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TMI Blog2019 (12) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... ppreciating that AO was not required to look into matters other than that forming part of limited scrutiny as decided by CBDT Instruction 7/2014, dated 26.09.2014 and further clarification on its scope vide instruction no. 20/2015, dated 29th December, 2015. Hence revision u/s 263 on the ground that AO has not looked into other grounds is bad in law as such areas were not required to be verified/inquired by the AO. Without prejudice to the above, 3. On the facts and under the circumstances of the case and in law, the Commissioner of Income-tax, erred by doubting that there was stock lying with the appellant of Rs. 7.92 crores without appreciating that the entire stock of Rs. 14.78 crores was sold at Rs. 6.86 crores incurring loss of Rs. 7.92 crores. Hence the hypothecated calculation made by the A.O from the amounts derived from profit and loss account and 3CD filed is mere a guess work. Revising order based on mere hypothetical inference drawn or guess work is bas in law. 4. The appellant craves for leave to add or alter and/or withdraw the above ground of appeal, if necessary. " 2. Briefly stated, the assessee company which is engaged in the business of manufacturing, trad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ever, the Pr. CIT did not find favour with the contentions advanced by the assessee. It was observed by the Pr. CIT, that as the case of the assessee was selected for 'Limited scrutiny' under CASS for two reasons viz. (i). Large other expenses claimed in the P&L A/c.; and (ii). Low income in comparison to High Loans/advance/Investment in shares, therefore, the A.O had no occasion to carry out a comprehensive scrutiny of the issues relating to 'closing stock' in the course of the assessment proceedings. Accordingly, the Pr. CIT holding a view that the assessment order passed by the A.O under Sec. 143(3), dated 08.12.2016 was erroneous, insofar it was prejudicial to the interest of the revenue, therefore, 'set aside' his order, with a direction to examine the issue relating to 'closing stock' after affording an opportunity of being heard to the assessee. 4. The assessee being aggrieved with the order passed by the Pr. CIT under Sec. 263, dated 15.02.2019, has carried the matter in appeal before us. The ld. Authorized Representative (for short 'A.R') for the assessee at the very outset of the hearing of the appeal submitted, that as the A.O after due application of mind had framed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 263 could not have stretched the scope of the jurisdiction vested with the A.O. In sum and substance, it was the claim of the ld. A.R that the Pr. CIT had gravely erred in law in holding the assessment order passed by the A.O under Sec. 143(3), dated 08.12.2016 as erroneous, for the reason, that the latter had erred in not traversing beyond the limited scope of his jurisdiction and adjudicating those issues which fell beyond the realm of the 'limited reasons' for which its case was selected for limited scrutiny assessment under CASS. 5. Per contra, the ld. Departmental Representative (for short 'D.R') objected to the contentions advanced by the counsel for the assessee. It was submitted by the ld. D.R, that the Pr. CIT had rightly exercised his jurisdiction under Sec. 263 and directed the A.O to adjudicate the issue as regards valuation of 'closing stock' after affording a reasonable opportunity of being heard to the assessee. In order to drive home his claim that the Pr. CIT had not exceeded his jurisdiction, the ld. D.R had drawn support from "Explanation 2" of Sec. 263 of the Act. In the backdrop of his aforesaid contentions, it was submitted by the ld. D.R that as the appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns are being made: i. Year of applicability: As stated in the Instruction No. 7/2014, the said Instruction is applicable only in respect of the cases selected for scrutiny through CASS-2014. ii. Whether the said Instruction is applicable to all cases selected under CASS: The said Instruction is applicable where the case is selected for scrutiny under CASS only on the parameters) of AIR/CIB/26AS data. If a case has been selected under CASS for any other reason(s)/parameter(s) besides the AIR/CIB/26AS data, then the said instruction would not apply. iii. Scope of Enquiry: Specific issue based enquiry is to be conducted only in those scrutiny cases which have been selected on the parameter(s) of AIR/CIB/26AS data. In such cases, the Assessing Officer, shall also confine the Questionnaire only to the specific issues pertaining to AIR/CIB/26AS data. Wider scrutiny in these cases can only be conducted as per the guidelines and procedures stated in Instruction No 7/2014 iv Reason for selection: In cases under scrutiny for verification of AIR/CIB/26AS data, the Assessing Officer has to intimate the reason for selection of case for scrutiny to the assessee concerned 3. As far as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with necessary evidences/reasons forming the basis of the same. Before passing the final order against the proposed additions/disallowances, due consideration shall be given to the submissions made by the assessee in response to the show- cause notice. 5. The contents of this Instruction should be immediately brought to the notice of all concerned for strict compliance. 6. Hindi version to follow (F.No 225/269/2015-ITA.II) (Ankita Pandey) Under Secretary to the Government of India" Now, the case of the assessee before us was selected for limited scrutiny through CASS, for the reasons, that there were viz. (i). Large other expenses claimed in the P&L A/c.; and (ii). Low income in comparison to High Loans/advance /Investment in shares.. Accordingly, it can safely be concluded that the assessment framed by the A.O fell within the realm of the limited purpose for which its case was selected for scrutiny assessment viz. viz. (i). Large other expenses claimed in the P&L A/c.; and (ii). Low income in comparison to High Loans/advance /Investment in shares. 7. As observed by us hereinabove, as per the CBDT instruction No. 20/2015, dated 29.12.2015, in a case which had been select ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aimed in the P&L A/c.; and (ii). Low income in comparison to High Loans/advance /Investment in shares, therefore, no infirmity could be attributed to the assessment framed by the A.O on the ground that he had failed to deal with other issues which though did not fall within the realm of the limited reasons for which the case was selected for scrutiny assessment. In other words, the Pr. CIT in the garb of his revisional jurisdiction u/s 263 cannot be permitted to traverse beyond the jurisdiction that was vested with the A.O while framing the assessment. In sum and substance, revisional jurisdiction cannot be exercised for broadening the scope of jurisdiction that was vested with the A.O while framing the assessment. As a matter of fact, what cannot be done directly cannot be done indirectly. Accordingly, in terms of our aforesaid observations, we are of the considered view that as the A.O had aptly confined himself to the issues for which the case of the assessee was selected for limited scrutiny, therefore, no infirmity can be attributed to his order, for the reason, that he had failed to dwell upon certain other issues which did not form part of the reasons for which the case was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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