INCOME TAX ACT, 1961

Section 263

Revision under section 263 - Source of funds used for purchase of immovable property - Gift received by assessee from his brother - Chargeability

Assessee's case was selected for scrutiny in order to verify the source of funds used for purchase of immovable property. Assessee had explained the source for acquisition of property purchased of Rs. 41,50,000 and registration and other charges of Rs. 5,75,000. AO completed the assessment under section 143(3) after making addition disbelieving the receipt of gift received from his brother and accepting explanation for balance sources of money for purchase of immovable property. PCIT on examination of the records found that AO had not enquired into issue of applicability of section 50C in the hands of assessee, as assessee had purchased the immovable property for a consideration of Rs. 41,50,000 against stamp duty value of the property of Rs. 77,19,000. PCIT held that no enquiry was conducted by AO.Held: Admittedly, assessment was taken up under limited scrutiny in order to verify the source for purchase of property. After considering the materials placed, AO had completed the assessment after making addition of a sum by treating the gift received from his brother as unexplained cash credit. But, it appeared that AO had looked into issue of source only to the extent of Rs. 41,50,000 which was apparent consideration paid for purchase of property. It is settled position of law that while completing the assessment under limited scrutiny, AO could not look beyond the issue for which the case was selected for scrutiny. It was beyond the power of AO to look into any other issue which had come to his notice during the course of assessment proceedings. Therefore, order passed by Pr. CIT could not be sustained in the eyes of law.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2014-15

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