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2022 (5) TMI 1008 - AT - Income TaxScope of scrutiny selected for limited scrutiny - exercise of jurisdiction by the Ld. AO in expanding the scope of scrutiny - Deduction u/s 54F denied - whether AO has fallen in error in passing the assessment order beyond the scope of scrutiny - as submitted reason for selection of the case of assessee under limited scrutiny was first High increase in Annual Letting Value of House Property and second Large deduction claimed u/s 54B, 54C, 54D, 54G, 54GA but the addition was made declining benefit of section 54 - HELD THAT:- Appreciating the matter on record it can be observed that the case of assessee was selected for limited scrutiny but the Ld. Assessing officer has not discussed a word about the original reasons for selection of the case under limited scrutiny and straightway proceeded to examine the disallowance on account of exemption claimed as per the provisions u/s 54 of the Act. The ld. AO made a detailed inquiry into the claim and also discussed the plea in alternative of the assessee for allowing the benefit u/s 54F of the Act. Settled proposition of law is that the Assessing officer can widen the scope of scrutiny even when the case was selected for limited scrutiny. However, the condition precedent for such widening of the scope is that the Assessing Officer has to seek prior approval of the PCIT. Reliance in this regard can be placed on the judgment of the Co-ordinate Bench [2020 (4) TMI 531 - ITAT DELHI] where after referring to various instructions of CBDT. aforesaid proposition of law was upheld. There is irregular exercise of jurisdiction by the Ld. AO in expanding the scope scrutiny. Ld. CIT(A) has fallen in error in dismissing this ground against the assessee by a sweeping observation that there was no prejudice to the assessee and it was a procedural or administrative matter. Consequentially, the ground no 1 and 2 of Cross Objection filed by assessee, going to the root of jurisdiction of the assessment order are allowed. Even on merits, Ld. DR has questioned the findings of Ld CIT(A) of allowing claim of assessee on basis that it failed to consider the detailed enquiry of Ld. AO but the Bench is of considered opinion that the ld. CIT(A) after taking into consideration, the entire facts of the case viz., date of purchase, date of sale, date of investment in capital gain scheme held that the assessee is eligible for claim u/s 54F of the Income Tax Act, 1961. Notwithstanding anything, the amount once invested in the capital gain scheme cannot be brought to tax in the year of investment itself without considering the utilization within the period allowed under the said scheme. - Decided against revenue.
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