KALPESH DHANJIBHAI MAKASANA,SURENDRANAGAR vs. PR. CIT, AHMEDABAD-3, AHMEDABAD, AHMEDABAD

In response, the assessee filed a detailed reply that significant amount of investment were in Private Limited Company from which no exempt income had been earned, the assessee had sufficient non-interest bearing funds which is more than the investment which has yielded exempt income, Auditor had certified that no disallowance was called for u/s 14A read with Rule 8D of the Act.

The Ld. PCIT considered the submission of the assessee and directed the assessing officer to invoke provisions of section 14A read with Rule 8D disallowance by giving proper opportunity of hearing to the assessee.

We have given our thoughtful consideration and perused the materials available on record including the Paper Book and Case Laws relied by both the parties. It is undisputed fact that the original return was taken for “limited scrutiny” assessment to verify the deduction of total income under Chapter VIA of the Act by issuing notice u/s 143(2) dated 29-06-2021 which is available at Page No. 12 of the Paper Book. Pursuant the same, the assessing officer issued notice u/s. 142(1) dated 15-11-2021 calling for various details relating to the deduction claim u/s 80G of the Act. The assessee filed its reply on 29-11-2021 namely name of the Donee with full address, PAN details, donation amount through banking channel enclosing bank statement, copy of the donation A.Y. 2020-21 Page No 6 Kalpesh Dhanjibhai Makasana Vs. Pr.CIT receipt and u/s 80G(5)(vi) certificate of the Donee and computation of income. Thus the assessee discharged its initial onus cast upon him. Verification of the same by the assessing officer found that the donation made by the assessee is to be true, thereby passed assessment order (under section 143(3)) accepting the returned income as total income of Rs.6,12,13,850/-.

Co-ordinate Bench of this Tribunal in the case of PCIT vs. M/s. Green Park held that revision proceedings cannot be initiated other than the limited scrutiny assessment by observing as follows: 12. We have considered the rival submissions of both the parties and have gone through the assessment order passed by the Assessing Officer as well the order passed by the ld. Pr.CIT under Section 263 of the Act which is impugned before us. We find that the case of assessee was selected for limited scrutiny. We further find that for limited, scrutiny, the Assessing Officer issued necessary questionnaire about, A.Y. 2020-21 Page No 7 Kalpesh Dhanjibhai Makasana Vs. Pr.CIT secking details of bank accounts and other related information and evidences. The assessee in its reply, furnished such details of bank statement and other information. The Assessing Officer after taking such reply, completed the assessment on 18/12/2019 without any variation. The Id. Pr.CIT in its show cause notice, identified the issue which was not the subject matter of limited scrutiny. In the show cause notice, the ld. Pr.CIT raised the issue that survey action was conducted on the assessee firm in relevant financial year and that the assessee made declaration of Rs. 1.24 crore on account of undisclosed expenses. We find that such issue was not the subject matter of scrutiny, hence, the Assessing Officer was not entitled to raise such question. However, we find that the assessee in his reply dated 09/09/2019 submitted before Assessing Officer submitted that they have duly offered the disclosed income in their return of income.

We find that the Coordinate Bench of Delhi High Court in Balvinder Kumar (supra) has held that "in case of limited scrutiny, Assessing Officer could not go beyond reason for which matter was selected for limited scrutiny thus, it would not be open to Principal Commissioner to pass revisionary order under section 263 on other aspects and remit matter to Assessing Officer for, fresh assessment." We further find that similar view was taken by Coordinate bench of Tribunal in series of decisions as has been relied by Id AR for the assessee.

The Supreme Court in celebrated/ leading case of Malabar Industrial Co. Ltd. v. CIT [2000] 243 ITR 832 (SC), held that the prerequisite for the exercise of jurisdiction by the Commissioner suo-motu is that the order of the Income-tax Officer is erroneous in so far as it is prejudicial to the interests of the revenue. The Commissioner has to be satisfied of twin conditions, namely, (1) the order of the Assessing Officer sought to be revised is erroneous; and (1) it is prejudicial to the interests of the revenue. If one of them is absent if the order of the Income-tax Officer is erroneous but is not prejudicial to the revenue or if it is not erroneous but is prejudicial to the revenue recourse cannot be had to section 263(1) of the Act. It can be exercised only when an order is erroneous, the section 263 will be attracted. In view of aforesaid factual and legal discussions, in our considered view, the twin condition as required to revise the assessment order is not meet out in the present case, therefore, the order passed by the ld. Pr.CIT is set aside and the grounds of appeal raised by the assessee are allowed."

We are therefore of the opinion that there is no mistake apparent on record from the order passed by the Tribunal in the Appeal so as to entertain the Misc. Application under Section 254(2) of the Act which reads as under: "Section 254(2): The Appellate Tribunal may, at any time within [six months from the end of the month in which the order was passed], with a view to rectifying any mistake apparent from the record, amend any order passed by it under sub-section (1), and shall make such amendment if the mistake is brought to its notice by the assessee or the [Assessing Officer]: Provided that an amendment which has the effect of enhancing an assessment or reducing a refund or otherwise increasing the liability of the assessee, shall not be made under this sub-section unless the Appellate Tribunal has given notice to the assessee of its intention to do so and has allowed the assessee a reasonable opportunity of being heard: [Provided further that any application filed by the assessee in this subsection on or after the 1st day of October, 1998, shall be accompanied by a fee of fifty rupees.]"

On perusal of the above provisions, we are of the opinion that the Tribunal has not committed any error which is apparent on record while passing the order in A.Y. 2020-21 Page No 9 Kalpesh Dhanjibhai Makasana Vs. Pr.CIT Appeal. If the petitioner has any grievance, the recourse in accordance with law can be taken but the provisions of Section 254(2) of the Act would not be of any avail to the petitioner.

In view of the above, the petition being devoid of any merit, is accordingly dismissed.”

Respectfully following the above judicial precedent and binding Jurisdictional High Court judgment, we have no hesitation in quashing the revision order passed by Ld. PCIT which is beyond the scope of “limited scrutiny”. Thus the case laws relied by the Revenue namely Kerala High Court and Calcutta High Court are not applicable to the facts of the present case. Thus the Grounds of Appeal raised by the assessee are hereby allowed.

In the result, the appeal filed by the Assessee is allowed.