TMI Blog2019 (12) TMI 755X X X X Extracts X X X X X X X X Extracts X X X X ..... as selected for limited scrutiny, it should be accepted that the case of the assessee was selected for limited scrutiny in view of material facts, as we have noticed above, as emanating from the records which shows clearly that the case of the assessee was selected for complete scrutiny. Assessee having participated in the assessment proceedings and not raising this objection before the AO during the assessment proceedings cannot be permitted to raise this contention in the revision proceedings. We are therefore of the considered view that the case of the assessee had been selected under complete scrutiny and not under limited scrutiny. In the assessment order passed u/s 143(3), AO has stated that the assessee firm is notified by the Central Govt. in the special economic zones for construction and development of low cost project of houses and is also entitled for claim of deduction under section 80IB for any 10 consecutive assessment years out of fifteen years beginning from the year in which special economic zone has been notified. This finding of the Assessing officer is clearly out of sync with the factual position and claim made by the assessee company in its return of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e are that the assessee is engaged in the business of construction and development of low cost housing projects. It filed its return of income on 23.09.2014 declaring Nil income after claiming deduction u/s 80IB of the Act. The case was selected for scrutiny under CASS and a notice u/s 143(2) was issued to the assessee on 10.09.2015. Subsequently, the assessment order was passed u/s 143(3) dated 19.12.2016 wherein the returned income was accepted. Thereafter, the assessment records were called for and reviewed by the ld. Pr. CIT and the order u/s 263 was passed setting aside the assessment order passed by the Assessing Officer u/s 143(3) with the following directions: 12. Keeping the above discussion in view, by the virtue of the powers conferred on the undersigned under the provisions of Section 263 of the IT Act 1961, I hold that the order under Section 143(3) dated 19.12.2016 for assessment year 2014-15 passed by the assessing officer is erroneous in so far as it is prejudicial to the interest of revenue as the order has been passed by the assessing officer in a routine and perfunctory manner without making enquiries/verification which ought t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icial to the interest of the Revenue when the Assessing Officer was not supposed to examine the issue at all. Once the Assessing Officer was not competent to examine the issue of deduction u/s 80IB of the Act, he cannot be held responsible for not examining and verifying the claim u/s 80IB of the Act. It was accordingly submitted that ld. Pr. CIT was wrong in setting aside the assessment order and therefore, the order so passed by the ld. Pr. CIT deserves to be quashed. 4. On merits, it was submitted by the ld AR that during the proceedings u/s 263 before the Pr. CIT, it was submitted that all the conditions for allowing claim u/s 80IB of the Act stood complied with by the assessee and there was no occasion for issuing directions to the Assessing Officer to re-examine the issue. It was submitted that it is not the case of the ld. Pr.CIT that the assessee did not comply with the provisions of section 80IB rather the case of the ld. Pr. CIT is that the claim u/s 80IB of the Act was allowed without verification and examination. Further, it was submitted that in respect of various objections raised by the ld. Pr. CIT vis- -vis conditions for claiming the deduction, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his unit is 1247 square feet. (vii) Flat having super-built area of 1170 sqft sold to Shri Sudesh Singh in violation of limit of 1500 sqft Flat no. 612 sold to Shri Sudesh Singh Soman is having only 1363 square feet built-up area which is in the cap specified in the section i.e. 1500 square feet. The area of 1770 square feet is super built-up area. The built-up area is only 1363 square feet. Hence the assessee firm has not violated any provisions of the act. (viii) Approval of competent authority not filed The assessee firm has taken approval of this project from Jaipur Development Authority on 30.03.2007 which is competent authority. (ix) Date of commencement of activity by the firm 07.04.2007 (x) Date of completion of the project 17.10.2009 5. Furthe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmitted herewith. It was accordingly submitted that the ld. Pr. CIT was not justifying in passing the order u/s 263 of the Act and the same deserves to be quashed. 6. Per contra, the ld. CIT DR strongly supported the findings and the directions of the ld. Pr. CIT in setting aside the assessment order passed u/s 143(3) of the Act. Referring to the notice u/s 143(2) and assessment order passed u/s 143(3), it was submitted that the case of the assessee was selected under CASS as mentioned in both the notice and the assessment order. Further, our reference was drawn to the issue of notice by the AO u/s 142(1) dated 11.08.2016 which has been reproduced by the ld Pr. CIT at para 4 of the order which shows that the Assessing Officer has issued the queries and sought information/documents on various matters arising out of the return filed by the assessee company. Further, our reference was drawn to the Para 2 and 3 of the ld. Pr. CIT order wherein it was stated that the case was selected for complete scrutiny under CASS. It was further submitted that the case was taken for review by the ld. Add. CIT, Range 2, Jaipur and in his report as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee u/s 80IB of the Act without any query and any question being asked by the Assessing Officer. It was further submitted that basis the review of the Form No. 10CCB and other information and documents submitted by the assessee during the revision proceedings before the ld. Pr. CIT, the latter has carried out detail examination and given her finding at pages 15 to 19 of her order basis which further examination by the Assessing Officer has been directed, hence the matter was rightly set aside to the file of the Assessing Officer. 