Revision u/s 263 on the issues which were not the subject matter of the assessment framed on the basis of limited scrutiny is not valid- ITAT Chandigarh
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Case Details: |
Taj Paul Bhardwaj vs. PCIT |
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Appeal No.: |
ITA No. 463/Chd/2019 |
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Order pronounced by: |
ITAT Chandigarh |
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Date of Order: |
13-05-2021 |
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In Favour of: |
Assessee |
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Assessment Year: |
2014-15 |
Source: www.itat.gov.in
Brief Facts:
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The assessee is an individual whose case was selected for limited scrutiny for the reason that there was a substantial increase in capital during the relevant assessment year. The assessee submitted details during the course of the assessment and the A.O. accepted the return filed by the assessee. Later, the Ld. PCIT issued notice to the assessee as to why the assessment order should not be revised u/s 263 of the Act on account of the capital gain as the assessee had not deposited the capital gain in the capital gain deposit account before the specific date. Therefore, the assessee was not entitled to claim exemption u/s 54 of the Act. Since the A.O. has failed to make any enquiry or verification, the assessment order is erroneous and prejudicial to the interest of the revenue. |
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It was contemplated that the assessee had shown the opening balance of capital without filing ITR for that year so the genuineness of the opening balance was doubtful and the A.O. failed to examine this issue. The replies of the assessee filed against the notice were rejected by the Ld. PCIT and he directed the A.O. to make a fresh assessment on the issues as mentioned in the Show Cause Notice. The assessee filed an appeal against the said order passed by the Ld. PCIT. |
Issued raised by the Ld. AR:
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The impugned order is bad in law as the Ld. PCIT could not have passed the impugned order being taken the case for limited scrutiny under CASS, therefore the Ld. PCIT has exceeded the jurisdiction in issuing notice u/s 263 of the Act. |
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Reliance was placed on the following judicial precedents:
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Observations & Ruling of the Tribunal:
- In the case of Nayek Paper Converters vs. ACIT (supra): The Kolkata Bench of the Tribunal has held that where the case was selected for limited scrutiny under section 143(2) of the Act, the A.O. cannot be expected to make an enquiry of the issues pointed out by the Ld. CIT in his order u/s 263 of the Act and directing the A.O. to make enquiry of the said issues were beyond the powers of the A.O. u/s 143(2) read with section 143(3) or beyond the scope of the limited scrutiny.
- A similar decision was made by the Hon’ble Kolkata Bench of the Tribunal in the case of Gift Land Handicrafts vs. CIT (supra) & by the Delhi Tribunal in the case of Ajit Gupta vs. ITO (supra)
- Admittedly, the case of the assessee was selected for limited scrutiny under CASS for the reason that there is a substantial increase in the capital in the relevant year and the A.O. passed the assessment order and accepted the return filed by the assessee after examining the issue regarding the increase in the capital account as the assessee had credited his capital account with agricultural income of Rs. 2,47,500/- and capital gain amounting to Rs. 54,56,000/- from the sale of flat. In response to the notice issued by the A.O. during the assessment proceedings, the assessee submitted his reply explaining the reason for the increase in the capital.
- However, the Ld. PCIT exercising jurisdiction under section 263 of the Act, directed the AO the make a fresh assessment on the issues which were not the subject matter of the limited scrutiny. Since the issue raised by the assessee in his case has already been decided in favour of the assessee by the various benched of the Tribunal as referred above, we find merit in the contention of the Ld. Counsel for the assessee that the Ld. PCIT has exceeded jurisdiction u/s 263 of the Act by directing the AO to make fresh assessment on the issues which were not the subject matter of the assessment framed on the basis of limited scrutiny.
Read complete order: Taj Paul Bhardwaj vs. PCIT
Disclaimer: The above article is based upon the ruling of the Hon’ble ITAT, Chandigarh and is meant for informative purposes only. Readers are requested to act diligently and under consultation with any professional before applying the information contained in this article.
