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2023 (4) TMI 1301 - AT - Income TaxRevision u/s 263 - as per CIT activity of taking loans not examined by AO - extension of scope of limited scrutiny - queries so raised by the AO during the course of assessment proceedings which was for Limited Scrutiny only to verify the“ Deduction against income from other sources” - HELD THAT:- The assessee had filed, names, complete address, IT PAN of persons to whom said interest paid along with their confirmation letters. The said documents have also been placed on record before us in paper book and all the said details so filed before Revenue Authorities goes to show that those were examined by the AO and accordingly order of assessment accepting the returned income was passed. Verification of extra interest PCIT raised the issue of non verification of fresh loans by the AO, but in this context we further noticed that the assessee had filed confirmation letters of each of the fresh unsecured loan creditors having complete address and PAN number and that being so, assessee had already discharged his onus to prove the genuineness and identity of the said loan creditors, so the conduct of the assessee cannot be said to be found to be faulty. Even otherwise, the case of the assessee was selected for Limited Scrutiny to verify the “Deduction against income from other sources” only. Therefore, by any stretch of imagination it was out of purview of the AO to verify the fresh loan creditors. The ambit of the assessment for Limited Scrutiny under CASS was admittedly in relation to the verification of “ Deduction against interest income from other sources” in response to which the assessee had already furnished complete documents relating to interest expenses claimed against the interest income under section 56 of the IT Act under the head Income from other sources. Even otherwise, the AO could not have travelled beyond enquiry into the interest expenses in view of CBDT Instruction No. 7/2014, 20/2015 and 5/2016 and also the CBDT letter dated 30 Nov. 2017 and thus asking for further details was beyond the purview of assessment. AO made enquiries on the issue and the assessee complied with the enquiry and filed all the required details. Thus, it is not a case where the AO made no enquiry or verification which should have been made. Thus the proceedings under section 263 is a step to start again a second scrutiny/investigation of facts without there being any material to hold even prima facie that the assessment order passed by AO was erroneous which was not valid in the eyes of law. Thus in case of limited scrutiny, the AO is duty bound to restrict himself to examine the matters for which matter was selected for limited scrutiny and where the AO takes a view and forms a reasonable belief that some other matters are required to be examined, the same will in effect be traversing beyond the scope of limited scrutiny which is not permissible unless the matter is converted into complete scrutiny and which has not happened during the course of present assessment proceedings. Therefore, the issue of activity of taking loans, i.e. how the amount is utilized, what is the rate of interest paid, what is the rate of interest charged, which are held by the ld PCIT as matters not being examined by the AO, are matters which are not part of the reasons for which the case was selected for limited scrutiny, therefore, no fault lie on the part of the AO resulting in order being held as erroneous and prejudicial to the interest of revenue. As far as matters for which case was selected for limited scrutiny for the reason of “Deduction against income from other sources”, the same has been duly examined by the AO - Appeal of the assessee is allowed.
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