TaxTMI 
TaxTMI 
2025 (3) TMI 1166
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....sessment Centre, Delhi does not speak about any enquiry or investigation done in the matter. He thus opined that the order so passed is erroneous and prejudicial to the interest of the Revenue. Further ld. PCIT observed that the deduction claimed u/s 54 of the Act at Rs. 5,00,00,000/- was allowed by the Assessing Officer, however, as the assessee has sold the land and has not invested the entire amount of sale consideration in the acquisition of the house property, only proportionate deduction should be allowed. According to Ld. PCIT, the same is worked out at Rs. 4,67,16,151/- as against Rs. 5,00,00,000/- allowed by the AO in the order passed u/s 143(3) of the Act. The Ld. PCIT further observed that assessee has declared the sale consideration on the basis of the agreement of sale/registered sale deed whereas the sale price as per provisions of section 50C being higher. Thus, the provisions of section 50C are to be invoked. This fact has not been examined by the Assessing Officer. Accordingly, the Ld. PCIT vide order passed u/s 263 of the Act has held the order so passed u/s 143(3) as erroneous in so far as it is prejudicial to the interest of Revenue and direct the AO for passing....
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.... in favour of the assessee. 7. That the order of the Ld. PCIT does not comply with principles of natural justice and the same has been passed without affording proper specific lawful opportunity to the assessee. As such too, the order u/s 263 deserves to be quashed. 8. That the order of the Ld. PCIT is against law and facts of the case involved. 9. That the Grounds of Appeal as herein are without prejudice to each other. 10. That the appellant craves leave to add, amend, modify and/or forgo any of the grounds of appeal before or at the time of hearing." 5. Before us, the Ld. AR of the assessee argued that the case was selected for limited scrutiny and after examination of the reason for limited scrutiny i.e., deduction claimed against the long term capital gain, the assessment order was passed accepting income declared by the assessee. The allegation of Ld. PCIT with regard to the application of provisions of section 50C, it is submitted that the same is beyond the scope of limited scrutiny, therefore, the same could not be considered for holding the order as prejudicial as well as erroneous, as the AO was not supposed to examine or visit on t....
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....the first issue, we find that the AO himself while passing the order in compliance to the directions given in the order u/s 263 has allowed the deduction u/s 54 of the Act at Rs. 5,00,00,000/- as claimed by the assessee, and, therefore, their remained no question to hold to assessment order as erroneous and prejudicial to the interest of Revenue on this point. It is also seen from the effect order dated 21.03.2024 that the deduction claimed/s 54 of the Act at Rs. 5,00,00,000/- was offered for the tax after expiry of three years in AY 2021-22 when the assessee has failed to make investment as per law, therefore, if any further addition/disallowance is made in the year under appeal it would be double taxation. Thus, this issue does not service for consideration at this stage. 10. With regard to the second issue of application of provisions of section 50C, it is seen that in the instant case, the case of assessee was selected for limited scrutiny for the reason "Capital Gains deduction claimed". The Assessing Officer while completing the assessment has already examined this issue and completed the assessment. Now alleging that the AO has not examined the applicability of section 50....
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....iny under CASS and the issue which the Commissioner sought to reopen namely, the issue of disallowance under section 14A of the Act, read with Rule 8D in respect of the exempt income was not one of the issues which was selected for scrutiny. The learned Tribunal in paragraph 2 of its order has set out the three items which have been selected for scrutiny namely, (i) Introduction of capital in NBFC/investment company; (ii) large deduction claimed u/s. 57 of the Act; and (iii) Mismatch of amount paid to related persons u/s. 40A(2)(b) reported in audit report and ITR. 5. If that is the undisputed factual position, we find the reasoning given by the learned Tribunal is fully justified. That apart, the learned Tribunal has rightly pointed issued out that the CBDT has issued....................... 6. A bare reading of the of the above Instruction clearly shows that the PCIT cannot make a roving enquiry in the quise of a limited scrutiny and as such the instruction issued by the CBDT is binding on the Department. Hon'ble Orrisa High High Court on similar circumstances in the case of Pr. CIT v. Shark Mines & Minerals (P.) Ltd. [2023] 151 taxmann.com 71 (Orissa) has hel....