TMI Blog2022 (11) TMI 1129X X X X Extracts X X X X X X X X Extracts X X X X ..... there are two conflicting decisions, then in that scenario the earlier has to be followed as in the latter decision the earlier one was neither noticed nor referred. Even the ratio laid down by the Hon ble Supreme Court in the case of Vegetable Products Ltd. [ 1973 (1) TMI 1 - SUPREME COURT] is applicable in this case. Decided in favour of assessee. - I.T.A. No. 2309/Kol/2018 C.O. No. 17/Kol/2021 - - - Dated:- 16-11-2022 - Shri Sanjay Garg, Judicial Member And Shri Rajesh Kumar, Accountant Member For the Appellant : Shri A.K. Tibrewal, FCA For the Respondent : Shri Amal Kamat, CIT ORDER Per Rajesh Kumar, AM: This is the appeal preferred by the revenue and the cross objection raised by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals)-10, Kolkata (hereinafter referred to as the Ld. CIT(A) ] dated 24.08.2018 for the AY 2015-16. 2. In the revenue s appeal, the order of Ld. CIT(A) has been challenged for deleting the addition of Rs. 8,55,00,000/- as made by the AO on account of security premium by raising the following grounds: 1. On the facts and circumstances of the case, the Ld. CIT(A) erred in deleting the securities p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assets were taken over and accounted for by the present LLP. It is noteworthy that in terms of Section 47(xiiib) of the Act, the transfer of capital asset or intangible asset of a private limited company to a limited liability partnership as a result of conversion of the company into LLP in accordance with provisions of LLP Act, 2008 will not result in any capital gain, provided all the assets and liability were transferred into the LLP. According to AO, after conversion, the said share premium of Rs. 8,55,00,000/- becomes available to the partners of LLP, whereas before conversion it was not available to the shareholders except for issue of bonus shares and could not have been withdrawn as per the provisions specified/ provided under the provisions of Companies Act. So according to the AO, the premium reserve becomes the general reserve and therefore has to be taken as profit of LLP on the date of conversion and must be brought to tax and he accordingly added the same to the income of the assessee LLP. 4. Now the assessee before us has raised the ground as to whether the said addition could have been made in a limited scrutiny, which has been selected by a notice u/s 143(2) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mity in the order passed by the AO and as affirmed by the ld CIT(A). 7. Having heard the rival submissions and perusing the material on record including the impugned order and decision of the Co-ordinate Bench, we find that the issue is squarely covered in favour of the assessee by the decision of the coordinate bench as referred to by the ld AR in which similar issue was decided in favour of the assessee. The operative part is reproduced as under: 5. We have perused the case records, heard the rival contentions, and analyzed the facts and circumstances in this case and have considered the judicial pronouncements placed before us on record. In this appeal filed by the Revenue, the grievance is that the Ld. CIT(A) has deleted the addition on converted premium reserve and also deleted additions on salary and rent paid. At the time of hearing before us, the assessee had filed a petition under Rule 27 of the ITAT Rules, 1963 and submitted that in the case of the assessee it was selected for limited scrutiny but the assessment order finally framed by the Assessing Officer under section 143(3) of the Act by making additions / disallowances which were not subject-matter of that li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tantive argument that since the Assessing Officer had framed his regular assessment involving limited scrutiny on the above stated issues not including sec. 33AB deduction to the purpose of the impugned withdrawals. We find that the same is duly covered in its favor as per this tribunal s co-ordinate bench s decision in ITA No.1361/Kol/2016 in Sanjeev K.Khemka vs. Pr. Commissioner of Income-Tax-15, Kolkata decided on 02.06.2017 as under:- 4. We have heard the rival contentions of the parties and perused the materials on record. The primary issue in the case on hand revolves whether it is a case selected under CASS for limited scrutiny or regular scrutiny. It can be seen from the grounds of appeal that the assessee wants to contend that the very initiation of proceedings u/s 143(3) of the Act on the basis of regular scrutiny under the Act was bad in law. The proceedings under section 143(3) of the Act should have been limited to the extent of the information gathered through AIR. Accordingly the proceedings u/s 263 of the Act cannot be expanded beyond the issue raised in AIR. Thus the order u/s 143(3) of the Act beyond the points of AIR is invalid in law and so the same is wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not taken any adverse view in respect of this issue for which the CASS has selected the return of income of the assessee for scrutiny u/s 143(3) of the Act. We note that the CBDT Circular issued u/s 119 of the Income Tax Act is binding on the Income Tax Authorities.The Assessing Officer s jurisdiction is limited to the issue identified by the CASS in case of Limited Scrutiny cases. In the assessee`s case under consideration the issue of mismatch of sales shown in the audit report vis- -vis ITR was for Limited Scrutiny but the assessing officer has expanded the scope of limited scrutiny without taking permission from the concerned Pr.CIT/CIT, since there is no whisper of any sanction or approval of the Pr.CIT/CIT therefore action of Assessing Officer to assess the loss of Rs.42,97,440/- is beyond his jurisdiction and in violation of the CBDT circular which he was bound to obey. Therefore, we find merit in the assessee s grounds of appeal that the action of the Assessing Officer to make addition on account of loss of Rs.42,97,440/- is beyond jurisdiction and therefore null in the eyes of law and hence we delete the addition of Rs.42,97,440/-. 9. That in all the aforesaid ..... X X X X Extracts X X X X X X X X Extracts X X X X
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