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Facts
The assessee's case was selected for limited scrutiny to verify sales turnover and large value of shares. The AO accepted the returned income after due consideration. The Pr. CIT invoked revisionary jurisdiction u/s 263, holding the order to be erroneous and prejudicial to revenue.
Held
The Tribunal held that the revisionary jurisdiction could not be exercised for broadening the scope of jurisdiction vested with the AO. The assessment framed by the AO was not erroneous, and the Pr. CIT could not traverse beyond the AO's jurisdiction.
Key Issues
Whether the Pr. CIT correctly invoked revisionary jurisdiction u/s 263 when the AO had already completed assessment after limited scrutiny and considering all aspects?
Sections Cited
263, 143(3), 142(1), 40(a)(ii)
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Income Tax Appellate Tribunal, “DB” BENCH, AGRA
Before: HON’BLE SHRI SATBEER SINGH GODARA, JM & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM
(िनधा�रणवष� / Assessment Year: 2015-16) बनाम/ Sh. Rajesh Kumar Gupta Pr. CIT - 1 3/65, Chatta Bazar, Agra (UP) Agra Vs. �थायीलेखासं./जीआइआरसं./PAN/GIR No. ACFPG-9884-K (अपीलाथ�/Appellant) : (� थ� / Respondent) अपीलाथ�कीओरसे/ Appellant by : Sh. Deependra Mohan, CA – Ld. AR � थ�कीओरसे/Respondent by : Dr. Arun Kumar Yadav – Ld. CIT-DR सुनवाईकीतारीख/Date of Hearing : 18-02-2025 घोषणाकीतारीख /Date of Pronouncement : 22.04.2025 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. By way of this appeal, the assessee assails invocation of revisionary jurisdiction u/s 263 by Ld. Pr. Commissioner of Income Tax, Agra-1 (Pr.CIT) for Assessment Year (AY) 2015-16 vide impugned order dated 31-03-2021 in the matter of an assessment framed by Ld. AO u/s 143(3) of the Act on 13-12-2017. Having heard rival submissions and upon perusal of case records, our adjudication would be as under.
Upon perusal of opening para of impugned order, it could be seen that the assessee’s return of income was selected for limited scrutiny in order to verify sales turnover and large value of shares or units reported in securities transaction tax return. During the course of assessment proceedings, notices were issued to the assessee u/s 142(1) on these issues which were duly complied with by the assessee. After due consideration thereof, Ld. AO accepted the returned income of the assessee.
Subsequently, Ld. Pr. CIT, upon perusal of case records, observed that the assessee derived business income from logistics in proprietorship concern namely M/s Krishna Logistics. It also reflected loss from share trading and commission in F&O Business. The assessee filed separate financials of share trading and F&O business but the accounts were not incorporated in the tax audit report. In other words, the books of share trading and F&O business were no audited. The assessee made share transactions of Rs.25.62 Crores. As per ICAI guidelines, the turnover worked out to be Rs.98.18 Lacs. In the absence of audit, the profits on the turnover were to be estimated @8% which would work out to be Rs.7.85 Lacs. Secondly, the assessee claimed TDS expenses for Rs.2856/- which was to be disallowed u/s 40(a)(ii). Accordingly, the assessee was show-caused. The assessee refuted the allegation of Ld. Pr. CIT and stated that specific queries were raised on the issues for which the case was subjected to limited scrutiny. The Ld. AO framed the assessment after due consideration of all the aspects. After being satisfied with the explanation and the documents submitted including Form 10DB, statement of share broker and financial statements etc., Ld. AO accepted the returned income. It was also stated that share transaction business was duly audited which was evident from the audit report. Since there was a loss of Rs.10.01 Lacs, the same was not included in turnover. The TDS demand was stated to be nothing but interest for late payment of TDS and it was not tax on income. Reliance was placed on various judicial decisions to support the submissions.
However, rejecting the same, Ld. Pr. CIT held the order to be erroneous and prejudicial to the interest of the revenue and directed Ld. AO to pass fresh order on the two issues. Aggrieved, the assessee is in further appeal before us.
At the outset, it could be observed that the assessee’s case was selected for limited scrutiny to verify the sales turnover and large value of shares or units reported in securities transaction tax return. During the course of assessment proceedings, notices were issued to the assessee u/s 142(1) on these issues which were duly responded to by the assessee and complete information, in this regard, was furnished by the assessee. After due consideration thereof, Ld. AO accepted the returned income of the assessee. It could very well be said that the purpose of limited scrutiny was duly fulfilled by Ld. AO and having satisfied with assessee’s explanation, Ld. AO chose not to make any additions to the returned income of the assessee. Under these circumstances, 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 fail in the realm of the limited reason for which the case of the assessee was selected for scrutiny assessment. In other words, Ld. Pr. CIT, in the garb of revisionary jurisdiction u/s 263, could not be permitted to traverse beyond the jurisdiction that was vested with Ld. AO while framing the assessment. The revisionary jurisdiction could not be exercised for broadening the scope of jurisdiction 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 the two issues as flagged in the revisionary order. It is another fact that both the issues were well addressed by the assessee during revisionary proceedings itself. 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.
The appeal stand allowed in terms of our above order. Order pronounced u/r 34(4) of Income Tax (Appellate Tribunal) Rules, 1963.
Sd/- Sd/- (SATBEER SINGH GODARA) (MANOJ KUMAR AGGARWAL) 6ाियक सद7 /JUDICIAL MEMBER लेखा सद7 / ACCOUNTANT MEMBER Dated: 22.04.2025 आदेश की 9ितिलिप अ;ेिषत / Copy of the Order forwarded to : 1. अपीलाथ�/Appellant 2. � थ�/Respondent 3. आयकरआयु3/CIT 4. िवभागीय�ितिनिध/DR 5. गाड9फाईल/GF ASSISTANT REGISTRAR
ITAT AGRA