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2023 (10) TMI 1232 - AT - Income TaxRevision u/s 263 - assessee case selected for limited scrutiny - share capital and other capital receipts - as per CIT AO failed to examine the issue relating to sale of shops and computation of long term capital gain - HELD THAT:- As gone through the assessment order, passed by AO and noted that assessment order was passed by the AO in the ‘limited scrutiny’ only to examine the items of ‘share capital and other capital’. The scrutiny assessment was for limited purpose to examine the issue of “share capital and other capital”. AO has examined the ‘share capital and other capital’ in the scrutiny assessment and framed the assessment order u/s 143(3) - PCIT has raised the issue, stating that there were sale of shop and computation of long-term capital gain, their on which was not the subject matter of ‘limited scrutiny’. Therefore, the issue raised by the L PCIT is outside the scope of limited scrutiny. Assessee’s case was selected for “limited scrutiny purpose” for the purpose of verification of “Share capital/other capital”. Therefore, AO need not to examine the issue relating to sale of shops and computation of long term capital gain, which was raised by the PCIT. Since in the limited scrutiny case, AO has to examine only those issues which are mentioned in the notice of limited scrutiny. If the AO wants to examine other items, which are not mentioned in the limited scrutiny notice, then in that circumstances, he has to convert the ‘limited scrutiny’ into ‘unlimited scrutiny’ by taking permission from the higher authorities, which the AO has not done in the assessee`s case under consideration. Therefore, the issue relating to sale of shops and capital gain thereon and other few issues raised by PCIT, which were raised by the PCIT in his order u/s 263 is outside the scope of the examination conducted by the AO hence order passed by PCIT in his revision order is not tenable and therefore, order of PCIT may be quashed. AO had rightly raised query regarding sources of substantial increase in capital, vide notice u/s 142(1) of the Act and the assessee had also submitted her detailed reply and explanation with supporting evidences, against notice u/s 142(1) - order passed u/s 143(3) of the Act is neither erroneous nor prejudicial to the revenue, as it was passed after detailed examination and proper verification of all documents of subject matter of limited scrutiny - Decided in favour of assessee.
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