| The Tax Publishers2019 TaxPub(DT) 7575 (Luck-Trib) INCOME TAX ACT, 1961
Section 143(3)
Assessee's case had been selected for limited scrutiny only on two issues, i.e., (i) Large deduction unders ection 54B, 54C, 54D, etc., and (ii) Large cash deposits in savings account of the assessee; whereas the additions have been made on the indexed cost of acquisition and indexed cost of improvement which was covered under section 48 and was outside the scope and purview of the reasons of limited scrutiny moreover, approval of Pr.CIT was also not taken by AO thus, the addition so made by the AO, in gross violation of the CBDT Instruction, was liable to be deleted.
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Assessment - Jurisdiction of AO - Conversion of limited scrutiny to complete scrutiny - Approval of Pr.CIT also not taken by AO
In the present case the Limited Scrutiny was on two issues. Firstly, on account of large deduction under section 5B, 54C, 54D, etc. and secondly, large cash deposits in savings bank account; that the AO had made addition on account of indexed cost of acquisition Rs. 17,59,545 and indexed cost of improvement of Rs. 20,90,319. Deduction claimed under section 48 was a separate issue and its working was not under challenge. Assessee further submitted that the approval of the Principal CIT is mandatorily required for scrutiny and in this case, there was no such approval. Held: As was evident from the assessment order, in the present case, the same was beyond the intent purpose and scope of the jurisdiction of the assessing officer, as the assessment had been made, exceeding his jurisdiction, because the case had been selected for limited scrutiny only on two issues, i.e., (i) Large deduction under sections 54B, 54C, 54D, etc., and (ii) Large cash deposits in savings account of the assessee; whereas the additions have been made on the indexed cost of acquisition at Rs. 17,59,545 and indexed cost of improvement at Rs. 20,90,319, which is covered under section 48, and was outside the scope and purview of the reasons of limited scrutiny.Moreover, the approval of the Pr.CIT is mandatorily required for converting the Limited Scrutiny to a Complete Scrutiny. So, the proper course for the AO before making these additional enquiries would have been to take approval from the administrative Commissioner to widen the scrutiny. This, however, was not done and therefore, the action of the AO was violative of the CBDT Instruction F.No. DGIT(Vig.)/HQ/SI/2017-18, dated 30-11-2017. Thus, the addition so made by the AO, in gross violation of the CBDT Instruction, was, therefore, liable to be deleted.
Relied:'Crystal Phosphates Ltd. v. ACIT', 34 CCH 136 (Del.-Trib.); 'Amal Kumar Ghosh v. Addl. CIT', (2014) 361 ITR 458 (Cal.) : 2014 TaxPub(DT) 1401 (Cal-HC)
REFERRED : Dr. Shashi Kant Garg v. CIT, (2006) 285 ITR 158 (All) : 2006 TaxPub(DT) 639 (All-HC), CIT v. Rajeev Sharma, (2010) 336 ITR 678 (All) : 2010 TaxPub(DT) 1956 (All-HC), Kr. Khemka v. Pr. CIT ITA. No. 1361/Kol/2016 (Kol-Trib), Smt. Gurpreeet Kaur v. ITO ITA. No. 87/Asr/2016 (Asr-Trib) : 2016 TaxPub(DT) 1657 (Asr-Trib).
FAVOUR : In assessee's favour.
A.Y. : 2014-15
INCOME TAX ACT, 1961
Section 54EC Section 45 48
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