Brief of the case:
- The ITAT Amritsar bench in the above cited case held that the scrutiny of cases selected on the basis of information received through Annual Information Return (AIR) would be limited only to the aspects of information received through AIR. Therefore, any enquiries made beyond verifying the AIR transaction would result in crossing the scope of limited scrutiny which is not allowed unless there is a potential escapement more than 10 lacs and prior approval of the Commissioner is sought in this behalf.
- Therefore, when in AIR transaction was reported that assessee made cash deposit of Rs. 25 lacs in her bank account , the AO’s scope is limited to verify only the source of such deposit and therefore, examination made relating to calculation of capital gain is not allowed as the same is beyond the scope of limited scrutiny.
Facts of the case:
- AO issued a notice u/s 143(2) APB-8 dated 21.09.2012 to the assessee, seeking information in connection with the return of income submitted by the assessee on 17.10.2011, for the year under consideration. The said notice is marked “AIR only”.Thereafter, the AO issued to the assessee, a notice (APB-9) dated 15.07.2013 under section 142(1) of the Act in which a detailed questionnaire was issued to assessee to be answered with the necessary documents.
- Assessee objected the questionnaire stating that the scrutiny was picked on the basisof AIR information, therefore, AO cannot ask for any details beyond the transaction reported in AIR.
- In response to the AO’s query, (Question no.11 of the Questioner), regarding the source of the alleged cash deposit of Rs. 25 lakhs in the assessee’s savings bank account with O.B.C, the assessee stated that she had sold her residential house for Rs.32.25 lakhs on 15.05.2010 and the proceeds thereof, i.e., Rs. 7 lakhs received by cheque and Rs.25.25 lakhs by cash were deposited in her savings bank account with O.B.C. In support, she filed a copy of the sale deed (APB 13-14) and a copy of her saving bank account with OBC.
- AO also examined the tax treatment made by assessee of the above sale and observed that assessee has claimed an exemption of Rs.11.92 lacs on acquisition of plot of land acquired on 28.07.2009.AO denied such exemption observing that investment in plot of land not allowed as exemption u/s 54.
- CIT(A) also upheld the order of AO denying exemption u/s 54 and observed the AO has not violated the instructions issued by the CBDT governing AIR cases in any way as he has limited his enquiries to the source of cash deposits in the bank account of the assessee and further logical conclusion because the cash deposits in the bank account of the assessee were found to be explained with the help of sale proceeds of house property but the AO is also duty bound to see whether the assessee has correctly declared taxable value of the long term capital gains from the sale of her residential house while filing the return of income.
- Aggrieved assessee is in appeal before ITAT.
Contention of the Assessee:
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