Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2022 (8) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (8) TMI 1334 - AT - Income TaxRevision u/s 263 - CIT modifying the assessment order passed u/s.143(3) under “limited scrutiny”- whether the Pr. CIT could use his revisionary powers to direct to make the addition by holding the assessment order erroneous and prejudicial to the interest of the Revenue on issues which are not connected issues to the issues which have been raised in the limited scrutiny in an assessment proceedings? - HELD THAT:- In the Instructions, it is categorically mentioned that in the case of Limited Scrutiny, AO cannot go beyond the issues which have been directed under the limited scrutiny. Once such fetters are placed on the AO in respect of limited scrutiny, the AO is barred from looking into any other issues other than those issues which are raised in the limited scrutiny. There could be such cases, where the AO while looking into issues which have been raised in the limited scrutiny, connected issues come up which could result in under assessment or escapement of assessment. It is in such cases, the AO is to take permission from the CCIT/Pr. CIT to expand the scope from limited scrutiny to complete scrutiny. Once such permission is granted and complete scrutiny is permitted, everything is opened to the AO to examine. Thus, in order to convert into a completed from limited scrutiny, connected issues should come up from limited scrutiny to give powers of the AO is to expand and get the permission for the complete scrutiny. In no other cases, the AO can go beyond what is directed in the limited scrutiny. Limited scrutiny was in relation to excess liability shown in respect of trade payable and second issue was disallowance u/s 40A(3) - The show cause notice in respect of 263 shows that the issue was in respect of adoption of FIFO method of valuation of its closing stock. This issue is nowhere connected to the issue of excess liability shown or disallowance u/s.40A(3) of the Act. This is absolutely fresh unconnected issues, which the Pr.CIT has picked up. A revision u/s.263 is permissible when an assessment order is shown to be erroneous and prejudicial to the interest of the Revenue. Both the conditions are compulsorily to be there. In the present case, admittedly, the assessment order is a limited scrutiny assessment and no error in respect of the said assessment order passed in respect of limited scrutiny issues have been pointed out by the Pr. CIT for the purpose of invoking the powers u./s.263 of the Act. On this ground itself, the order passed by the Pr. CIT u/s.263 is liable to be quashed and we do so. Coming to the issue of the decision in the case of Sri Sushant Kumar Choudhury [2020 (10) TMI 249 - ITAT CUTTACK] - The facts in the said case were that the CIT mentioned that the order of the AO is erroneous insofar as he did not ask for permission for complete scrutiny and to that extent, the assessment order was erroneous and prejudicial to the interest of the Revenue. In the present case, there is no such averment by the pr. CIT. Even assuming such averment is there, the order of revision would be unsustainable insofar as the issue raised by Pr. CIT is in no way connected to the issues that have been raised in the limited scrutiny assessment. Thus, the decision in the case of Sri Sushanta Kumar Choudhury (supra) is clearly distinguishable. Therefore, the prayer of the ld CIT DR that the matter be referred to Larger Bench also does not survive insofar as the facts of the present case and in the said decision in the case of Sri Sushanta Kumar Choudhury (supra) is fully distinguishable. This view of ours in respect of revision u/s.263 vis-à-vis limited scrutiny is also supported by the decision in the case of Smt. Padmavathi [2019 (12) TMI 399 - ITAT CHENNAI] which has been approved by Hon’ble Madras High Court as also the decision in the case of Balvinder Kumar [2021 (3) TMI 649 - ITAT DELHI] and Rajani Venkata Naga Annavarapu Narayana [2021 (7) TMI 607 - ITAT DELHI] and case of Akash Ganga Promoters and Developers [2019 (12) TMI 973 - ITAT CUTTACK] - In the circumstances, the revisionary order passed by Pr. CIT is found to be erroneous and same is quashed. Appeal of the assessee is allowed.
|