TaxTMI 
TaxTMI 
2023 (10) TMI 262
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....ed in passing order u/s 263 of the Act when order passed by assessing officer is neither erroneous nor prejudicial to the interest of revenue. 3. It is prayed that order passed by Learned Principal Commissioner may please be quashed. 4. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal." 3. The facts necessary for disposal of the appeal are stated in brief. The assessee before us is an Individual and filed return of income for assessment year (A.Y.) 2018-19, declaring total income at Rs. 1,40,74,210/-. The assessee`s case was selected for limited scrutiny and assessment was completed u/s 143(3) of the Act on 24.02.2021, determining total at Rs. 1,42,58,400/-. The assessee`s case was subjected to audit and the audit party observed that the assessee has debited the loan processing fee amounting Rs. 59,236/- to the profit and loss account. Prima facie, this amount appeared to be a capital expenditure and should have been added back in computation of income. The ACIT and the Range Head both have accepted the audit objection and recommended the case for action u/s 263 of the Act. 4. Therefore, ld ....
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.... Facility was availed to manage the day-to-day business activities of the assessee and Further, this loan was neither for purchase of any fixed assets nor for purchase of any properties of business. Since said overdraft facility was to manage day to day business of the assessee, the loan processing charges paid of Rs. 59326/- is a revenue nature, and it is not a capital nature and accordingly, the assessee had debited said processing charges to his profit and loss a/c. We further submit that; We submit that Assessee's return was selected for limited scrutiny through CASS (in faceless mode) on issue of substantial increase in capital. Copy of Notice u/s 143(2) is enclosed herewith for your honour's perusal. Kindly Refer to Encl (2) Later, to verify the sources of substantial increase in capital, the LD AO had issued detailed questionnaire u/s 142(1) of the IT Act and asked explanation and justification of sources of substantial increase in capital with evidences. Copy of notice u/s 142(1) of the IT Act is enclosed herewith for your honour's perusal. Kindly Refer to Encl (3) Against the said notice u/s 142(1) ....
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....tiny. Further, the requirement in law that if the AO has to go beyond the scope of the issues for which 'limited scrutiny' has to be undertaken by him, he has to seek prior permission of the superior officer in terms of the CBDT Instruction No.7/14 dated 26th September, 2014 and Instruction No.20/15 dated 19th December, 2015. As per the CBDT instruction No.20/2015 dated 29/12/2015 and instruction no 05/2016 dated 14-07-2016 the Assessing Officer in case of "Limited Scrutiny" can only examine those issues for which, the case has been selected or the issue mentioned therein. If the AO of the view that there is a potential escapement of income, he may convert, the "Limited Scrutiny" into "Complete Scrutiny" but such view should be reasonable view based on credible information or material available on record. Furthermore, there should be direct nexus between such, view and information/material." 6. However, the ld. PCIT has rejected the contentions of the assessee and directed the assessing officer to examine other issue which was not the subject matter of notice under section 263 of the Act. The ld. PCIT observed that from the perusal of balance sheet from "additio....
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....l or other capital. In this regard, the ld Counsel took us through the findings of the assessing officer, which are reproduced below: "1. The case was selected for Limited Scrutiny assessment under the E-assessment Scheme, 2019 on the following issues:- S. No. Issues i. Share Capital/Other capital 2. After perusal of the return of income, material available on record and the reply filed to the notice u/s 142(1) of the Income Tax Act, 1961, the explanation of the assessee on the above issue is accepted and no addition is made. 3. The assessment of income is done as per computation sheet and the sum payable is determined as per the demand notice." 10. Therefore, Ld. Counsel contended that the assessee's case was selected for 'limited scrutiny' to verify the share capital or other capital. However, the ld. PCIT has exercised the jurisdiction on the issue which was not subject matter of 'limited scrutiny'. In the case of 'limited scrutiny', the Assessing Officer does not have power to examine the entire items of the return of income and, the Assessing Officer restricted only to the extent of issues for which the 'limited scrutiny, has been initiated.....
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....M. S. Gill vs The Chief Election Commission 1978 AIR SC 851 held "The dichotomy between administrative and quasijudicial function vis-à-vis the doctrine of natural justice is presumably obsolescent after Kraipak (A.K. Kraipak vs UOI AIR 1970 SC 150) which makes the water-shed in the application of natural justice to administrative proceedings. The rules of natural justice are rooted in all legal systems and are not any new theology. They are manifested in the twin principles of nemo judex in parte sua (no person shall be a judge in his own case) and audi alterem partem (the right to be heard). It has been pointed out that the aim of natural justice is to secure justice. 13. We note that Hon`ble Supreme Court in the case of Amitabh Bachchan 384 ITR 0200 (SC), held that opportunity of hearing should be provided by Principal Commissioner of Income Tax (PCIT) to the assessee during revision proceedings. The findings of the Hon`ble Supreme Court is reproduced below ( to the extent useful for our analysis): "9. Under the Act different shades of power have been conferred on different authorities to deal with orders of assessment passed by the primary authority. While Se....