TMI Blog2021 (10) TMI 1400X X X X Extracts X X X X X X X X Extracts X X X X ..... cerned and the questions u/s 142(1) of the Act shall remain confined only to a specific reasons / issues for which the case has been taken up for scrutiny - the scope of enquiry by the assessing officer shall be restricted to the limited scrutiny issue. The aforesaid position stands reiterated in CBDT Instrn. No.5 of 2016 dated 14-07-2016. Thus, the assessing officer being bound by instructions issued by CBDT from time to time, could not have gone beyond the scope and ambit of limited scrutiny for which the case was selected. AO was required to strictly confine himself to conduct necessary enquiry relating to issues for which limited scrutiny was required. AO while completing the assessment has restricted himself and, rightly so, to the scope and ambit of the limited scrutiny. Thus, unless the scope of scrutiny is expanded by converting it to a complete scrutiny with the approval of the higher authority, the assessing officer could not have travelled beyond his mandate. That being the case, the assessment order cannot be considered to be erroneous and prejudicial to the interest of revenue for not examining the loans taken by the assessee and their utilization as well as capi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, the Additional Commissioner of Income Tax in charge of the range found that the increase in loan taken by the assessee from Rs.8.57 crores in the preceding year to Rs.10.42 crores in the current year was not verified by the assessing officer. Further, he observed, the assessing officer did not also verify assessee s claim that all loans and advances given are for the purpose of business, by calling for details of transactions in subsequent years along with supporting documents. Further, he observed, the assessing officer did not verify the capitalization of interest paid. In view of these facts, a proposal was submitted to the learned PCIT for exercising powers under section 263 of the Act to revise the assessment order. Based on such proposal, a show cause notice under section 263 of the Act was issued to the assessee on 12-09-2018 on the following grounds:- Please refer to the Assessment order passed u/s 143(3) of the I T Act in your case I for A.Y 2015-16 on 29/06/2017 assessing the total income at Rs. 34,824/- after making additions of Rs 14,69,060/- being expenses claimed during the year without carrying out any business activity. 2. On perusal of assessment records, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the scrutiny. Referring to Explanation 2 to section 263 of the Act, learned PCIT opined that the assessing officer completed the assessment without making relevant enquiries. Therefore, he exercised power under section 263 of the Act as the assessment order is erroneous and prejudicial to the interest of revenue due to non enquiry by the assessing officer. Relying upon certain judicial precedents, ultimately, learned PCIT held the assessment order passed to be erroneous and prejudicial to the interest of revenue on the issues raised by him and set it aside with a direction to the assessing officer to examine the relevant details as observed in the revision order and complete the assessment after conducting proper and necessary enquiry. 5. The learned counsel for the assessee submitted, assessee s case was selected for limited scrutiny to examine, firstly, the issue of low income in comparison to high loan / advances / investment in shares appearing in balancesheet and secondly, mismatch in minimum alternate tax (MAT) liability. He submitted, in course of assessment proceedings, the assessing officer had examined and enquired into both these aspects and completed assessment wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d prejudicial to the interest of revenue to enable learned PCIT to revise it under section 263 of the Act. In support, learned counsel relied upon the following decisions:- 1. CIT vs Nirav Modi (2016) 71 taxmann.com 272 (Bom) 2. CIT vs Nirav Modi (2017) 77 taxmann.com 15 (SC) 3. Sir Dorabji Tata Trust vs Dy.CIT(Exemption), Cir.2(1), Mumbai (2020) 122 taxmann.com 274 (Mumbai-Trib) 4. CIT vs Reliance Communication Ltd(2016) 69 taxmann.com 103 (Bom) 5. CIT vs Reliance Communication Ltd (2016) 76 taxmann.com 226 (SC) 6. CIT vs Gabriel India Ltd (1993) 71 Taxman 585 (Bombay) 7. CIT, Bangalore vs Chemsworth (P) Ltd (2020) 119 taxmann.com 358 (Karnataka) 8. CIT, Bangalore vs Cyber Park Development Construction Ltd (2020) 121 taxmann.com 172 (Karnataka) 9. Malabar Industrial Co. Ltd vs CIT (2000) 109 Taxman 66 (SC) 10. CIT(Central), Ludhiana vs Max India Ltd (2008) 166 Taxman 188(SC) 11. CIT vs Gokuldas Exports (2012) 20 taxmann.com 491 (Karnataka) 12. M/s Su-Raj Diamond Dealers Pvt Ltd vs PCIT ITAT, G-Bench, Mumbai ITA No.3098/Mum/2019 ord dated 27-11-2019 6. Strongly opposing the contentions of the assessee learned departmental representative subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther words, whether the assessing officer could have acted beyond the scope of limited scrutiny or expanded the scope of limited scrutiny. 9. We have noted, learned PCIT while exercising power under section 263 of the Act has attempted to expand the scope of limited scrutiny by observing that the assessing officer had not examined the increase of loan taken from Rs.8.57 crore to Rs.10.42 crore (increase of ₹ . 1.67 crore) and whether the loans taken were for the purpose of business as well as the capitalization of interest. 10. As already discussed, the scope of limited scrutiny was to examine the reason of low income compared to high loans / advances / investments in shares. To our understanding, the expression low income in comparison to high loan / advances / investments in shares in balance-sheet read conjunctively would mean compared to loans and advances given and investments in shares, why the income of the assessee is low. Perusal of the notices issued under section 142(1) as well as 143(2) make it clear that in course of assessment proceedings, the assessing officer did examine both the issues for which assessee s case was selected for scrutiny. In fact, in ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
