SHREE ANIRUDDHA UPASANA FOUNDATION,MUMBAI vs. CIT (EXEMPTION) , MUMBAI

Shree Aniruddha Upasana Foundation Shree Aniruddha Upasana Foundation 3 ITA No. 706/M/2022 d. (d) The Appellant had informed the Learned CIT (d) The Appellant had informed the Learned CIT (d) The Appellant had informed the Learned CIT (Exemptions), Mumbai that the reduction in CWIP is merely (Exemptions), Mumbai that the reduction in CWIP is merely (Exemptions), Mumbai that the reduction in CWIP is merely pertaining to accounting entries passed in the books of pertaining to accounting entries passed in the books of pertaining to accounting entries passed in the books of accounts for capitalization of assets and booking of bills ccounts for capitalization of assets and booking of bills ccounts for capitalization of assets and booking of bills under CWIP and nothing else. The Appellant explained the under CWIP and nothing else. The Appellant explained the under CWIP and nothing else. The Appellant explained the above facts along with the annexures in relation to reduction above facts along with the annexures in relation to reduction above facts along with the annexures in relation to reduction in CWIP to the Learned Assessing Officer during the course of in CWIP to the Learned Assessing Officer during the course of in CWIP to the Learned Assessing Officer during the course of assessment procee assessment proceedings and only after due verification and dings and only after due verification and perusal of all the documents and materials on record and perusal of all the documents and materials on record and perusal of all the documents and materials on record and only after duly understanding the facts of the Appellant, did only after duly understanding the facts of the Appellant, did only after duly understanding the facts of the Appellant, did the learned Assessing Officer pass the order u/s 143(3) of the the learned Assessing Officer pass the order u/s 143(3) of the the learned Assessing Officer pass the order u/s 143(3) of the Act for AY 2017 Act for AY 2017-18.

2. The Learned The Learned CIT(Exemptions), Mumbai has erred in not CIT(Exemptions), Mumbai has erred in not appreciating that all the documentary evidences w.r.t all three appreciating that all the documentary evidences w.r.t all three appreciating that all the documentary evidences w.r.t all three issues have been submitted by the Appellant to the Learned issues have been submitted by the Appellant to the Learned issues have been submitted by the Appellant to the Learned Assessing Officer. The Assessing Officer, only after taking into Assessing Officer. The Assessing Officer, only after taking into Assessing Officer. The Assessing Officer, only after taking into consideration the submissio consideration the submissions filed by the Appellant, has ns filed by the Appellant, has accepted the returned income and such a view, being a accepted the returned income and such a view, being a accepted the returned income and such a view, being a plausible view cannot be considered as erroneous or prejudicial plausible view cannot be considered as erroneous or prejudicial plausible view cannot be considered as erroneous or prejudicial to the interest of the revenue by any stretch of imagination and to the interest of the revenue by any stretch of imagination and to the interest of the revenue by any stretch of imagination and hence the inference drawn by the Learned C hence the inference drawn by the Learned CIT(Exemptions) IT(Exemptions) deserves to be "Dismissed" in liminee. deserves to be "Dismissed" in liminee.

2. The assessee has f assessee has further raised additional ground additional ground vide letter dated 06/07/2022, which are reproduced as under: dated 06/07/2022, which are reproduced as under:

3. The learned CIT(E), Mumbai has failed to appreciate that the The learned CIT(E), Mumbai has failed to appreciate that the The learned CIT(E), Mumbai has failed to appreciate that the learned Assessing Officer has passed the order u/s 143(3) only learned Assessing Officer has passed the order u/s 143(3) only learned Assessing Officer has passed the order u/s 143(3) only

Shree Aniruddha Upasana Foundation Shree Aniruddha Upasana Foundation 4 ITA No. 706/M/2022 after verification of the issue of payment made to specified after verification of the issue of payment made to specified after verification of the issue of payment made to specified person in the limited scrutiny category under CASS. person in the limited scrutiny category under CASS. person in the limited scrutiny category under CASS.

4. The learned CIT(E), The learned CIT(E), Mumbai has erred in not referring to the Mumbai has erred in not referring to the submission dated 20/02/2019 of the Appellant wherein the submission dated 20/02/2019 of the Appellant wherein the submission dated 20/02/2019 of the Appellant wherein the issue of payment made to specified person [(Question No. 16 of issue of payment made to specified person [(Question No. 16 of issue of payment made to specified person [(Question No. 16 of Notice u/s 142(1)] is already been verified and examined by the Notice u/s 142(1)] is already been verified and examined by the Notice u/s 142(1)] is already been verified and examined by the learned AO. learned AO.

3. In the grounds raised, the assessee is agitated by action of the the grounds raised, the assessee is agitated by action of the the grounds raised, the assessee is agitated by action of the Ld. CIT in terms of section 263 of the CIT in terms of section 263 of the Income-tax Act Act, 1961 (in short ‘the Act’) for holding the assessment order dated 16/11/2019 ) for holding the assessment order dated 16/11/2019 ) for holding the assessment order dated 16/11/2019

Shree Aniruddha Upasana Foundation Shree Aniruddha Upasana Foundation 5 ITA No. 706/M/2022 passed by the Assessing Officer Assessing Officer as erroneous insofar as oneous insofar as prejudicial to the interest of the Revenue Revenue.

(i) the assessee is a registered charitable the assessee is a registered charitable trust trust and for the year under consideration year under consideration filed return of income return of income on 26/10/2017 declaring Nil income 017 declaring Nil income, along with income and along with income and expenditure account, balance sheet expenditure account, balance sheet and audit report in and audit report in Form No. 10 Form No. 10B of the Income-tax Rules, 1962. The , 1962. The return of income filed by the assessee of income filed by the assessee was selected for limited was selected for limited scrutiny for for verification of payment made verification of payment made to be specified persons specified persons. The Assessing Officer Assessing Officer accordingly issued notice under section 143(2) of the Act, which was issued notice under section 143(2) of the issued notice under section 143(2) of the duly served upon the assessee. Thereafter the Assessing duly served upon the assessee. Thereafter the duly served upon the assessee. Thereafter the Officer issued notice under section 142(1) dated issued notice under section 142(1) dated issued notice under section 142(1) dated 8/02/2019 8/02/2019 calling for detailed information from the ormation from the assessee. The assessee fi assessee. The assessee filed reply of the queries asked led reply of the queries asked

Shree Aniruddha Upasana Foundation Shree Aniruddha Upasana Foundation 6 ITA No. 706/M/2022 vide letter dated 20/02/2019. After considering the letter dated 20/02/2019. After considering the letter dated 20/02/2019. After considering the submission of the assessee the submission of the assessee the Assessing Officer Assessing Officer, accepted the returned income the returned income, vide assessmentorder dated , vide assessmentorder dated 16/11/2019 passed under 16/11/2019 passed under section 143(3) of the section 143(3) of the Act. (ii) Subsequently, the Ld. CIT called for the record and after Subsequently, the Ld. CIT called for the record and after Subsequently, the Ld. CIT called for the record and after examination examination and verification of the records and verification of the records, he was of the opinion that opinion that the assessment order dated 16/11/2019 the assessment order dated 16/11/2019 framed by the framed by the Assessing Officer was erroneous insofar as was erroneous insofar as prejudicial to the interest of the prejudicial to the interest of the Revenue Revenue within the meaning of section 263 of the meaning of section 263 of the Act. Accordingly issued a . Accordingly issued a show cause notice to the assessee observing that he was show cause notice to the assessee observing that he was show cause notice to the assessee observing that he was of prime facie view that assessment order was erroneous of prime facie view that assessment order was erroneous of prime facie view that assessment order was erroneous insofar as prejudicial to the interest of the as prejudicial to the interest of the as prejudicial to the interest of the Revenue in view of the followings: view of the followings: (a) the Assessing Officer Assessing Officer has allowed deduction of has allowed deduction of ₹6,75,25,296/ 6,75,25,296/- towards the object of the trust under towards the object of the trust under section 11 of the section 11 of the Act, without any enquiry. , without any enquiry.

