TMI Blog2023 (6) TMI 400X X X X Extracts X X X X X X X X Extracts X X X X ..... I 444 - ITAT AMRITSAR] has held that revisionary jurisdiction shall not be invoked by the Pr. CIT to look into the issues which were not within the purview of limited scrutiny. AO cannot go beyond reasons for of limited scrutiny and thus, it would not be open to the PCIT to pass revisionary order u/s 263 on other aspects and remit matter to AO for fresh assessment. Assessee appeal allowed. - Dr. M. L. Meena, Accountant Member And Sh. Anikesh Banerjee, Judicial Member For the Appellant : Sh. Sudhir Sehgal For the Respondent : Sh. Girish Bali, CIT- DR ORDER PER DR. M. L. MEENA, AM: This appeal has been filed by the assessee against the order of the Ld. Pr. Commissioner of Income Tax-1, Amritsar (In short the PCIT ) dated 31.03.2021 in respect of Assessment Year 2015-16. 2. The assessee has raised the following ground of appeal: 1. The Principal Commissioner of Income Tax-1, Amritsar has erred in law and facts and circumstances of the case by proceeding on the issues not covered by the grounds of Limited Scrutiny and thus expanded the scope of limited scrutiny. 2. The Principal Commissioner of Income Tax-1, Amritsar has erred in law and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.2015 passed by the ITO, Ward-1(1), Bathinda in present case for the A.Y. 2015- 16 as erroneous and prejudicial to the interest of revenue u/s 263 of the Act. 4. The Ld. AR for the appellant submitted that the PCIT had erred in law and facts, and circumstances of the case by proceeding on the issues which were not covered under Limited Scrutiny and thus, he has expanded the scope of limited scrutiny; to set aside original order in spite of the fact that he has not controverted the submissions of the assessee that high sea sales is not speculative transaction and therefore there can be no disallowance of loss arising therefrom against the non speculative business income; that he has not controverted/negated any of the contention of the assessee as per detailed reply submitted in response to show cause notice u/s 263. The Ld. AR argued that the Ld. PCIT has erred in law and facts of the case by passing an order based on whims and fancies, without laying down what is uncanny adjustment of loss from High sea trading results . In support of its contention, a brief synopsis is filed which reads as under: 1. The appellant is a partnership firm engaged in the business of trading o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roceedings, replies to all the queries raised by the AO were filed and there was no lack of providing information at the end of the assessee. The Ld. AO was fully satisfied with the replies filed by the assessee and having a thorough discussion of the case, an ad-hoc addition/disallowance was made by the AO tot eh tune of Rs. 3,70,000/-.The copies of replies filed by assessee before the AO during the course of assessment proceedings are forming part of paper book at Pg 21-23. iii. Further, notice u/s 263 of the Act has been issued on the basis that the loss of speculative business has been adjusted out of the interest income from money lending business and other expenses related to speculation business have also been adjusted out of interest income and the said issue has not been looked into by the AO and accordingly, the order passed by the AO is erroneous as well as prejudicial to the revenue. In this respect, it is submitted that such issue was never the subject matter of the limited scrutiny (as mentioned in Para 3 above) and therefore, the said issue was not looked into by the AO during assessment proceedings. The AO was never bound to enquire into such issues, therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ground alone, and contended that if the first ground is decided in favour of the assessee then other grounds would be academic in view of the order of PCIT may be quashed. However, in case the bench comes to the conclusion that the matter is required to be heard, then the written submissions reproduced hereinabove can be considered for the purpose of deciding the issues on merit. 12. Recently, the coordinate bench, Amritsar in the case of Paradise Rubber Industries in ITA no. I.T.A No. 115/ASR/2020, ASSESSMENT YEAR: 2015-16 on similar facts held that revisionary jurisdiction shall not be invoked by the Pr. CIT to look into the issues which were not within the purview of limited scrutiny by observing vide para 20 and 21 as under: 20. In the light of the above, we have considered ground No. 1. Admittedly the present case before us is a case of Limited scrutiny selected for particular points reproduced hereinabove confined to 4 issues. The issue for which the PCIT issued the show cause notice was entirely different than the four issues examined under limited scrutiny by the assessing officer. The Board in its circular mentioned the procedure for converting the limited sc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... approval of the competent authority. To our understanding, it was a limited scrutiny case being selected under CASS for examination of cash deposits made in the bank during demonetarization period and, therefore, the authorities below ought to have restricted their examination and enquiries limited for the purpose of cash deposits made by the appellant during the period of demonetarization only. By expanding the scope of scrutiny beyond the issue of cash deposits during demonetarization period, amounts to exceeding the jurisdiction by the Id. PCIT without following the prescribed procedure and the administrative guidelines under the law. After considering the documentary evidences filed by the assessee in compliance to the enquiries caused by the AO and scrutiny of the documents in respect of the cash deposits, the AO has accepted the cash deposits in the bank during the period of demonetarization made by the appellant as duly explained. Thus, the AO to his satisfaction accepted the cash deposits in the bank account of the assessee during the period of demonetarization as explained money in accepting the returned income of the assessee under section 143(3) of the IT Act. In our vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utiny. The said circular was reproduced by the PCIT in the impugned order before us. From the perusal of the above said circular, it is abundantly clear that the conditions, which are sine qua non were nonexistence. Therefore, the assessing officer did not have to convert or make a request for a limited scrutiny case to full-fledged scrutiny. 21. Since the assessing officer was only required to decide the issues specifically selected under Limited scrutiny and was not required to examine or sufficiently enquire the matters which are not referred to him as alleged by the PCIT. Once the assessing officer was required to apply his mind to the specific issues, which were duly dealt by the assessing officer in the order passed by him, it cannot be said that the order passed by the assessing officer was erroneous or prejudicial to the interest of the revenue. The revenue in its wisdom has directed the assessing Officer to decide the specific issues and laid down the condition of deviation from the specific issues after fulfilling the requirement of the circular issued by the Board in this regard. Once the AO had scrupulously discharged the duty assigned to him, it cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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