunal in the case of Sri Sushant Kumar Choudhury (supra) The facts in the said case were that the pr. CIT mentioned that the order of the AO is erroneous insofar as he did not ask for permission for complete scrutiny and to that extent, the assessment order was erroneous and prejudicial to the interest of the Revenue. In the present case, there is no such averment by....