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(b) The assessee set The assessee set-aside ₹2,50,00,000 2,50,00,000/- in the assessment year 2015 assessment year 2015-16 under section 11(2) of the 16 under section 11(2) of the Act Act for the purpose of “development fund”. development fund”. According to Ld. CIT, the purpose of According to Ld. CIT, the purpose of According to Ld. CIT, the purpose of said development fund is vague and not a specific and development fund is vague and not a specific and development fund is vague and not a specific and not a concrete reason for setting aside the amount. not a concrete reason for setting aside the amount. not a concrete reason for setting aside the amount. He further ob He further observed that during the year under served that during the year under consideration, the assessee claimed consideration, the assessee claimed consideration, the assessee claimed utilization of said accommodated fund and the accommodated fund and the Assessing Officer Assessing Officer called for details with documentary evidence with called for details with documentary evidence with called for details with documentary evidence with respect to the above fund, but the assessee neither respect to the above fund, but the assessee neither respect to the above fund, but the assessee neither replied nor submitte replied nor submitted documentary evidence. The d documentary evidence. The Assessing Officer Assessing Officer has also not verified the same. has also not verified the same. According to the Ld. CIT same is not allowable under According to the Ld. CIT same is not allowable under According to the Ld. CIT same is not allowable under section 11(3) of the section 11(3) of the Act. (c) From From the statement of the fixed asse the statement of the fixed asset, it is seen that there is a reduction of there is a reduction of ₹43,18,981 981/- in tangible

Shree Aniruddha Upasana Foundation Shree Aniruddha Upasana Foundation 8 ITA No. 706/M/2022 assets assets and ₹40,39,390/- from capital work in from capital work in progress progress. According to The Ld. CIT the assessee has . According to The Ld. CIT the assessee has not offered the income not offered the income on sale of the assets in the sale of the assets in the return of income furnished and return of income furnished and the issue of sale of the issue of sale of assets assets has not been examined by the has not been examined by the Assessing Officer Officer in assessment proceedings. (iii) After considering submission of the assessee, the Ld. CIT After considering submission of the assessee, the Ld. CIT After considering submission of the assessee, the Ld. CIT vide impugned order dated 15/03/2022 held the order of impugned order dated 15/03/2022 held the order of impugned order dated 15/03/2022 held the order of the Assessing Officer Assessing Officer as erroneous insofar as prejudicial as erroneous insofar as prejudicial to the interest of the to the interest of the Revenue on the ground of no on the ground of non- verification of the verification of the utilization of the accumulated accumulated amount and non-verification of reduction in fi verification of reduction in fi verification of reduction in fixed asset and capital work in progress, which translated into income for capital work in progress, which translated into income for capital work in progress, which translated into income for the year under consideration. the year under consideration.

5. Aggrieved, the assessee Aggrieved, the assessee is in appeal before the Tr Tribunal raising the grounds as reproduced above. reproduced above.

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6. Before us the assessee has filed a paperbook (pages 1 to 113) Before us the assessee has filed a paperbook (pages 1 to 113) Before us the assessee has filed a paperbook (pages 1 to 113) containing interalia, interalia, notices issued by the Assessing Officer Assessing Officer during assessment proceedings proceedings, reply of the same by the assessee, notices , reply of the same by the assessee, notices issued in proceeding under section 263 of the issued in proceeding under section 263 of the Act and reply of the and reply of the assessee by the same. the same.

Shree Aniruddha Upasana Foundation Shree Aniruddha Upasana Foundation 10 ITA No. 706/M/2022 7.1 The Ld. counsel of the assessee referred to instruction No. 7 of counsel of the assessee referred to instruction No. 7 of counsel of the assessee referred to instruction No. 7 of 2014 dated 26/09/2014 issued by the Central Board of Direct Taxes 2014 dated 26/09/2014 issued by the Central Board of Direct Taxes 2014 dated 26/09/2014 issued by the Central Board of Direct Taxes (CBDT) for restricting the scope of the enquiry for restricting the scope of the enquiry during assessment during assessment proceedings to verification of particular aspects on the basis of the to verification of particular aspects on the basis of the to verification of particular aspects on the basis of the which the case was selected for scrutiny (PB:42 which the case was selected for scrutiny (PB:42- -43). The CBDT further issued clarification ther issued clarification vide letter dated 29/12/2015 in respect letter dated 29/12/2015 in respect of the instruction No. 7/2014 which i of the instruction No. 7/2014 which is placed on paperbook page s placed on paperbook page 48-49. Further, the CBDT issued instruction on 14/07/2016 vide Further, the CBDT issued instruction on 14/07/2016 vide Further, the CBDT issued instruction on 14/07/2016 vide instruction No. 5/ 2016 in respect of the cases selected through instruction No. 5/ 2016 in respect of the cases selected through instruction No. 5/ 2016 in respect of the cases selected through Computer Assisted Selection o Computer Assisted Selection of Scrutiny (CASS ) cycle 2015 and CASS ) cycle 2015 and 2016 (PB-50-51). The 51). The Ld. counsel referred to procedure laid down red to procedure laid down for converting a lim for converting a limited scrutiny case to complete ited scrutiny case to complete scrutiny case mentioned in clause clause 2 to 6 of said Instruction. The Ld. Ld. counsel also referred to letter of DG Vigilance dated 30/11/2017 advising the referred to letter of DG Vigilance dated 30/11/2017 advising the referred to letter of DG Vigilance dated 30/11/2017 advising the Assessing Officers to comply s to comply with the instruction of the CBDT for with the instruction of the CBDT for restricting in making enquiry in limited scrutiny cases and for restricting in making enquiry in limited scrutiny cases and for restricting in making enquiry in limited scrutiny cases and for Shree Aniruddha Upasana Foundation Shree Aniruddha Upasana Foundation 11 ITA No. 706/M/2022 following the procedure for converting a limited following the procedure for converting a limited scrutiny case into a scrutiny case into a complete scrutiny case (PB:52 scrutiny case (PB:52-51).

7.2 The Ld. counsel submitted that the counsel submitted that the Ld. CIT ha CIT has held the assessment order as assessment order as erroneous insofar as prejudicial to the interest insofar as prejudicial to the interest of the revenue for non of the revenue for non-verification of utilisation of accumulative verification of utilisation of accumulative fund and non-verification of reduction in sale of assets and work in verification of reduction in sale of assets and work in verification of reduction in sale of assets and work in progress. According to him, these issues progress. According to him, these issues were not included in the were not included in the verification of limited scrutiny and limited scrutiny wa verification of limited scrutiny and limited scrutiny wa verification of limited scrutiny and limited scrutiny was never converted into complete converted into complete scrutiny, therefore the L scrutiny, therefore the Ld. CIT has exceeded his jurisdiction in holding that no enquiry was made by exceeded his jurisdiction in holding that no enquiry was made by exceeded his jurisdiction in holding that no enquiry was made by the Assessing Officer Assessing Officer. Accordingly, the order of the Ld. CIT deserve the order of the Ld. CIT deserve to be quashed. In support of the contention, the In support of the contention, the Ld. counsel relied on counsel relied on the decisions of the ITAT Delhi bench in the case of of the ITAT Delhi bench in the case of of the ITAT Delhi bench in the case of Balvinder Kumar Vs PCIT reported in (2021) 125 taxmann.com 83 (Delhi) Kumar Vs PCIT reported in (2021) 125 taxmann.com 83 (Delhi) Kumar Vs PCIT reported in (2021) 125 taxmann.com 83 (Delhi) and Gift and Handicrafts Vs C Handicrafts Vs CIT in IT in ITA No 2898/Del/2005 reported in (2008) 19 SOT 5 reported in (2008) 19 SOT 5.

Shree Aniruddha Upasana Foundation Shree Aniruddha Upasana Foundation 12 ITA No. 706/M/2022 7.3 The Ld. counsel further submitted that for assessment year counsel further submitted that for assessment year counsel further submitted that for assessment year 2016-17 also the Ld. CIT issued notice for proceeding under section 17 also the Ld. CIT issued notice for proceeding under section 17 also the Ld. CIT issued notice for proceeding under section 263 of the Act on the ground for non on the ground for non-verification of the verification of the utilization of the accumulated fund d and held the order of the Assessing Officer Assessing Officer as erroneous insofar as prejudicial to the interest of the erroneous insofar as prejudicial to the interest of the erroneous insofar as prejudicial to the interest of the Revenue vide order dated 11/03/2021. order dated 11/03/2021. In consequent assessment order passed In consequent assessment order passed under section 143 (3) read with section 263 of the under section 143 (3) read with section 263 of the under section 143 (3) read with section 263 of the Act dated 26/03/2022, no addition was made by the , no addition was made by the Assessing Officer Assessing Officer on the issue of utilization of the accumulated fund. The The Ld. counsel submitted that order passed by the CIT order passed by the CIT dated 11/03/2021 has been 11/03/2021 has been accordingly quashed quashed by the ITAT vide order dated 05/05 order dated 05/05/2022 in ITA No. 686/Mum/2021. No. 686/Mum/2021.