8. We have heard the rival contentions and perused the material available on record. Firstly, on the issue of whether the matter was selected for limited scrutiny or complete scrutiny, on perusal of the notices issued u/s 143(2), 142(1) and the assessment order passed u/s 143(3), we are of the considered view that the case of the assessee was selected under CASS for complete scrutiny and not for limited scrutiny. We find that firstly, there is no mention in the notice u/s 143(2) that the matter has been selected for limited scrutiny, secondly, along with notice u/s 142(1), a detailed questionnaire was issued by the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wed to the assessee. Further, the ld. Add. CIT, Range 2, Jaipur in his report has also stated that the case of the assessee was selected for complete scrutiny. We are therefore unable to agree with the contentions of ld AR that merely because in the initial show cause notice issued by the ld. Pr. CIT., it has been stated that the case was selected for limited scrutiny, it should be accepted that the case of the assessee was selected for limited scrutiny in view of material facts, as we have noticed above, as emanating from the records which shows clearly that the case of the assessee was selected for complete scrutiny. Further, we find that the assessee having participated in the assessment proceedings and not raising this objection before the Assessing officer during the assessment proceedings cannot be permitted to raise this contention in the revision proceedings. We are therefore of the considered view that the case of the assessee had been selected under complete scrutiny and not under limited scrutiny. 10. Now coming to the contentions of ld. AR on merits that the assessee company has fully complied with all the necessary conditions prescri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 86/- to be accepted without any investigation thus rendering the order not only erroneous but also prejudicial to the interest of revenue to that extent. This by itself leaves it open to the invocation of section 263 of the I T Act 1961 specially when it is required that complete investigation, enquiry and verification is to be done so that the deduction claimed is first established beyond doubt before acceptance. The case of the assessee had been selected under complete scrutiny category to examine all the financial aspects of the case having potential implication on revenue. This itself mandated a careful and detailed examination to be done of all material available before the claim of deduction/ exemption could be allowed to the assessee. In this case it is seen that no effort to do so has been made. The AO has not made any enquiry on the issue. The discussion in the preceding paragraphs has clearly made it apparent that routine allowance of claim of deduction as made by the assessee without any scrutiny by the assessing officer has resulted in an erroneous assessment order being framed under Section 143 (3) of the Income Tax Act, which is clearly prejudicial to the interest of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot be accepted due to lack of affidavit by the auditor as to why and on what basis the changes have been made and as to why a wrong audit report was submitted earlier and not corrected till the defects were pointed out. The auditor's report in Form 10CCB filed nowhere records a specific project but it shows assessee's name and project name same as SDC construction . No separate Profit Loss account were submitted for the eligible project but only firm's P L account submitted. It was apparent that during the year firm was engaged in other activities also which is evident from the fact that the firm has shown loans advances of ₹ 19,78,43,679/- which is for firm's business advance and not related to the project. From the reply of assessee dated 14/9/2016, it is clear that the firm has taken new loan of ₹ 13,83,44,622/- during the year which certainly cannot be related to the project for which deduction stands claimed by the assessee as the project has already completed on 18/3/2013. The firm has also claimed interest expense which cannot be expense of the eligible projec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n set aside to the file of the AO, we see no infirmity in the action of the ld Pr CIT by invoking her jurisdiction u/s 263 of the Act. In this regard, we draw useful reference to observations of the Coordinate Bench in case of Subhlakshmi Vanijya (P.) Ltd. vs Commissioner of Income-tax-I, Kolkata, reported in 60 taxmann.com 60 (Kolkata) wherein it was held as under: Scope of the term 'enquiry' can be diverse in different circumstances. There cannot be straight jacket formula to positively conclude as to conducting or non-conducting of 'enquiry' by the Assessing Officer. It depends on the facts and circumstances of each case. Where the facts are just ordinary and prima facie there is nothing untoward the recorded transaction, in such circumstances, the obtaining of the documents and the application of mind thereon, without a further outside enquiry, may mean that the Assessing Officer did conduct enquiry, leaving the question open as to whether it was a proper or an improper enquiry. But, where the factual scenario of a case prima facie indicates abnormalities and cry for looking deep into it, then a mere collection of documents ..... X X X X Extracts X X X X X X X X Extracts X X X X
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