Hirenkumar Lavjibhai Kanani Vs PCIT (ITAT Ahmedabad)
ITAT Ahmedabad held that the revisionary jurisdiction under section 263 cannot be exercised to widen the scope of the original assessment beyond the specific reasons recorded for reopening the assessment.
Facts- The reassessment proceedings were initiated for the limited scrutiny purpose of verifying the applicability of the provisions of Section 2(22)(e) of the Act, which deals with “Deemed Dividend”. AO, after considering the submissions and explanations provided by the assessee, made an addition of Rs. 3,50,000/- to the income of the assessee, treating it as deemed dividend u/s. 2(22)(e) of the Act.
Subsequently, PCIT initiated revisionary proceedings u/s. 263 of the Act, alleging that the AO had not properly examined two issues i.e. cash deposits amounting to Rs. 6.12 lakhs in the assessee’s bank account, and the purchase of two immovable properties valued at Rs. 40 lakhs and Rs. 26.92 lakhs. PCIT, passed order u/s 263 and set aside the order of AO passed on 27-03-2022 u/s 147 r.w.s. 144 read with section 144B of the Act.
Being aggrieved, the present appeal is filed.
Conclusion- PCIT has attempted to revise the assessment order by bringing in issues related to cash deposits and the purchase of immovable properties, which were outside the purview of the notice for reassessment. The revisionary jurisdiction under section 263 cannot be exercised to widen the scope of the original assessment beyond the specific reasons recorded for reopening the assessment. Moreover, the assessee had provided sufficient explanations and evidence during the reassessment proceedings regarding the unsecured loans received from M/s. Yash EPC Projects Pvt. Ltd., and the AO had duly considered these submissions before making the addition under section 2(22)(e). Thus, the assessment order cannot be termed as erroneous or prejudicial to the interests of the revenue merely because the Ld. PCIT holds a different view on unrelated issues.