8.1 In the rejoinder, the In the rejoinder, the Ld. counsel filed a copy of the instruction copy of the instruction issued with regard to CASS Cycle 2017 issued with regard to CASS Cycle 2017 and 2018 for scope of 2018 for scope of enquiry in limited scrutiny enquiry in limited scrutiny cases.

Shree Aniruddha Upasana Foundation Shree Aniruddha Upasana Foundation 14 ITA No. 706/M/2022 paperbook. The relevant query raised paperbook. The relevant query raised by the Assessing Officer Assessing Officer is reproduced as under: reproduced as under:

“16. Details of any amount paid during the previous year to any Details of any amount paid during the previous year to any Details of any amount paid during the previous year to any person referred to in Sub person referred to in Sub-section (3) of section 13.” 9.1 The Ld. counsel has referred to the reply submitted by the counsel has referred to the reply submitted by the counsel has referred to the reply submitted by the assessee in response of the above query, which is placed on page 18 assessee in response of the above query, which is placed on page 18 assessee in response of the above query, which is placed on page 18 of the paperbook. The relevant reply is reproduced as under: of the paperbook. The relevant reply is reproduced as under: of the paperbook. The relevant reply is reproduced as under:

“15. no amount has been paid by ‘A’ to any person referred u/s no amount has been paid by ‘A’ to any person referred u/s no amount has been paid by ‘A’ to any person referred u/s 13(3) of the I.T. Act. I.T. Act.” 9.2 Thus it is evident that the it is evident that the Assessing Officer has carried out the has carried out the enquiry on the issue of verification of limited scrutiny reason. enquiry on the issue of verification of limited scrutiny reason. enquiry on the issue of verification of limited scrutiny reason.

9.3 Further, on perusal perusal of the impugned order of the order of the Ld. CIT, we find that he has nowhere stated that no verification or any further find that he has nowhere stated that no verification or any further find that he has nowhere stated that no verification or any further verification has not been done by the verification has not been done by the Assessing Officer Assessing Officer on the issue of scrutiny for which the case was selected as limited scrutiny case. of scrutiny for which the case was selected as limited scrutiny case. of scrutiny for which the case was selected as limited scrutiny case. The Ld. CIT has held the order of the CIT has held the order of the Assessing Officer sessing Officer as erroneous on the ground of no enquiry on other issues i.e. the issue of non on the ground of no enquiry on other issues i.e. the issue of non on the ground of no enquiry on other issues i.e. the issue of non-

Shree Aniruddha Upasana Foundation Shree Aniruddha Upasana Foundation 15 ITA No. 706/M/2022 verification of utilization utilization of the accumulated fund and non fund and non- verification of reduction in t verification of reduction in tangible assets and capital work angible assets and capital work-in- progress.

9.4 As far as scope of ve As far as scope of verification in limited scrutiny cases is rification in limited scrutiny cases is concerned the CBDT in instruction No. 7/2014 concerned the CBDT in instruction No. 7/2014 vide vide letter dated 26/09/2014 has specified that scope of enquiry in limited scrutiny 26/09/2014 has specified that scope of enquiry in limited scrutiny 26/09/2014 has specified that scope of enquiry in limited scrutiny cases should be limited to verification of those particular aspects cases should be limited to verification of those particular aspects cases should be limited to verification of those particular aspects only and therefore only and therefore the Assessing Officer shall confine shall confine the questionnaire and subsequent enquiry or verification only on the questionnaire and subsequent enquiry or verification only on the questionnaire and subsequent enquiry or verification only on the specific points on the basis of which the particular return has been specific points on the basis of which the particular return has been specific points on the basis of which the particular return has been selected for scrutiny. It is further provided that if there’s a potential selected for scrutiny. It is further provided that if there’s a potential selected for scrutiny. It is further provided that if there’s a potential escapement of the income then ent of the income then Assessing Officer may convert the may convert the case into detail scrutiny after prior approval of the higher case into detail scrutiny after prior approval of the higher case into detail scrutiny after prior approval of the higher authorities. The relevant clause of the authorities. The relevant clause of the Instruction Instruction No. 7/2014 (supra) is reproduced as under: is reproduced as under:

“4. In case, during the course of assessment proceedings, it is found 4. In case, during the course of assessment proceedings, it is found 4. In case, during the course of assessment proceedings, it is found that there is potential escapement of income exceeding that there is potential escapement of income exceeding ₹10 lakhs ₹10 lakhs

Shree Aniruddha Upasana Foundation Shree Aniruddha Upasana Foundation 16 ITA No. 706/M/2022

(for non-metro charges, the monetary limit shall be metro charges, the monetary limit shall be ₹5 lakhs) on ₹5 lakhs) on any other issue(s) apart from the AIR/CIB/26AS informatio any other issue(s) apart from the AIR/CIB/26AS informatio any other issue(s) apart from the AIR/CIB/26AS information based on which the case was selected under CASS requiring based on which the case was selected under CASS requiring based on which the case was selected under CASS requiring substantial verification, the case may be taken up for substantial verification, the case may be taken up for substantial verification, the case may be taken up for comprehensive scrutiny with the approval of the Pr. CIT/DIT comprehensive scrutiny with the approval of the Pr. CIT/DIT comprehensive scrutiny with the approval of the Pr. CIT/DIT concerned. However, such an approval shall be accorded by the Pr. concerned. However, such an approval shall be accorded by the Pr. concerned. However, such an approval shall be accorded by the Pr. CIT/DIT in writ CIT/DIT in writing after being satisfied about merits of the ing after being satisfied about merits of the issue(s) necessitating wider and detailed scrutiny in the case. issue(s) necessitating wider and detailed scrutiny in the case. issue(s) necessitating wider and detailed scrutiny in the case. Cases so taken up for detailed scrutiny shall be monitored by the Jt. Cases so taken up for detailed scrutiny shall be monitored by the Jt. Cases so taken up for detailed scrutiny shall be monitored by the Jt. CIT/Addl. CIT concerned. CIT/Addl. CIT concerned.”

9.5 Regarding the scope of enquiry in limited scrutiny cases, the Regarding the scope of enquiry in limited scrutiny cases, the Regarding the scope of enquiry in limited scrutiny cases, the CBDT vide letter dated 29/12/2015 has further clarified as under: letter dated 29/12/2015 has further clarified as under: letter dated 29/12/2015 has further clarified as under:

“3. As far as the returns selected for scrutiny through CASS 3. As far as the returns selected for scrutiny through CASS-2015 3. As far as the returns selected for scrutiny through CASS are concerned, two type of cases have been selected for scruti are concerned, two type of cases have been selected for scruti are concerned, two type of cases have been selected for scrutiny in the current Financial Year the current Financial Year-- one is 'Limited Scrutiny' and other is one is 'Limited Scrutiny' and other is 'Complete Scrutiny'. The assessees concerned have duly been 'Complete Scrutiny'. The assessees concerned have duly been 'Complete Scrutiny'. The assessees concerned have duly been intimated about their cases falling either in 'Limited Scrutiny' or intimated about their cases falling either in 'Limited Scrutiny' or intimated about their cases falling either in 'Limited Scrutiny' or 'Complete Scrutiny' through notices issued under secti 'Complete Scrutiny' through notices issued under section 143(2) of on 143(2) of the Income-tax Act, 1961 ('Act'). The procedure for handling tax Act, 1961 ('Act'). The procedure for handling tax Act, 1961 ('Act'). The procedure for handling 'Limited Scrutiny' cases shall be as under: 'Limited Scrutiny' cases shall be as under: a. In 'Limited Scrutiny' cases, the reasons/issues shall be forthwith a. In 'Limited Scrutiny' cases, the reasons/issues shall be forthwith a. In 'Limited Scrutiny' cases, the reasons/issues shall be forthwith communicated to the assessee concerned. communicated to the assessee concerned. b. The Questionnaire under s b. The Questionnaire under section 142(1) of the Act in 'Limited ection 142(1) of the Act in 'Limited Scrutiny' cases shall remain confined only to the specific Scrutiny' cases shall remain confined only to the specific Scrutiny' cases shall remain confined only to the specific reasons/issues for which case has been picked up for scrutiny. reasons/issues for which case has been picked up for scrutiny. reasons/issues for which case has been picked up for scrutiny.

