INCOME TAX ACT, 1961

Section 263

Revision under section 263 - Erroneous and prejudicial order - AO, despite information received during assessment as regards on money payment, failed to consider the issue - Assessee pleading assessment to be based on limited scrutiny

Pr. CIT treated order passed by AO as erroneous and prejudicial to the interests of the revenue. On the ground that despite this specific information before AO, he failed to consider sources for on-money payment in assessee's hands towards purchase of land. Assessee's case was that assessment was completed based on limited scrutiny in order to verify large expenses claimed in profit and loss account and mismatch between income/receipt credited to profit and loss account and AO could not go beyond the issue for which case was selected for scrutiny assessment. Held: In terms of sub-clause (d) of clause 3 of CBDT Instruction No. 20/2015, dated 29-12-2015, AO was empowered to take up any other issue for assessment with the approval of Pr. CIT/CIT which had come to notice of AO involving potential escapement of income admittedly, AO was in receipt of information from Dy. CIT, stating that assessee had paid on money consideration at the time of purchase of land. Undisputedly, this information formed part of record and had material bearing in the assessment of tax liability of assessee. Therefore, AO not having following procedure prescribed in sub-clause (d) of clause of 3 of said CBDT instruction, assessment order was erroneous and prejudicial to the interests of revenue.

Supported by:Pr.CIT v. Pushpa Devi (1987) 164 ITR 639 (Pat-HC) : 1987 TaxPub(DT) 609 (Pat-HC) and Rampyari Devi Saraogi v. CIT (1968) 67 ITR 84 (SC) : 1968 TaxPub(DT) 135 (SC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2014-2015

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