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2022 (12) TMI 1474 - AT - Income TaxRevision u/s 263 - taxability of undisclosed expenses as declared in survey action - case of assessee was selected for limited scrutiny - As per CIT income declared during the survey was also charged to tax at normal rate instead of charging at special rate at 60% as per the provisions of Section 115BBE of the Act which is in violation of Section 68 to 69C r.w.s. 115BBE - HELD THAT:- We find that the case of assessee was selected for limited scrutiny and for limited scrutiny, AO issued necessary questionnaire about seeking details of bank accounts and other related information and evidences. The assessee in its reply, furnished such details of bank statement and other information. AO after taking such reply, completed the assessment on 18/12/2019 without any variation. CIT in its show cause notice, identified the issue which was not the subject matter of limited scrutiny. In the show cause notice, the ld. Pr. CIT raised the issue that survey action was conducted on the assessee firm in relevant financial year and that the assessee made declaration of Rs. 1.24 crore on account of undisclosed expenses. We find that such issue was not the subject matter of scrutiny, hence, the Assessing Officer was not entitled to raise such question. We find that in Balvinder Kumar [2021 (3) TMI 649 - ITAT DELHI] has held that “in case of limited scrutiny, AO could not go beyond reason for which matter was selected for limited scrutiny thus, it would not be open to Principal Commissioner to pass revisionary order u/s 263 on other aspects and remit matter to AO for fresh assessment.” The Supreme Court in celebrated/ leading case of Malabar Industrial Co. Ltd. [2000 (2) TMI 10 - SUPREME COURT] held that the prerequisite for the exercise of jurisdiction by the Commissioner suo-motu is that the order of the Income-tax Officer is erroneous in so far as it is prejudicial to the interests of the revenue. If one of them is absent - if the order of the Income-tax Officer is erroneous but is not prejudicial to the revenue or if it is not erroneous but is prejudicial to the revenue - recourse cannot be had to section 263(1) of the Act. Thus the twin condition as required to revise the assessment order is not meet out in the present case, therefore, the order passed by the ld. Pr. CIT is set aside and the grounds of appeal raised by the assessee are allowed.
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