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Further, the scope of enquiry shall be restricted to the 'Limited Further, the scope of enquiry shall be restricted to the 'Limited Further, the scope of enquiry shall be restricted to the 'Limited Scrutiny' issues. Scrutiny' issues. c. These cases shall be completed expeditiously in a limited number s shall be completed expeditiously in a limited number s shall be completed expeditiously in a limited number of hearings. d. During the course of assessment proceedings in 'Limited d. During the course of assessment proceedings in 'Limited d. During the course of assessment proceedings in 'Limited Scrutiny cases, if it comes to the notice of the Assessing Officer that Scrutiny cases, if it comes to the notice of the Assessing Officer that Scrutiny cases, if it comes to the notice of the Assessing Officer that there is potential escapement of income exceeding Rs. fiv there is potential escapement of income exceeding Rs. fiv there is potential escapement of income exceeding Rs. five lakhs (for metro charges, the monetary limit shall be Rs. ten lakhs) (for metro charges, the monetary limit shall be Rs. ten lakhs) (for metro charges, the monetary limit shall be Rs. ten lakhs) requiring substantial verification on any other issue(s), then, the requiring substantial verification on any other issue(s), then, the requiring substantial verification on any other issue(s), then, the case may be taken up for 'Complete Scrutiny' with the approval of case may be taken up for 'Complete Scrutiny' with the approval of case may be taken up for 'Complete Scrutiny' with the approval of the Pr. CIT/CIT concerned. However, such an approva the Pr. CIT/CIT concerned. However, such an approval shall be l shall be accorded by the by the Pr. CIT/CIT in writing after being satisfied accorded by the by the Pr. CIT/CIT in writing after being satisfied accorded by the by the Pr. CIT/CIT in writing after being satisfied about merits of the issue(s) necessitating Complete Scrutiny' in about merits of the issue(s) necessitating Complete Scrutiny' in about merits of the issue(s) necessitating Complete Scrutiny' in that particular case Such cases shall be monitored by the Range that particular case Such cases shall be monitored by the Range that particular case Such cases shall be monitored by the Range Head concerned. The procedure indicated at point Head concerned. The procedure indicated at points (a). (b) and (c) s (a). (b) and (c) above shall no longer remain binding in such cases. (For the above shall no longer remain binding in such cases. (For the above shall no longer remain binding in such cases. (For the present purpose, 'Metro charges' would mean Delhi, Mumbai, present purpose, 'Metro charges' would mean Delhi, Mumbai, present purpose, 'Metro charges' would mean Delhi, Mumbai, Chennai, Kolkata, Bengaluru, Hyderabad and Ahmedabad). Chennai, Kolkata, Bengaluru, Hyderabad and Ahmedabad). Chennai, Kolkata, Bengaluru, Hyderabad and Ahmedabad).” 9.6 For cases selected through CASS cycle 2015 and 2016 the For cases selected through CASS cycle 2015 and 2016 the For cases selected through CASS cycle 2015 and 2016 the CBDT has further emphasi has further emphasized that scrutiny proceeding in limited that scrutiny proceeding in limited scrutiny should be restricted to the relevant parameters which scrutiny should be restricted to the relevant parameters which scrutiny should be restricted to the relevant parameters which formed the basis for selecting the case for the scrutiny and the formed the basis for selecting the case for the scrutiny and the formed the basis for selecting the case for the scrutiny and the Assessing Officer shall not proceed to make other inquiries exce shall not proceed to make other inquiries except shall not proceed to make other inquiries exce

Shree Aniruddha Upasana Foundation Shree Aniruddha Upasana Foundation 18 ITA No. 706/M/2022 with the prior approval of the higher authorities. with the prior approval of the higher authorities. with the prior approval of the higher authorities. The relevant clauses of the instruction are reproduced as under: clauses of the instruction are reproduced as under:

“INSTRUCTION NO.5/2016 IF.NO.225/269/2015 INSTRUCTION NO.5/2016 IF.NO.225/269/2015-ITA.111, DATED ITA.111, DATED 14-7-2016 vide Instruction No. 20/2015 dated 29.12.2015 in File of even number, Board vide Instruction No. 20/2015 dated 29.12.2015 in File of even number, vide Instruction No. 20/2015 dated 29.12.2015 in File of even number, has laid down Standard Operating Procedure for handling of cases under has laid down Standard Operating Procedure for handling of cases under has laid down Standard Operating Procedure for handling of cases under 'Limited Scrutiny' which were selected through Computer Aided Scrutiny 'Limited Scrutiny' which were selected through Computer Aided Scrutiny 'Limited Scrutiny' which were selected through Computer Aided Scrutiny Selection in 'CASS Cycle 2015'. in these cases, it was stated that the general Selection in 'CASS Cycle 2015'. in these cases, it was stated that the general Selection in 'CASS Cycle 2015'. in these cases, it was stated that the general scope of enquiry in scrutiny scope of enquiry in scrutiny proceedings should be restricted to the relevant proceedings should be restricted to the relevant parameters which formed the basis for selecting the case for scrutiny. However, parameters which formed the basis for selecting the case for scrutiny. However, parameters which formed the basis for selecting the case for scrutiny. However, in revenue potential cases, it was further provided that 'Complete Scrutiny' in revenue potential cases, it was further provided that 'Complete Scrutiny' in revenue potential cases, it was further provided that 'Complete Scrutiny' could be conducted, if there was potential escapem could be conducted, if there was potential escapement of income above a ent of income above a prescribed monetary limit, subject to the approval of administrative Pr. prescribed monetary limit, subject to the approval of administrative Pr. prescribed monetary limit, subject to the approval of administrative Pr. CIT/CIT/Pr.DIT/DIT.

2. In order to ensure that maximum objectivity is maintained in converting a 2. In order to ensure that maximum objectivity is maintained in converting a 2. In order to ensure that maximum objectivity is maintained in converting a case falling under 'Limited Scrutiny' into a 'Complete Scrutiny' case falling under 'Limited Scrutiny' into a 'Complete Scrutiny' case, the matter case, the matter has been further examined and in partial modification to Para 3(d) of the has been further examined and in partial modification to Para 3(d) of the has been further examined and in partial modification to Para 3(d) of the earlier order dated 29.12.2015, Board hereby lays down that while proposing earlier order dated 29.12.2015, Board hereby lays down that while proposing earlier order dated 29.12.2015, Board hereby lays down that while proposing to take up 'Complete Scrutiny' in a case which was originally earmarked for to take up 'Complete Scrutiny' in a case which was originally earmarked for to take up 'Complete Scrutiny' in a case which was originally earmarked for 'Limited Scrutiny', the Assessing Officer ('AO') shall be required to form a utiny', the Assessing Officer ('AO') shall be required to form a utiny', the Assessing Officer ('AO') shall be required to form a reasonable view that there is possibility of under assessment of income if the reasonable view that there is possibility of under assessment of income if the reasonable view that there is possibility of under assessment of income if the case is not examined under Complete Scrutiny'. In this regard, the monetary case is not examined under Complete Scrutiny'. In this regard, the monetary case is not examined under Complete Scrutiny'. In this regard, the monetary limits and equirement of administrat limits and equirement of administrative approval from Pr. CIT/CIT/Pr.IT/DIT, ive approval from Pr. CIT/CIT/Pr.IT/DIT, as prescribed in Para 3(d) of earlier Instruction dated 9.12.2015, shall continue as prescribed in Para 3(d) of earlier Instruction dated 9.12.2015, shall continue as prescribed in Para 3(d) of earlier Instruction dated 9.12.2015, shall continue to remain applicable.

