“complete scrutiny”
The decision most relied on for complete scrutiny is Dr. C. Balakrishnan Nair v. CIT (237 ITR 70), cited in 42 judgments on BharatTax.
Leading authorities on complete scrutiny
A restraint order under Section 132(3) cannot be passed solely on the ground that scrutiny of documents or assets could not be completed during a search, as the search process must be continuous. Additionally, Section 158BC (Chapter XIV-B) cannot be invoked if there is no violation of the Income-tax Act, such as when valid exemptions are claimed.
The selection of cases for scrutiny must be completed within the time prescribed by CBDT instructions. The department is bound by its own standards and cannot act with discrimination or selectively apply them.
An assessment order is erroneous and prejudicial to the interest of the revenue if the Assessing Officer fails to conduct necessary inquiries or investigate facts when circumstances warrant it, demonstrating a lack of complete scrutiny. This failure to act as an investigator and not just an adjudicator can trigger revision under Section 263.
Share capital and share premium cannot be treated as unexplained cash credits under section 68 of the Income Tax Act, especially when cash did not pass at any stage and entries made a complete round. The Supreme Court dismissed the Revenue's appeal against this view.
An assessment order cannot be held erroneous and prejudicial to revenue if the Assessing Officer (AO) could not have travelled beyond the issues forming the subject matter of 'limited scrutiny'. The Principal Commissioner of Income Tax (PCIT) cannot invoke Section 263 to set aside an assessment on grounds not forming part of the limited scrutiny.
A revisionary order under Section 263 is invalid if it is based on the same facts and involves extensive enquiry after the assessment proceedings were completed, implying a lack of application of mind during the original assessment.
The Project Completion Method (PCM) for accounting is a recognized and scientifically sound method that has judicial approval for real estate businesses, allowing profit or loss to be recognized only upon project completion.
A Principal Commissioner (PCIT) cannot assume jurisdiction under Section 263 merely because the Assessing Officer's (AO) view is not acceptable, if the AO has made due enquiries and taken a plausible view.
