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2021 (10) TMI 1400 - AT - Income TaxRevision u/s 263 - scope of limited scrutiny or expanded the scope of limited scrutiny - assessee’s case was selected under limited scrutiny category on Low income in comparison to high loan / advances / investments in shares appearing in balance-sheet and Minimum alternate tax (MAT) liability mismatch - HELD THAT:- Perusal of the notices issued u/s 142(1) as well as 143(2) make it clear that in course of assessment proceedings, AO did examine both the issues for which assessee’s case was selected for scrutiny - in response to query raised by the AO from time to time, the assessee had furnished all relevant and necessary details relating to loans and advances given and investment made in shares as appearing in balance sheet. AO has conducted necessary enquiry on the issues for which case was selected for scrutiny and after applying his mind to the materials on record, has completed the assessment. As per CBDT instruction No.20/2015 dated 29-12-2015, in limited scrutiny cases the reasons / issues shall be verified as communicated to the assessee concerned and the questions u/s 142(1) of the Act shall remain confined only to a specific reasons / issues for which the case has been taken up for scrutiny - the scope of enquiry by the assessing officer shall be restricted to the limited scrutiny issue. The aforesaid position stands reiterated in CBDT Instrn. No.5 of 2016 dated 14-07-2016. Thus, the assessing officer being bound by instructions issued by CBDT from time to time, could not have gone beyond the scope and ambit of limited scrutiny for which the case was selected. AO was required to strictly confine himself to conduct necessary enquiry relating to issues for which limited scrutiny was required. AO while completing the assessment has restricted himself and, rightly so, to the scope and ambit of the limited scrutiny. Thus, unless the scope of scrutiny is expanded by converting it to a complete scrutiny with the approval of the higher authority, the assessing officer could not have travelled beyond his mandate. That being the case, the assessment order cannot be considered to be erroneous and prejudicial to the interest of revenue for not examining the loans taken by the assessee and their utilization as well as capitalization of interest. The material on record clearly establishes that the assessing officer adhering to the scope of limited scrutiny has enquired into and examined the specific issues. When the assessing officer is not empowered to do certain acts directly, the revisionary authority certainly cannot direct the assessing officer to do so indirectly by exercising power u/s 263 of the Act. While coming to such conclusion, we get support from the decision of M/s Su-Raj Diamond Dealers Pvt Ltd vs PCIT [2019 (12) TMI 26 - ITAT MUMBAI] - The assessment order cannot be considered to be erroneous and prejudicial to the interest of revenue. In view of the aforesaid, we set aside the impugned order of PCIT passed u/s 263 of the Act and restore the order of assessment. Appeal of assessee allowed.
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