Shree Aniruddha Upasana Foundation Shree Aniruddha Upasana Foundation 19 ITA No. 706/M/2022

3. Further, while forming the reasonable view, the Assessing Officer would 3. Further, while forming the reasonable view, the Assessing Officer would 3. Further, while forming the reasonable view, the Assessing Officer would ensure that: a. there exists credible material or information available on e material or information available on record for forming record for forming such view; b. this reasonable view should not be based on mere suspicion, conjecture or this reasonable view should not be based on mere suspicion, conjecture or this reasonable view should not be based on mere suspicion, conjecture or unreliable source; and unreliable source; and c. there must be a direct nexus between the available material and formation of there must be a direct nexus between the available material and formation of there must be a direct nexus between the available material and formation of such view.

4. It is further clarified that in cases under 'Limited Scrutiny', the scrutiny 4. It is further clarified that in cases under 'Limited Scrutiny', the scrutiny 4. It is further clarified that in cases under 'Limited Scrutiny', the scrutiny assessment proceedings would initially be confined only assessment proceedings would initially be confined only to issues under to issues under 'Limited Scrutiny' and questionnaires, enquiry, investigation etc. would be 'Limited Scrutiny' and questionnaires, enquiry, investigation etc. would be 'Limited Scrutiny' and questionnaires, enquiry, investigation etc. would be restricted to such issues. Only upon conversion of case to 'Complete Scrutiny' ues. Only upon conversion of case to 'Complete Scrutiny' ues. Only upon conversion of case to 'Complete Scrutiny' after following the procedure outlined above, the AO may examine the after following the procedure outlined above, the AO may examine the after following the procedure outlined above, the AO may examine the additional issues besides the issue(s) involved in 'Limited Scrutiny'. The AO shall additional issues besides the issue(s) involved in 'Limited Scrutiny'. The AO shall additional issues besides the issue(s) involved in 'Limited Scrutiny'. The AO shall also expeditiously intimate the taxpayer conce also expeditiously intimate the taxpayer concerned regarding conducting rned regarding conducting 'Complete Scrutiny' in such cases. 'Complete Scrutiny' in such cases.

5. It is also clarified that once a case has been converted to 5. It is also clarified that once a case has been converted to 'Complete Scrutiny', the AO can deal with any issue emerging from ongoing 'Complete Scrutiny', the AO can deal with any issue emerging from ongoing 'Complete Scrutiny', the AO can deal with any issue emerging from ongoing scrutiny proceedings notwithstanding the fact that the scrutiny proceedings notwithstanding the fact that the reason for such issue reason for such issue have not been included in the Note. have not been included in the Note.

6. To ensure proper monitoring in cases which have been converted from 6. To ensure proper monitoring in cases which have been converted from 6. To ensure proper monitoring in cases which have been converted from 'Limited Scrutiny' to 'Complete Scrutiny', it is suggested, that provisions of 'Limited Scrutiny' to 'Complete Scrutiny', it is suggested, that provisions of 'Limited Scrutiny' to 'Complete Scrutiny', it is suggested, that provisions of section 144A of the Act may be invoked in suitab section 144A of the Act may be invoked in suitable cases. To prevent possibility le cases. To prevent possibility of fishing and roving enquiries in such cases, it is desirable that these cases of fishing and roving enquiries in such cases, it is desirable that these cases of fishing and roving enquiries in such cases, it is desirable that these cases

Shree Aniruddha Upasana Foundation Shree Aniruddha Upasana Foundation 20 ITA No. 706/M/2022 should invariably be picked up while conducting Review or Inspection by the should invariably be picked up while conducting Review or Inspection by the should invariably be picked up while conducting Review or Inspection by the administrative authorities. administrative authorities.

7. The above Instruction shall be appli The above Instruction shall be applicable from the date of its issue and would cable from the date of its issue and would cover the cases selected under CASS 2015 which are pending scrutiny cases as cover the cases selected under CASS 2015 which are pending scrutiny cases as cover the cases selected under CASS 2015 which are pending scrutiny cases as well as cases selected/being selected under the CASS 2016. well as cases selected/being selected under the CASS 2016.

8. The contents of this Instruction may be brought to the notice of all for 8. The contents of this Instruction may be brought to the notice of all for 8. The contents of this Instruction may be brought to the notice of all for necessary compliance. ecessary compliance.”

“To All Principal Chief-Commissioners of Income Commissioners of Income-tax/All Principa tax/All Principal Director- Generals of Income-tax tax

Shree Aniruddha Upasana Foundation Shree Aniruddha Upasana Foundation 21 ITA No. 706/M/2022 Sir/Madam, Subject: Scope of enquiry in Limited Scrutiny cases selected under CASS cycles Subject: Scope of enquiry in Limited Scrutiny cases selected under CASS cycles Subject: Scope of enquiry in Limited Scrutiny cases selected under CASS cycles 2017 and 2018 in the context of information provided by any law context of information provided by any law-enforcement/ intelligence/regulatory authority or agency intelligence/regulatory authority or agency redg.- Under CASS cycles 2017 and 2018, some of the cases were selected for scrutiny Under CASS cycles 2017 and 2018, some of the cases were selected for scrutiny Under CASS cycles 2017 and 2018, some of the cases were selected for scrutiny as a "Limited Scrutiny" case. It Limited Scrutiny' cases, A as a "Limited Scrutiny" case. It Limited Scrutiny' cases, Assessing Officer cannot ssessing Officer cannot travel beyond the issues) for which the case was selected. travel beyond the issues) for which the case was selected. The idea behind such The idea behind such a stipulation is to enforce checks and balances up o enforce checks and balances upon powers of an Assessing on powers of an Assessing Officer to do fishing and roving enquiries in cases under 'Limited Scrutiny'. Officer to do fishing and roving enquiries in cases under 'Limited Scrutiny' Officer to do fishing and roving enquiries in cases under 'Limited Scrutiny'

3. The matter has been considered by the Board. In order to enable proper er has been considered by the Board. In order to enable proper er has been considered by the Board. In order to enable proper enquiry/ investigation in pending enquiry/ investigation in pending 'Limited Scrutiny' cases which were selected 'Limited Scrutiny' cases which were selected through CASS cycles of 2017 and 2018, where credible material or information ycles of 2017 and 2018, where credible material or information ycles of 2017 and 2018, where credible material or information has been/is provided by any law has been/is provided by any law-enforcement/intelligence/regulatory cement/intelligence/regulatory authority or agency regarding tax authority or agency regarding tax-evasion by an assessee, it has been decided evasion by an assessee, it has been decided by the Board that issues arising from such information can also be examined by the Board that issues arising from such information can also be examined by the Board that issues arising from such information can also be examined during the course of conduct of assessment proceedings in such "Limited during the course of conduct of assessment proceedings in such "Limited during the course of conduct of assessment proceedings in such "Limited Scrutiny' cases with prior administrative approval of the concerned Pr. Scrutiny' cases with prior administrative approval of the concerned Pr. Scrutiny' cases with prior administrative approval of the concerned Pr. CIT/CIT.

4. It is pertinent to mention that unlike CASS 2015 and 2016 cycles, where 4. It is pertinent to mention that unlike CASS 2015 and 2016 cycles, where 4. It is pertinent to mention that unlike CASS 2015 and 2016 cycles, where consideration of any additional issue lead to the conversion of case to consideration of any additional issue lead to the conversion of case to consideration of any additional issue lead to the conversion of case to Shree Aniruddha Upasana Foundation Shree Aniruddha Upasana Foundation 22 ITA No. 706/M/2022 "Complete Scrutiny" as laid "Complete Scrutiny" as laid down in Instruction No. 5/2016 dated 14.07.16. the down in Instruction No. 5/2016 dated 14.07.16. the pending 'Limited Scrutiny' cases of CASS 2017 and 2018 pending 'Limited Scrutiny' cases of CASS 2017 and 2018 cycles would not be ycles would not be taken up for "Complete taken up for "Complete Scrutiny" as the present directive is only to facilitate Scrutiny" as the present directive is only to facilitate consideration of those issues wherein specific in consideration of those issues wherein specific information Therefore, in such Therefore, in such of tax-evasion evasion evasion has has has been been been furnished furnished furnished by by by any any any law- law law enforcement/intelligence/regulatory authority or agency. nforcement/intelligence/regulatory authority or agency. 'Limited Scrutiny’ 'Limited Scrutiny’ Assessing Officer shall not expand the scope Assessing Officer shall not expand the scope enquiry/investigation beyond the enquiry/investigation beyond the issue(s) on which the case w issue(s) on which the case was flagged for Limited Scrutiny' & issue arising as flagged for Limited Scrutiny' & issue arising from nature of information mentioned in para 2 and 3. Above from nature of information mentioned in para 2 and 3. Above.

5. The following procedure shall be adopted while examining the additional 5. The following procedure shall be adopted while examining the additional 5. The following procedure shall be adopted while examining the additional issue: i. The Assessing Officer shall duly record the reasons for expan i. The Assessing Officer shall duly record the reasons for expanding the scope of ding the scope of 'Limited Scrutiny" to the extent mentioned in para 2 and 3, above; 'Limited Scrutiny" to the extent mentioned in para 2 and 3, above; 'Limited Scrutiny" to the extent mentioned in para 2 and 3, above; ii. The same shall be placed before the Pr. CIT/CIT concerned and upon his . The same shall be placed before the Pr. CIT/CIT concerned and upon his . The same shall be placed before the Pr. CIT/CIT concerned and upon his approval, further issue can be considered during the assessment proceeding: approval, further issue can be considered during the assessment proceeding: approval, further issue can be considered during the assessment proceeding: iii. The Assessing Officer shall issue an intimation to the assessee concerned that fficer shall issue an intimation to the assessee concerned that fficer shall issue an intimation to the assessee concerned that additional issue would also be considered during the course of pending additional issue would also be considered during the course of pending additional issue would also be considered during the course of pending assessment proceeding: assessment proceeding: iv. To ensure proper monitoring in these cases, provisions of section 144A of the iv. To ensure proper monitoring in these cases, provisions of section 144A of the iv. To ensure proper monitoring in these cases, provisions of section 144A of the Income-tax Act, 1961 may be invoked in suitable cases. Further, to prevent 1961 may be invoked in suitable cases. Further, to prevent 1961 may be invoked in suitable cases. Further, to prevent fishing and roving enquiries in these cases, it is desirable that these cases are fishing and roving enquiries in these cases, it is desirable that these cases are fishing and roving enquiries in these cases, it is desirable that these cases are invariably picked up for Review/Inspection by the administrative authorities. invariably picked up for Review/Inspection by the administrative authorities. invariably picked up for Review/Inspection by the administrative authorities.

Shree Aniruddha Upasana Foundation Shree Aniruddha Upasana Foundation 23 ITA No. 706/M/2022 and 2018 cycles can be expanded in its scope and that too only to the extent of and 2018 cycles can be expanded in its scope and that too only to the extent of and 2018 cycles can be expanded in its scope and that too only to the extent of the issues referred to by the law the issues referred to by the law-enforcement/intelligence/regulatory enforcement/intelligence/regulatory authority or agency.

7. It may be brought to the notice of all for necessary compliance 7. It may be brought to the notice of all for necessary compliance. .” 10.1 In view of above above instruction of the CBDT, it is evident that , it is evident that Ld. Assessing Officer was not authorized to travel beyond the enquiry was not authorized to travel beyond the enquiry was not authorized to travel beyond the enquiry on the issue for which case was selected for scrutiny and enquiry on on the issue for which case was selected for scrutiny and enquiry on on the issue for which case was selected for scrutiny and enquiry on the issues as observed as observed by the Ld. CIT in order under section 263 of CIT in order under section 263 of the Act on the issue of non the Act on the issue of non-verification of utilization of the verification of utilization of the accumulated fund and reduction in sale of fund and reduction in sale of asset and capital work in and capital work in progress, were beyond the scope of the limited scrutiny. The , were beyond the scope of the limited scrutiny. The , were beyond the scope of the limited scrutiny. The Ld. DR has not brought before has not brought before us whether any permission was sought by us whether any permission was sought by the Assessing Officer for converting the limited scrutiny case into a the Assessing Officer for converting the limited scrutiny case into a the Assessing Officer for converting the limited scrutiny case into a completely scrutiny case. completely scrutiny case.

10.2 Further, we find that we find that Tribunal in the case of Balvinder Kumar in the case of Balvinder Kumar (supra) after analyzing (supra) after analyzing CBDT instructions on the issue of the scope sue of the scope of limited scrutiny held that it would not be open for the PCIT to of limited scrutiny held that it would not be open for the PCIT to of limited scrutiny held that it would not be open for the PCIT to Shree Aniruddha Upasana Foundation Shree Aniruddha Upasana Foundation 24 ITA No. 706/M/2022 pass revisionary order under section 263 in the case of limited order under section 263 in the case of limited order under section 263 in the case of limited scrutiny, where the Assessing Officer could not go beyond reason for scrutiny, where the Assessing Officer could not go beyond reason for scrutiny, where the Assessing Officer could not go beyond reason for which matter was selected for limited s which matter was selected for limited scrutiny. The relevant finding crutiny. The relevant finding of the Tribunal (supra) (supra) is reproduced as under:

“8. We have gone through the record in the light of the submissions made on 8. We have gone through the record in the light of the submissions made on 8. We have gone through the record in the light of the submissions made on either side. There is no dispute that the case of the assessee was picked up for either side. There is no dispute that the case of the assessee was picked up for either side. There is no dispute that the case of the assessee was picked up for scrutiny under the category of limited scrutiny. This fact is established from the scrutiny under the category of limited scrutiny. This fact is established from the scrutiny under the category of limited scrutiny. This fact is established from the assessment order and also the notice issued under section 143(2) of the Act. It is and also the notice issued under section 143(2) of the Act. It is and also the notice issued under section 143(2) of the Act. It is also not in dispute that the CBDT issued the instructions relied upon by the also not in dispute that the CBDT issued the instructions relied upon by the also not in dispute that the CBDT issued the instructions relied upon by the assessee and for the sake of convenience we extract the relevant portions assessee and for the sake of convenience we extract the relevant portions assessee and for the sake of convenience we extract the relevant portions thereof hereunder: - “CBDT Instruction No. 7/2014 The reason(s) for selection of cases under CASS No. 7/2014 The reason(s) for selection of cases under CASS No. 7/2014 The reason(s) for selection of cases under CASS are displayed to the Assessing Officer in AST application and notice u/s 143(2), are displayed to the Assessing Officer in AST application and notice u/s 143(2), are displayed to the Assessing Officer in AST application and notice u/s 143(2), after generation from AST, is issued to the taxpayer with the remark ".Selected after generation from AST, is issued to the taxpayer with the remark ".Selected after generation from AST, is issued to the taxpayer with the remark ".Selected under Computer Aided Scrutiny Selec under Computer Aided Scrutiny Selection (CASS)". The functionality in AST is tion (CASS)". The functionality in AST is being modified suitably to flag the reasons for scrutiny selection in being modified suitably to flag the reasons for scrutiny selection in being modified suitably to flag the reasons for scrutiny selection in AIR/CIB/26AS cases. This functionality is expected to be operationalized by AIR/CIB/26AS cases. This functionality is expected to be operationalized by AIR/CIB/26AS cases. This functionality is expected to be operationalized by 15th October, 2014. Further, the Assessing Officer while issuing notice under 15th October, 2014. Further, the Assessing Officer while issuing not 15th October, 2014. Further, the Assessing Officer while issuing not section 142(1) of the Act which is enclosed with the first questionnaire would section 142(1) of the Act which is enclosed with the first questionnaire would section 142(1) of the Act which is enclosed with the first questionnaire would proceed to verify only the specific aspects requiring examination/verification. only the specific aspects requiring examination/verification. only the specific aspects requiring examination/verification. In such cases, all efforts would be made to ensure that assessment proceedings In such cases, all efforts would be made to ensure that assessment proceedings In such cases, all efforts would be made to ensure that assessment proceedings are completed expeditiously in minimum possible number of hearings without leted expeditiously in minimum possible number of hearings without leted expeditiously in minimum possible number of hearings without unnecessarily dragging the case till the time unnecessarily dragging the case till the time-barring date.

CBDT Instruction No. 20/2015 CBDT Instruction No. 20/2015

Shree Aniruddha Upasana Foundation Shree Aniruddha Upasana Foundation 25 ITA No. 706/M/2022

(a) ....

(b) The Questionnaire under section 142(1) of the Act in 1Limited Scrutiny * (b) The Questionnaire under section 142(1) of the Act in 1Limited Scrutiny * (b) The Questionnaire under section 142(1) of the Act in 1Limited Scrutiny * cases shallre nut in confi cases shallre nut in confined only to the specific reasons/issues for which case ned only to the specific reasons/issues for which case has been picked upforscrutiny.Further, the scope of enquiry shall be restricted has been picked upforscrutiny.Further, the scope of enquiry shall be restricted has been picked upforscrutiny.Further, the scope of enquiry shall be restricted to the Limited Scrutiny’ issues. to the Limited Scrutiny’ issues.

CBDT Instruction No. 5/2016 CBDT Instruction No. 5/2016 “4. It is further clarified that in cases under 'Limited S “4. It is further clarified that in cases under 'Limited Scrutiny crutiny \ the scrutiny assessment proceedings would initially be confined only to issues under assessment proceedings would initially be confined only to issues under assessment proceedings would initially be confined only to issues under 'Limited Scrutiny' and Questionnaires, enquiry, investigation etc. would be 'Limited Scrutiny' and Questionnaires, enquiry, investigation etc. would be 'Limited Scrutiny' and Questionnaires, enquiry, investigation etc. would be restricted to such issues. Only upon comers ion of case to restricted to such issues. Only upon comers ion of case to 'Complete Scrutiny' 'Complete Scrutiny' after following the procedure outlined above, the AO may examine the following the procedure outlined above, the AO may examine the following the procedure outlined above, the AO may examine the additional issues besides the issue(s) involved in 'Limited Scrutiny'. The AO shall additional issues besides the issue(s) involved in 'Limited Scrutiny'. The AO shall additional issues besides the issue(s) involved in 'Limited Scrutiny'. The AO shall also expeditiously intimate the taxpayer concerned regarding conducting also expeditiously intimate the taxpayer concerned regarding conducting also expeditiously intimate the taxpayer concerned regarding conducting 'Complete Scrutiny' in such cases.” C 'Complete Scrutiny' in such cases.” CBDT Letter dated 30.11.2017 J Instances BDT Letter dated 30.11.2017 J Instances have come to notice of CBDT where some Assessing Officers are travelling have come to notice of CBDT where some Assessing Officers are travelling have come to notice of CBDT where some Assessing Officers are travelling beyond their jurisdiction while making assessments in Limited scrutiny cases by beyond their jurisdiction while making assessments in Limited scrutiny cases by beyond their jurisdiction while making assessments in Limited scrutiny cases by initiating inquiries on new issues without complying with mandatory initiating inquiries on new issues without complying with manda initiating inquiries on new issues without complying with manda requirements of the relevant CBDT Instructions dated 26 requirements of the relevant CBDT Instructions dated 26-9-2014, 29 2014, 29-12-2015 and 14-7-2016. These instances have been viewed very seriously by the CBDT 2016. These instances have been viewed very seriously by the CBDT 2016. These instances have been viewed very seriously by the CBDT and in one case the Central Inspection Team of the CBDT was tasked with and in one case the Central Inspection Team of the CBDT was tasked with and in one case the Central Inspection Team of the CBDT was tasked with Shree Aniruddha Upasana Foundation Shree Aniruddha Upasana Foundation 26 ITA No. 706/M/2022 examination of assessment rec examination of assessment records on receipt of a I lee at ions of several a I lee at ions of several irregularities. Amongst other irregularities, it was found that no reasons had Amongst other irregularities, it was found that no reasons had Amongst other irregularities, it was found that no reasons had been recorded for expanding the scope of limited scrutiny, no approval was been recorded for expanding the scope of limited scrutiny, no approval was been recorded for expanding the scope of limited scrutiny, no approval was taken from the PCIT for the conversion of the limited sc taken from the PCIT for the conversion of the limited scrutiny case to a rutiny case to a complete scrutiny case and the order sheet was maintained very perfunctorily. complete scrutiny case and the order sheet was maintained very perfunctorily. complete scrutiny case and the order sheet was maintained very perfunctorily. This gave rise to a very strong suspicion of mala fide intentions.” This gave rise to a very strong suspicion of mala fide intentions.”

9. The above CBDT instructions and the letter clearly establish that it’s not open 9. The above CBDT instructions and the letter clearly establish that it’s not open 9. The above CBDT instructions and the letter clearly establish that it’s not open for the learned Assessing Officer to travellers beyond the reason for selection of earned Assessing Officer to travellers beyond the reason for selection of earned Assessing Officer to travellers beyond the reason for selection of the matter for limited scrutiny and on that aspect the assessment order in this the matter for limited scrutiny and on that aspect the assessment order in this the matter for limited scrutiny and on that aspect the assessment order in this case is in accordance with the instructions governing the field. In such case is in accordance with the instructions governing the field. In such case is in accordance with the instructions governing the field. In such circumstances it has to be se circumstances it has to be seen whether the Ld. PCIT is justified in holding the en whether the Ld. PCIT is justified in holding the assessment order to be erroneous insofar as it is prejudicial to the interest of assessment order to be erroneous insofar as it is prejudicial to the interest of assessment order to be erroneous insofar as it is prejudicial to the interest of the Revenue for the learned Assessing Officer not considering the aspects which the Revenue for the learned Assessing Officer not considering the aspects which the Revenue for the learned Assessing Officer not considering the aspects which are beyond the purview of limited scrutiny. are beyond the purview of limited scrutiny.

10. In the Deccan Paper Mills Co. Ltd. vs. CIT in ITA 1013 AND 1635/PUN/2015, 10. In the Deccan Paper Mills Co. Ltd. vs. CIT in ITA 1013 AND 1635/PUN/2015, 10. In the Deccan Paper Mills Co. Ltd. vs. CIT in ITA 1013 AND 1635/PUN/2015, Pune Bench of the Tribunal held, that, Pune Bench of the Tribunal held, that, “40. Now, coming to the aspect of book profits which was considered by the “40. Now, coming to the aspect of book profits which was considered by the “40. Now, coming to the aspect of book profits which was considered by the Commissioner and the order of the Assessing Officer was held to be erroneous Commissioner and the order of the Assessing Officer was held to be erroneous Commissioner and the order of the Assessing Officer was held to be erroneous and prejudicial to the interest of revenue. In this regard, it may be pointed out and prejudicial to the interest of revenue. In this regard, it may be pointed out and prejudicial to the interest of revenue. In this regard, it may be pointed out that the case of assessee was picked up for scrutiny under CASS for the limited see was picked up for scrutiny under CASS for the limited see was picked up for scrutiny under CASS for the limited purpose of verifying the Chapter VI purpose of verifying the Chapter VI-A deduction. Once the case is picked up for A deduction. Once the case is picked up for specific purpose under CASS, then it is outside the purview of the Assessing specific purpose under CASS, then it is outside the purview of the Assessing specific purpose under CASS, then it is outside the purview of the Assessing Officer to look into any other aspect oth Officer to look into any other aspect other than the aspect for which it is picked er than the aspect for which it is picked up. Hence, the Assessing Officer has not formed any opinion in respect of up. Hence, the Assessing Officer has not formed any opinion in respect of up. Hence, the Assessing Officer has not formed any opinion in respect of computation of book profits in the hands of assessee. Once, no such opinion has computation of book profits in the hands of assessee. Once, no such opinion has computation of book profits in the hands of assessee. Once, no such opinion has been formed by the Assessing Officer, the Commissioner has e been formed by the Assessing Officer, the Commissioner has erred in holding the rred in holding the order of the Assessing Officer to be erroneous and prejudicial to the interest of order of the Assessing Officer to be erroneous and prejudicial to the interest of order of the Assessing Officer to be erroneous and prejudicial to the interest of revenue in this regard. revenue in this regard.

Shree Aniruddha Upasana Foundation Shree Aniruddha Upasana Foundation 27 ITA No. 706/M/2022 Accordingly, we reverse the findings of the Commissioner. Accordingly, we reverse the findings of the Commissioner. Accordingly, we hold Accordingly, we hold that the order passed by the Commissioner under se that the order passed by the Commissioner under section 263 of the Act is ction 263 of the Act is invalid and the same is quashed for both the assessment years.” invalid and the same is quashed for both the assessment years.”

