SHRI VINAY CHAURASIA,CHHATARPUR vs. P. CIT, GWALIOR

By way of this appeal, the assessee assails invocation of revisionary juri iction u/s 263 by Ld. Pr. Commissioner of Income Tax, Gwalior (Pr.CIT) for Assessment Year (AY) 2011-12 vide impugned order dated 21-03-2016 in the matter of an assessment framed by Ld. AO u/s 143(3) of the Act on 11-02-2014. Having heard rival submissions and upon perusal of case records, our adjudication would be as under.

Upon perusal of Para-2 of impugned order, it could be seen that the assessee's return of income was selected for limited scrutiny in order to verify the sources of cash deposit in savings bank account as per AIR information. The Ld. AO framed an assessment on 11-02- 2014 after making addition of suppressed sale and disallowance of expenses. Subsequently, Ld. Pr. CIT, upon perusal of case records, alleged that there was credit entry of Rs.50 Lacs in the capital account which remained to be examined by Ld. AO. Another observation was that differential of interest income as credited in capital account was to be brought to tax. Thirdly, the assessee being a shareholder in M/s Peptech Housing Pvt. Ltd. took loan from the said entity for Rs.42.75 Lacs and Ld. AO failed to explore the possibility of invoking the provisions of Sec.2(22)(e). The assessee opposed the same on the ground that credit in capital account represents contribution by a member of Joint Venture entity which was formed to bid tenders for obtaining excise contracts from MP government. The differential of interest of Rs.0.63 Lacs was stated to be not received. On the issue of Sec. 2(22)(e), it was stated by the assessee that the assessee was rather a creditor in M/s Peptech Housing Pvt. Ltd. and moreover, the assessee was not holding any share in that entity during the year. However, rejecting the same, Ld. Pr. CIT held the assessment order to be erroneous and prejudicial to the interest of the revenue and directed Ld. AO to pass fresh order on three issues. Aggrieved, the assessee is in further appeal before us.

At the outset, it could be observed that the case was selected for limited scrutiny to verify the source of cash deposit. The issue of interest income and invocation of Sec.2(22)(e) was not subject matter of limited scrutiny assessment proceedings. Therefore, no infirmity could be attributed to the assessment framed by Ld. AO on the ground that he failed to deal with other issues which did not fall in the realm of the limited reason for which the case of the assessee was selected for scrutiny assessment proceedings. In other words, Ld. Pr. CIT, in the garb of revisionary juri iction u/s 263, could not be permitted to traverse beyond the juri iction that was vested with Ld. AO while framing the assessment. The revisionary juri iction could not be exercised for broadening the scope of juri iction that stood vested with Ld. AO while framing the assessment. As a matter of fact, which could not be done directly could not be done indirectly. Accordingly, the assessment could not be said to be erroneous and prejudicial to the interest of the revenue on these two issues. So far as the capital introduction in cash is concerned, it could be seen that the case was scrutinized specifically to examine the source of cash deposit. The same was duly verified by Ld. AO with due application of mind. Secondly, the assessee had duly explained the sources of capital contribution of Rs.50 Lacs which fact has not been rebutted in the impugned order. Under these circumstances, the impugned revisionary order is liable to be quashed. We order so. The assessment as framed by Ld. AO stand restored back. Delving into other arguments has been rendered academic in nature.

The appeal stand allowed in terms of our above order. Order pronounced u/r 34(4) of Income Tax (Appellate Tribunal) Rules, 1963. (SATBEER SINGH GODARA) न्यायिक सदस्य /JUDICIAL MEMBER Dated: 22.04.2025 (MANOJ KUMAR AGGARWAL) लेख सदस्य / ACCOUNTANT MEMBER आदेश की प्रतिलिपि □ ग्रेषित / Copy of the Order forwarded to : 1. अपीलार्थी/Appellant 2. प्रत्यर्थी/Respondent 3. आयकर आयुक्त/CIT 4. विभागीयप्रतिनिधि/DR 5. गार्डफाईल/GF