MR. KEDAR S. KESAR PROP. KK TRAVELS,PUNE vs. THE PRINCIPAL COMMISSIONER OF INCOME-TAX -3, PUNE

ORDER

PER SHRI PARTHA SARATHI CHAUDHURY, JM :

2. The only grievance of the assessee is that the ld. Pr. CIT did not have jurisdiction for resorting to his revisionary power u/s 263 of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) by directing the Assessing Officer to convert the limited scrutiny to complete scrutiny and why it was not done, therefore, holding the assessment order to be erroneous and prejudicial to the interest of revenue.

2 ITA 599/PUN/2020 Kedar S. Kasar Prp. K.K. Travels A.Y. 2015-16 other issues also which was beyond the scope of limited scrutiny and should have converted the limited scrutiny to a complete scrutiny after seeking approval from the Competent Authority. Since this exercise was not done according to the Pr. CIT the order passed by the A.O becomes erroneous and prejudicial to the interest of revenue. The said observation is evident at para 4.1 of the order passed u/s 263 where the Pr. CIT himself acknowledges that it was a limited scrutiny case for which the A.O has passed the assessment order. We further notice that in the paper book filed by the assessee at page (1) there is the notice u/s 143(2) dated 21-09-2016, in which it is clearly spelt out that the case was selected for limited scrutiny and the area for which the A.O was supposed to enquire was with regard to (i) Sales turnover mismatch and (ii) Tax credit mismatch. We have seen from the assessment order that the A.O has done the requisite enquiry and the assessee has also submitted reply in regard to these two issues raised in the limited scrutiny notice. Now, what the ld. Pr. CIT wants that the A.O should have taken necessary approval and should have converted this limited scrutiny to a complete scrutiny enquiring various other issues as is evident in the show cause notice issued to the assessee during the proceedings u/s 263 of the Act. This notice is made part of the order passed u/s 263 of the Act by the ld. Pr. CIT. However, it is crystal clear that these issues for which the assessee was show caused by the Pr. CIT was not the subject matter of limited scrutiny before the A.O. The A.O was only supposed to enquire as per the subject matter of the limited scrutiny and not beyond that. This is settled position of law. Having said so, the assessment order cannot be erroneous and neither prejudicial to the interest of revenue. The A.O has enquired about (i) sales turnover mismatch; and (ii) tax credit mismatch and the assessee has also furnished written submissions before the A.O and this fact is not disputed by the Department. When this is complied

3 ITA 599/PUN/2020 Kedar S. Kasar Prp. K.K. Travels A.Y. 2015-16 with, the A.O cannot be held to be at fault. Assumption of the revisionary jurisdiction u/s 263 of the Act by the CIT or Pr. CIT can only be done when he finds the assessment order to be erroneous and prejudicial to the interest of revenue. This is when, the A.O has not enquired into certain issues which he should have done in the course of assessment proceedings or when he has accepted the written submissions from the assessee without examining or verifying the same or when the A.O has not raised any question regarding any particular source of income relating to the assessee which results in loss to the revenue. Therefore, in the aforestated circumstances only the Pr. CIT or C.I.T can decide whether such assessment order is erroneous and prejudicial to the interest of revenue or not. Meaning thereby such revisionary jurisdiction is to be adjudicated and decided within the very subject matter and scope of the assessment order. Here, in this case, the Computer Automated Support System (CASS) has selected the assessee‟s case as limited scrutiny. It was even submitted by the ld. D.R that CASS selects cases for limited or complete scrutiny based on the materials on record as per the electronic inputs of the assessee in the computer data system. Therefore, once the case has been selected for limited scrutiny, the A.O is bound to follow the said scope and enquire only in those areas for which the said case has been selected in the present case. Since it is for a limited scrutiny, there is no jurisdiction for the A.O to go beyond and enquire into other subject matter without approval of Competent Authority. Similarly, the ld. Pr. CIT has not found any fault in the assessment order in relation to the areas of inquiry conducted by the A.O which was covered within the limited scrutiny scope i.e. (i) sales turnover mismatch; and (ii) tax credit mismatch. What the ld. Pr. CIT intends that the A.O should have gone beyond the limited scrutiny and enquired into various other matters in relation to the assessee and this particular reason of the ld. Pr. CIT which 4 ITA 599/PUN/2020 Kedar S. Kasar Prp. K.K. Travels A.Y. 2015-16 forms the sole bedrock for resorting to the revisionary jurisdiction u/s 263 of the Act is not warranted in law. We find, Mumbai Tribunal also is in conformity with our view as held in the case of M/s. R.H. Property Developer Pvt. Ltd., Mumbai Vs. Pr. CIT-11, Mumbai in dated 30-07-2019 for A.Y. 2014-15 and the relevant part of the order is as follows: “3.1 We are of a strong conviction that now when the case of the assessee was selected for limited scrutiny for the reason viz. “large investment in property (AIR) as compared to total income” therefore no infirmity could be attributed to the assessment framed by the A.O on the ground that he had failed to deal with other issues which did not fell within the realm of the limited reason for which the case of assessee was selected for scrutiny assessment. In other words, the Pr. CIT in the garb of his revisional jurisdiction cannot be exercised for broadening the scope of jurisdiction that was vested with the A.O while framing the assessment.”