Preetiben Chhatrasingh Chauhan Vs PCIT (ITAT Surat)
ITAT Surat held that AO cannot go beyond reason for which matter was selected for limited scrutiny. Thus, PCIT cannot pass revisionary order u/s. 263 of the Income Tax Act on other aspects outside the scope of limited scrutiny.
Facts- The assessee earned income from house property, business, agriculture income, and income from other sources during the year. The case was selected for limited scrutiny assessment, on the issue that assessee has introduced capital during the year, which is very high as compared to the profit after tax of the assessee. The assessment was completed u/s 143(3) on 13.01.2021 accepting the returned income as such.
Later on, PCIT has exercised his jurisdiction u/s 263 of the Act. On perusal of assessment records, it was noticed by PCIT that assessee has introduced capital in M/s Sai Nath Petroleum from various sources after claiming capital gains and business income on sale of land and a number of The computation of such transaction which led to build of capital in Sai Nath Petroleum was also perused and it was noted by PCIT that there is huge discrepancy which needs to be explained by the assessee, considering these facts a notice was issued to the assessee on 10.03.2023 stating that why assessment framed for assessment year (A.Y) 2018-19 should not be revised u/s 263.
PCIT held that AO has passed the assessment order without making inquiries or verification on the issue which ought to have been made in the assessee`s case therefore the assessment order u/s 143(3) of the Act by AO is erroneous in so far it is prejudicial to the interest of revenue. Therefore, PCIT directed AO to frame the assessment de- novo after making proper enquiries. Being aggrieved, the present appeal is filed.
Conclusion- Hon’ble Delhi High Court in the case of Balvinder Kumar Vs Pr. CIT has held that in case of limited scrutiny, Assessing Officer could not go beyond reason for which matter was selected for limited scrutiny thus, it would not be open to Principal Commissioner to pass revisionary order under section 263 on other aspects and remit matter to Assessing Officer for fresh assessment.
Held that an assessment or re-assessment could only be revised u/s 263 of the Act in case it satisfies the twin conditions, viz: order is erroneous as well as prejudicial to the interest of In the case of assessee, order passed u/s 143(3) of the Act is neither erroneous nor prejudicial to the revenue, as it was passed after detailed examination and proper verification of all documents of subject matter of limited scrutiny.
FULL TEXT OF THE ORDER OF SURAT ITAT DELHI
By way of this appeal, the assessee has challenged the correctness of the order dated 30.03.2023 passed by the Learned Principal Commissioner of Income-Tax-Valsad (in short “Ld PCIT”) under section 263 of the Income-Tax Act, 1961 (hereinafter referred to as ‘the Act’), for the assessment year 2018-19. Grievances raised by the assessee, are as follows:
“1. On the facts and circumstances of the case as well as law on the subject, the revision order passed by the learned Principal Commissioner of Income Tax, Valsad u/s 263 of the Act for assessment year 2018-1 9 without considering our detailed submission made in reply to the show cause notice issued.
2. On the facts and circumstances of the case as well as law on the subject, the Principal Commissioner of Income Tax, Valsad erred 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. On the facts and circumstances of the case as well as law on the subject, the Principal Commissioner of Income Tax, Valsad erred in passing order u/s 263 of the act without considering the fact that the profit on sale of shop has already been shown as business income.
4. On the facts and circumstances of the case as well as law on the subject, the Principal Commissioner of Income Tax, Valsad erred in invoking power u/s 263 of the Act on the issues which were never part of the show cause notice given.
5. It is prayed that order passed by Learned Principal Commissioner may please be quashed.
6. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal.”
2. Succinctly, the factual panorama of the case is that assessee before us is an Individual. The assessee has earned income from house property, business, agriculture income and income from other sources during the year for assessment year 2018-19. The assessee filed her return of income on 03.2019, declaring total income at Rs.1,39,88,280/-. The case was selected for limited scrutiny assessment, on the issue that assessee has introduced capital during the year, which is very high as compared to the profit after tax of the assessee. The assessment was completed u/s 143(3) on 13.01.2021 accepting the returned income as such.
3. Later on, Ld PCIT has exercised his jurisdiction u/s 263 of the Act. On perusal of assessment records, it was noticed by ld PCIT that assessee has introduced capital in M/s Sai Nath Petroleum from various sources after claiming capital gains and business income on sale of land and a number of The computation of such transaction which led to build of capital in Sai Nath Petroleum was also perused and it was noted by ld PCIT that there is huge discrepancy which needs to be explained by the assessee, considering these facts a notice was issued to the assessee on 10.03.2023 stating that why assessment framed for assessment year (A.Y) 2018-19 should not be revised u/s 263. The copy of notice issued to the assessee is reproduced below:
“In this case assessment u/s 143(3) was completed on 13.01.2021 accepting the returned income i.e. Rs.1,39,88,280/-. On verification of record, it is noticed that in the computation of income filed by the assessee the long term capital gain of Rs.36,75,845/- has been disclosed after claiming indexed cost of acquisition and indexed cost of improvement. The long term capital gains of Rs.36,75,854/- has been determined in the following manner:
