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The Tax Publishers2019 TaxPub(DT) 7948 (Coch-Trib) INCOME TAX ACT, 1961
Section 263
Even in case of limited scrutiny assessment. AO was duty bound to make a prima facie inquiry as to whether there were any other items which required examination and in the event, potential escapement of income would have exceeded Rs. 10 lakh, AO ought to have sought permission of CIT/DIT to convert 'limited scrutiny assessment' into complete scrutiny assessment'. Having failed to do so, CIT, who was the authority to have granted permission for such conversion was fully justified in invoking his revisionary jurisdiction under section 263.
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Revision under section 263 - Erroneous and prejudicial order - In case of limited scrutiny assessment AO not having examined certain item potential tax escapement of income far exceeding amount prescribed in CBDT Instructions -
CIT invoked revisionary jurisdiction under section 263 and held order passed by AO as erroneous and prejudicial to the interests of revenue on account of failure of AO to examine applicability of section 56(2)(viia) or section 68 for the issue/allotment of OPCCPS having a potential tax escapement of income far exceeding amount prescribed in CBDT Instructions. Assessee's case was that it was a case of limited scrutiny assessment and also CIT had not come to a categorical finding that valuation of OPCCPS was far exceeding fair market value of shares.Held: In case of limited scrutiny assessment, AO was duty bound to make a prima facie inquiry as to whether there were any other items which required examination and in the event, potential escapement of income would have exceeded Rs. 10 lakhs, AO ought to have sought permission of CIT/DIT to convert 'limited scrutiny assessment' into complete scrutiny assessment'. Having failed to do so, CIT, who was the authority to have granted permission for such conversion was fully justified in invoking his revisionary jurisdiction under section 263. CIT had only set aside the assessment and directed AO to examine valuation of OPCCPS and in view of Explanation 2(a) to section 263. CIT was not required to come to a categorical finding that valuation of OPCCPS was far exceeding fair market value of shares. Accordingly, order passed under section 263 was correct and in accordance with law.
Distinguished:CIT v. Narayana Pai (T) (1975) 98 ITR 422 (Karn) : 1975 TaxPub(DT) 0194 (Karn-HC).
REFERRED :
FAVOUR : Against the assessee.
A.Y. : 2014-2015
IN THE ITAT, COCHIN BENCH
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