Shail Gas Pvt Ltd Vs PCIT (ITAT Delhi)
ITAT Delhi held that order under section 263 of the Income Tax Act passed on the issues for which no show cause notice has been issued is unjustifiable and hence liable to be quashed.
Facts- The assessee filed return of income on 30.03.2016 declaring Nil income and the assessment u/s 143(3) was completed on 09.08.2017 assessing the total income at Rs.21,630/- after making disallowance u/s 14A of the Income Tax Act, 1961. Thereafter PCIT exercising its jurisdiction u/s 263 issued show cause notice on 24.03.2021 fixing matter for 26.03.2021 with the allegation that AO failed to omitted to consider issue in respect of income u/s 56(2)(via). After receiving the replies from the assessee, PCIT set aside the Assessment Order and directed the AO to assess the case afresh. Being aggrieved, the present appeal is filed.
Conclusion- Order u/s 263 based partially on the issue raised in the notice and also on entirely new issue without any SCN or without providing any opportunity is beyond the mandate of section 263.
Held that, the order of the ld. PCIT passed u/s 263 cannot be affirmed owing to the reasons of, i) the order is passed beyond jurisdiction, ii) the order passed is beyond the limited scrutiny, iii) the order has been passed on the issues for which no show cause notice has been issued, iv) the issues flagged by the ld. PCIT have examined by the AO, v) the decision of the ld. PCIT determining the difference on the value of the shares at Rs.1.50 per share is against the provisions of the Act as the assessee can resort to the method of valuation as per DCF/NAV as per Rule 11UA at their discretion.