In M/s R.H. Property vs. PCIT, it was held that,- In M/s R.H. Property vs. PCIT, ITA No. 1906/Mum/2019 it was held that, In M/s R.H. Property vs. PCIT, ITA No. 1906/Mum/2019 it was held that,

As a matter of fact, what cannot be done directly cannot be done indirectly. “As a matter of fact, what cannot be done directly cannot be done indirectly. “As a matter of fact, what cannot be done directly cannot be done indirectly. Accordingly, in terms of our aforesaid observations, we are of the terms of our aforesaid observations, we are of the terms of our aforesaid observations, we are of the considered view that as the A.O had O had aptly confined himself to the issue for which the case of aptly confined himself to the issue for which the case of the assessee was selected for the assessee was selected for limited scrutiny, therefore, no infjrmity can be limited scrutiny, therefore, no infjrmity can be attributed to his order for the attributed to his order for the reason. that he had failed to dwell reason. that he had failed to dwell upon certain other issues which were clearly beyond the other issues which were clearly beyond the realm of the reason for which the realm of the reason for which the case of the assessee was selected for limited scrutiny case of the assessee was selected for limited scrutiny as per the AIR information. as per the AIR information. We thus not being able to concur with the view We thus not being able to concur with the view taken by the f J r. CIT that the taken by the f J r. CIT that the order passed by the A.O under Sec. 143(3), dated 10.10.2016is erroneous, order passed by the A.O under Sec. 143(3), dated 10.10.2016is erroneous, order passed by the A.O under Sec. 143(3), dated 10.10.2016is erroneous, therefore, set aside his order and restore the order passed by the A.O. As wehave therefore, set aside his order and restore the order passed by the A.O. As wehave therefore, set aside his order and restore the order passed by the A.O. As wehave quashed the order passed by the Pr. CIT under Sec. 263 on the ground of invalid quashed the order passed by the Pr. CIT under Sec. 263 on the ground quashed the order passed by the Pr. CIT under Sec. 263 on the ground assumption of jurisdiction by him, therefore, we refrain from adverting to and assumption of jurisdiction by him, therefore, we refrain from adverting to and assumption of jurisdiction by him, therefore, we refrain from adverting to and therein adjudicating the contentions advanced by the Id. A. Ron the merits of adjudicating the contentions advanced by the Id. A. Ron the merits of adjudicating the contentions advanced by the Id. A. Ron the merits of the case, which thus are left open.

11. Similarly, is the view taken consistently are left open.”

11. Similarly, is the view taken consistently are left open.”

11. Similarly, is the view taken consistently by the benches of this Tribunal in the other two cases also, relied upon by the he benches of this Tribunal in the other two cases also, relied upon by the he benches of this Tribunal in the other two cases also, relied upon by the assessee. In the circumstances, in view of the consistent view taken in similar assessee. In the circumstances, in view of the consistent view taken in similar assessee. In the circumstances, in view of the consistent view taken in similar matters we are of the considered opinion that when the assessing officer is matters we are of the considered opinion that when the assessing officer is matters we are of the considered opinion that when the assessing officer is bound to follow the CBDT bound to follow the CBDT instructions and while following such instructions instructions and while following such instructions and after verification of the material furnished by the assessee on the aspect and after verification of the material furnished by the assessee on the aspect and after verification of the material furnished by the assessee on the aspect covered by the limited scrutiny, is not open for the Ld. PCIT to say that not covered by the limited scrutiny, is not open for the Ld. PCIT to say that not covered by the limited scrutiny, is not open for the Ld. PCIT to say that not adverting to the other aspects of the competiti adverting to the other aspects of the competition would render the assessment on would render the assessment order erroneous and prejudicial to the interest of the Revenue. With this view of order erroneous and prejudicial to the interest of the Revenue. With this view of order erroneous and prejudicial to the interest of the Revenue. With this view of the matter we find that the impugned order cannot be sustained and, therefore, the matter we find that the impugned order cannot be sustained and, therefore, the matter we find that the impugned order cannot be sustained and, therefore, the same is liable to be quashed. We accordingly quash the same. the same is liable to be quashed. We accordingly quash the same.” ”

Shree Aniruddha Upasana Foundation Shree Aniruddha Upasana Foundation 28 ITA No. 706/M/2022 10.3 Further, the Tribunal in the case of Gift and Handicrafts (supra) the Tribunal in the case of Gift and Handicrafts (supra) the Tribunal in the case of Gift and Handicrafts (supra) has held as under:

“17. With regard to allowing deduction under section 80HHC in 17. With regard to allowing deduction under section 80HHC in 17. With regard to allowing deduction under section 80HHC in spite of there being a loss as defined under clause (baa) of spite of there being a loss as defined under clause (baa) of spite of there being a loss as defined under clause (baa) of Explanation to section 80HHC, it is seen Explanation to section 80HHC, it is seen that provisions of section that provisions of section 80HHC(3) have been 80HHC(3) have been amended retrospectively with effect from 1 ct from 1-4- 1992 and in the light of the a foresaid amendment the claim of the 1992 and in the light of the a foresaid amendment the claim of the 1992 and in the light of the a foresaid amendment the claim of the assessee is in accordance with law. Even otherwise as already held assessee is in accordance with law. Even otherwise as already held assessee is in accordance with law. Even otherwise as already held by us, the claim for deduction by us, the claim for deduction under section 80HHC was never the under section 80HHC was never the subject-matter of the limited scrutiny assessment and therefore the matter of the limited scrutiny assessment and therefore the matter of the limited scrutiny assessment and therefore the Assessing Officer could not have considered the sa Assessing Officer could not have considered the same. The CIT in me. The CIT in exercise of the j exercise of the jurisdiction under section 263 could not, therefore, urisdiction under section 263 could not, therefore, hold the order of th hold the order of the Assessing Officer as erroneous on this ground. ous on this ground. It is further seen that the Assessing Officers passed the orders of It is further seen that the Assessing Officers passed the orders of It is further seen that the Assessing Officers passed the orders of assessments in the case of present assesses on 10 assessments in the case of present assesses on 10-4-2003, 8 2003, 8-9-2003 and 29-12-2003 respectively. The decision of the Hon'ble Supreme 2003 respectively. The decision of the Hon'ble Supreme 2003 respectively. The decision of the Hon'ble Supreme Court in the case of IPCA Laboratory case (supra) was rendered n the case of IPCA Laboratory case (supra) was rendered n the case of IPCA Laboratory case (supra) was rendered much later in point of time. Prior to the said decision there was a much later in point of time. Prior to the said decision there was a much later in point of time. Prior to the said decision there was a considerable debate, on this issue. As already stated, the subsequent considerable debate, on this issue. As already stated, the subsequent considerable debate, on this issue. As already stated, the subsequent statutory amendment with retrospective effect also supports th statutory amendment with retrospective effect also supports th statutory amendment with retrospective effect also supports the claim of the assessee. Exercise of jurisdiction under section 263 on claim of the assessee. Exercise of jurisdiction under section 263 on claim of the assessee. Exercise of jurisdiction under section 263 on this ground cannot be sustained. this ground cannot be sustained.”

10.4 Respectfully following the above decision of the Tribunal, we Respectfully following the above decision of the Tribunal, we Respectfully following the above decision of the Tribunal, we hold that in the instant case the Assessing Officer was not hold that in the instant case the Assessing Officer was not hold that in the instant case the Assessing Officer was not authorized to carry out enquiry beyond the scope of the reasons for authorized to carry out enquiry beyond the scope of the reasons for authorized to carry out enquiry beyond the scope of the reasons for Shree Aniruddha Upasana Foundation Shree Aniruddha Upasana Foundation 29 ITA No. 706/M/2022 which the case was selected under limited scrutiny and therefore which the case was selected under limited scrutiny and therefore which the case was selected under limited scrutiny and therefore the Ld. CIT is not justified in directing the Assessing Officer to carry CIT is not justified in directing the Assessing Officer to carry CIT is not justified in directing the Assessing Officer to carry out the enquiry on the issues other than the issues for which case out the enquiry on the issues other than the issues for which case out the enquiry on the issues other than the issues for which case was selected for limited scrutiny and holding the order as erroneous was selected for limited scrutiny and holding the order as erroneous was selected for limited scrutiny and holding the order as erroneous insofar prejudicial to the interest of the reve insofar prejudicial to the interest of the revenue. The additional nue. The additional ground No. 3 of the appeal is accordingly allowed. of the appeal is accordingly allowed.