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2021 (7) TMI 607 - AT - Income TaxRevision u/s 263 - Non Verification of cash deposits and purchase of property - case has been selected for limited scrutiny under CASS.HELD THAT - We find that the complete details pertaining to both the issues have been examined by the AO and the replies of the assessee dated 27.10.2017 along with the details of purchase of property and registration document. The entire details of the said two transactions which are the subject matter of scrutiny have been duly provided and examined by the AO and duly accepted after examination and verification. - We find that the ld. PCIT has also mentioned at para no. 2 that the case has been selected for limited scrutiny under CASS. On going through order u/s 263, we find that the order u/s 263 passed by the ld. PCIT dwelled into the issue of re-computation of capital gains which is beyond the mandate of the limited scrutiny issued by the CBDT. Hence, the directions of the ld. PCIT which are beyond the selection criteria of scope of scrutiny for the instant year cannot be held to be legally valid. Appeal of the assessee is allowed.
Issues:
Challenge to order passed under section 263 by the ld. PCIT on various grounds including jurisdictional error and incorrect computation of capital gains. Analysis: The appeal challenged the order passed by the ld. PCIT invoking section 263. The grounds raised by the assessee included errors in fact and law, jurisdictional issues, and incorrect computation of capital gains. The appellant contended that the proceedings initiated and the order passed by the ld. PCIT were legally flawed and without jurisdiction. The case was initially selected for limited scrutiny based on cash deposits and property purchase. The ld. PCIT issued a notice under section 263, questioning the capital gain calculation on the sale of property. The notice highlighted discrepancies in the computation of capital gains and disallowed certain deductions claimed by the assessee. The appellant argued that the ld. PCIT exceeded the scope of limited scrutiny by delving into the capital gains issue, which was not part of the original selection criteria. During the proceedings, the ld. AR emphasized that expanding the scrutiny beyond the initial grounds was not valid. On the contrary, the ld. DR asserted that the ld. PCIT had the authority to examine the entire case to prevent revenue leakage. The ld. DR cited relevant legal provisions and court decisions to support the broader powers of the ld. PCIT under section 263. After hearing both parties and examining the record, it was observed that the AO had already scrutinized and accepted the details related to cash deposits and property purchase. The AO had thoroughly examined the issues and the appellant had provided necessary documentation. The order passed by the ld. PCIT, which delved into the re-computation of capital gains, was deemed beyond the scope of the limited scrutiny criteria set by the CBDT. Consequently, the directions issued by the ld. PCIT were considered legally invalid, leading to the allowance of the appellant's appeal. In conclusion, the appeal was allowed, and the order was pronounced in favor of the appellant on 16/06/2021.
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