Longia Engineers Vs PCIT (ITAT Chandigarh)
ITAT held that matter relating to wages/labour expenses which was not subject matter of limited scrutiny cannot be raised in revisionary proceedings u/s 263 for the first time. It is now a settled position as held by the various Benches of the Tribunal that the matter which was not subject matter of limited scrutiny cannot be raised in revisionary proceedings u/s 263 and thereby enlarging the scope of limited scrutiny and broadening the scope of jurisdiction that was originally vested with the A.O.
FULL TEXT OF THE ORDER OF ITAT CHANDIGARH
This is an appeal filed by the assessee against the order of Learned Principal Commissioner of Income Tax , Chandigarh-1 [in short the ‘Ld. Pr. CIT’] passed u/s 263 of the Income Tax Act, 1961 (in short ‘the Act’) dated 23/03/2021 for assessment year 2016-17, wherein the assessee has taken the following grounds of appeal:
“That the Ld. Principal Commissioner of Income Tax has wrongly assumed jurisdiction under section 263 of the Act to set-aside the assessment order dated 25.08.2018 passed by the Assessing Officer in as much as the order is neither erroneous nor prejudicial to the interest of Revenue and as such the assumption of jurisdiction under section 263 of the Act is beyond his competence.
That the Ld. Principal Commissioner of Income Tax has erred in failing to consider the various replies and submissions placed on record in proceedings before her in the correct perspective which is arbitrary and unjustified.
That the assessment order having been passed by the Assessing Officer after due application of mind and taking into consideration the various replies, material on record and books of account, the action resorted to by the Principal Commissioner of Income Tax is unwarranted and uncalled for.
That the Ld. Principal Commissioner of Income Tax has failed to carry out any enquiry during the course of revisionary proceedings in respect of the issues being raised by her which is mandatory and as such the order passed by her is arbitrary and unjustified.
That the issues in respect of sales/turnover/receipt was scrutinised by the Assessing Officer in depth and as such revising the order passed by the Assessing Officer is arbitrary and unjustified
That the order of Commissioner of Income tax is erroneous, arbitrary, opposed to the facts of the case and is unsustainable in law.”
2. Briefly the facts of the case are that the assessee has filed his return of income declaring total income of Rs. 4,71,510/- which was selected for limited scrutiny under CASS and thereafter, after issuance of notice and calling for necessary information / documentation, the assessment was completed under section 143(3) of the Act vide order dt. 25/08/2018 wherein the returned income filed by the assessee was accepted. Subsequently, the assessment records were called for and examined by the Ld. Pr. CIT and a show cause dt. 06/03/2021 was issued and thereafter, after taking into consideration the submissions filed by the assessee but not finding the same acceptable, the assessment order passed by the AO was held erroneous in so far as it was prejudicial to the interest of the Revenue and same were set aside to the file of the AO to pass a fresh order after making necessary inquiry / investigation in light of discussions made in the impugned order.
3. Against the said findings and the order of Ld. Pr. CIT, the assessee is in appeal before us.
4. During the course of hearing, our reference was drawn to the various notices/questionnaire issued by the AO dated 3/07/2017, 28/07/2017, 8/06/2018, 27/06/2018, 29/06/2018 and 13/07/2018 and the responses/submissions filed by the assessee from time to time in response to the said notices during the course of assessment proceedings and it was submitted that the matter has been duly examined by the AO. Further, our reference was drawn to the relevant findings of the Ld. Pr. CIT which are contained at para 5 to 5.1 of the impugned order which read as under:
“5. The facts of the case are that the assessee is a contractor and he is also selling the goods to different parties. The assessee is having retail outlet for electric goods and is doing contractor work for Air Force. As per Profit and Loss account, the assessee has declared sales/receipts from job work at Rs. 1,36,73,469/-, the breakup of which is as under:-
