Late Smt. Gurbachan Kaur Vs DCIT (ITAT Jaipur)
If the A.O. has taken up the issue of determining fair market value of the property in question as on 01/4/1981 without converting the limited scrutiny to comprehensive scrutiny by taking the prior approval of the competent authority then the said order passed by the A.O. will be nullity as beyond his jurisdiction. The AO neither in the assessment order nor in the assessment proceedings sheet has mentioned about any proposal of converting the limited scrutiny to comprehensive scrutiny and consequential approval of the Competent Authority being Principal CIT/DIT. The ld. Counsel for the assessee has produced the certified copy of the assessment proceedings sheet which does not contain any such proposal of the AO for expanding the limited scrutiny to complete scrutiny. Further, the revenue has also not produced anything to show that the AO has obtained the necessary approval from the Competent Authority for conversion of the limited scrutiny to comprehensive scrutiny. Accordingly, the issue which is taken up by the AO in the proceedings under section 154 is illegal and void being beyond his jurisdiction to frame the limited scrutiny assessment. Accordingly, we set aside and quash the order passed by the AO under section 154 of the Act.
FULL TEXT OF THE ITAT JUDGMENT
This appeal by the assessee is directed against the order dated 15/03/2019 of ld. CIT(A)-I, Jaipur arising from the order passed U/s 154 of the Income Tax Act, 1961 (in short, the Act). The assessee has raised following grounds of appeal:
“1. That in the facts and in circumstances of the case and in law, ld. A.O. has grossly erred in passing order U/s 154 of the Act after passing the assessment order U/s 143(3) of the Act which is without jurisdiction and barred by the law and thus is bad in law, is null and void and deserves to be quashed and set aside.
1.1 That in the facts and in circumstances of the case and in law, ld. Lower authorities grossly erred in issuing notice u/s 154/155 of the Act dated 07/07/2017 on the basis of DVO report received subsequent to passing of assessment order u/s 143(3) of the Act dated 27/12/2016 and in passing order u/s 154 of the Act dated 22/08/2017.
2. That on the law and in the facts and circumstances of the case the ld. Lower authorities grossly erred in calculation long term capital gain at Rs. 75,25,770/- as against Rs. 14,71,577/- adopted by the assessee.
2.1 That on the law and in the facts and in the circumstances of the case the ld. Lower authorities grossly erred in adopting the fair market value of the property as at 01/04/1981 at Rs. 1,57,000/- as against Rs. 8,01,749/- adopted by the assessee.
3. The appellant craves leave to add, alter, modify or amend any ground on or before the date of hearing.”
The assessee has also raised additional ground, which reads as under:
“That the ld. A.O. grossly erred in referring the matter to the ld. Departmental Valuation Officer u/s 55A of the Act which was beyond the scope of Limited Scrutiny Assessment and thus entire action is bad in law, nullity and void and deserves to be quashed and set aside.”
2. We have heard the ld counsel of the assessee as well as the ld DR and considered the relevant material on record for admission of the additional ground. The ld counsel of the assessee has submitted that the additional ground raised by the assessee is purely legal in character and goes to the root of the matter and therefore, the same may be admitted for adjudication on merits. In support of his contention, he has relied upon the judgment of the Hon’ble Supreme Court in the case of NTPC Vs CIT (1998) 229 ITR 383 (SC).
3. On the other hand, the ld DR has objected to the admission of the additional ground and submitted that the assessee has not raised such objection either before the A.O. or before the ld. CIT(A).
4. Having considered the rival submissions and carefully perusal of the record we note that the assessee has not raised this issue of validity of the addition made by the A.O. on the issue of long term capital gain and particularly fair market value as on 01/4/1981 on the ground of jurisdiction of the A.O. beyond the Limited Scrutiny. The assessee has questioned the validity of the assessment of long term capital gain on the point that the assessment was taken up by the A.O. in CASS for limited scrutiny on the issue of deduction claimed by the assessee U/s 54 of the Act, large amount of sale consideration of the property reported in the return of income but less than the sale considered reported in the TDS return U/s 194IA of the Act and cash deposit in the savings bank account of the assessee, therefore, the issue of fair market value of the property as on 01/04/1981 was not within the scope of limited scrutiny which cannot be expanded without prior approval of the appropriate authority. Further the scope of the limited scrutiny cannot be expanded while passing the order U/s 154 of the Act when the said issue was not within the scope of scrutiny assessment. Therefore, the issue raised in the additional ground is purely legal in nature and can be adjudicated on the basis of facts and material available on assessment record. Accordingly, we admit the additional ground for adjudication.
4.1 On merits, the ld. Counsel has submitted that the order passed by the A.O. U/s 154 of the Act is invalid as the same is beyond the scope of scrutiny assessment undertaken by the A.O. In support of his contention, he has relied upon the following decisions:
(i) CBS International Projects Pvt. Ltd. Vs CIT dated 28/02/2019 passed by the Hon’ble ITAT, New Delhi.
(ii) Sarvajit Bhatia Vs ITO, Faridabad dated 21/08/2019 passed by the Hon’ble ITAT, New Delhi.
(iii) Shri Vijay Kumar Vs ITO, Patiala dated 12/09/2019 passed by ITAT, Chandigarh.
(iv) Lokesh Sadashiv Shetty Vs ITO, Ahmednagar, dated 20/02/2019 passed by ITAT, Pune.
5. On the other hand, the ld DR has submitted that when the scrutiny assessment was taken up on the issue of sale consideration of the property sold by the assessee as well as the deductions claimed by the assessee under Chapter-IV of the Act then the determination of the fair market value of the property is very much within the scope of scrutiny assessment.
6. We have considered the rival submissions as well as relevant material on record. There is no dispute that the case of the assessee was selected for limited scrutiny under CASS and the scope of limited scrutiny is discernable from the notice issued U/s 142(1) dated 07/04/2016 as under:
“Specific queries raised, for which information to be furnished:
