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TMI Blog2019 (12) TMI 973X X X X Extracts X X X X X X X X Extracts X X X X ..... DT Circulars (supra), he is not allowed to travel beyond the ambit of the points for which, case was selected for limited scrutiny. ACIT, who was not having revisional power u/s.263 wrongly alleged that the AO has not made enquiry on certain points. Therefore, we are unable to agree with the conclusions drawn by ld PCIT in paras 10 11 of the impugned order and hold that the assessment order is neither erroneous nor prejudicial to the interests of the revenue and the AO has made sufficient enquiries, investigations and examination on both the points. Consequently, the revisional proceedings, issue of notice and impugned order u/s.263 of the Act is quashed. - Decided in favour of assessee. - ITA No.164/CTK/2019 - - - Dated:- 18-12-2019 - Shri Chandra Mohan Garg, Judicial Member And Laxmi Prasad Sahu, Accountant Member For the Assessee : Shri B.N.Agrawal/Binod Agarwal, ARs For the Revenue : Shri S.M.Keshkamat, DR ORDER PER C.M.GARG, JM This is an appeal filed by the assessee against the order u/s.263 of the Income tax Act, 1961 of the Ld. Pr. CIT, Sambalpur dated 29.3.2019 f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y in detail about the genuineness and creditworthiness of the parties in respect of whom advance was shown. Further, the AO failed to examine the information like cost of construction of the project, the estimated sale value of the project, the estimated sale value of the project, selling price of individual flat, period of construction/ completion etc. Thirdly, there was a mismatch in sales turnover reported in audit report and return of income filed by the assessee . In the ITR the assessee had shown ₹ 2,31,60,000. The difference amount of ₹ 18,00,000/- is deducted as land value from the total sales turnover, as stated by the assessee. But, the AO has not made detailed examination on this aspect. 3. In response to the said show cause notice issued to the assessee on 14.1.2019, the assessee, inter alia, submitted as under: i) After due examination of the books of account and documents produced and available on record, the AO completed the limited scrutiny assessment u/s.143(3) estimating the net profit @ 4.24% as against 3.24% shown by the assessee. ii) The total sales value of land among the total sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n audit report return of income filed and in the Profit Loss account for the year ending on 31.03.2015. In the audit report return of income, the assessee has shown ₹ 2,31,60,000/- as sales turnover whereas as per Profit Loss account, the total sales turnover is ₹ 2.49.60.000/-. Thus, there is difference of ₹ 18,00.000/- between the sales figure disclosed in audit report return of income and the sales figure reflected in P L account which the assessee claims as land value and deducted the same from the total sales turnover. The AO is required to verify this aspect thoroughly by examining the relevant details/documents 5. Hence, the assessee has filed appeal before the Tribunal. 6. We have heard the rival submissions, perused the orders of lower authorities, inter alia, paper book filed by the assessee consisting of 159 pages, written synopsis and case laws filed by the assessee. 7. Ld counsel for the assessee submitted that the case of the assessee was selected for limited scrutiny on two points i.e. (i) real estate business without considering the closing stock to verify whether the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revisional proceedings and notice u/s.263 of the Act, which has been initiated without application only on the proposal of the AO, which is not permissible as per mandate of section 263 of the Act. Ld counsel submitted that as per latest provisions of section 263 of the Act and first and foremost requirement of initiation of revisional proceedings by the competent authority is that Pr. CIT may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Assessing Officer is erroneous in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment. Ld counsel submitted that this is a peculiar case wherein Pr. CIT has only proceeded to initiate revisional proceedings and issued notice u/s.263 on the proposal of the Assessing Officer without following the mandate of section 263 of the Act and without app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has not made any enquiry on other issues, then, on such issues, the allegation cannot be levelled against the AO. Ld counsel submitted that if there is no specific findings recorded by the Pr. CIT in the impugned order u/s 263 of the Act that there is lack of enquiry by the AO on the issues of limited scrutiny then the revisional proceedings u/s.263 of the Act cannot be triggered and initiated against the assessee. Ld counsel submitted that in view of CBDT Circulars (supra), the AO was right in confining himself only to the issues for which the case was selected for scrutiny, the AO cannot travel beyond the issues of limited scrutiny. 10. On the issue of application of mind by Pr. CIT and inquiry of proceedings and issue of notice on the proposal by AO, ld counsel has placed reliance on the ITAT Kolkata in the case of Manish Chirania vs Pr. CIT order dated 8,11.2019 in ITA No.1161/Kol/2019 for A.Y. 2015-16 and another order of Pune Bench of ITAT in the case of Span Overseas Ltd vs CIT, order dated 21.12.2015 in ITA No.1223/Pn/2013 for A.Y. 2008-09. Ld counsel further placing reliance on the ITAT Mumbai F Bench in the case of Vinay Pratap Thacker vs CIT order date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt by calling relevant details and documents. Ld A.R. prayed that initiation of proceedings u/s.263 of the Act, notice and impugned revisional order should be quashed. 13. Replying to above, ld CIT DR strongly supported the order of ld Pr. CIT and submitted that in the case of limited scrutiny, the AO is not allowed to pass the assessment order without sufficient enquiry and due diligence. Ld CIT DR also invited some part of the impugned order especially para 10 11 and submitted that no prejudice is going to be caused to the assessee if the issues are verified by the AO, which were not properly enquired, verified and examined by the AO during original assessment proceedings. Ld CIT DR also submitted that the AO was required to verify the net sales of flats shown in the profit and loss account by collecting for the details of the parties/persons from whom the assessee claims to have received sale proceeds of flats during the previous year relevant to the assessment year 2015-16. Ld CIT DR also submitted that the AO was also required to verify the genuineness and correctness of the amounts claim to have shown in the balance sheet as receipts from the customers. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment order. Further from para 5 of the assessment order, we also gather that the AO, as a result of enquiry and verification made by him, noted that the assessee has adopted percentage completion method and has estimated profit @ 3.24% of the turnover and most of the inventory was not sold and was in stock, the work-in-progress as on 31.3.2015 was thus on a higher side. In view of above, we are satisfied that the AO has made enquiry, verification and examination on both the points for which the case was selected for limited scrutiny and from the impugned order passed by ld Pr. CIT u/s.263 of the Act, it is also ample clear that there is no allegation by him against the assessment order that the AO has not made any enquiry on any of the issues for which the case was selected for limited scrutiny. 17. In view of foregoing discussion, we reach to a logical conclusion that the AO has made sufficient, adequate and proper enquiry and thereafter took both the issues to a logical conclusion by way of adjudication and deliberation in the assessment order. Therefore, the impugned assessment cannot be held as erroneous and prejudicial to the interest of the revenue. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 of the Act. For proper adjudication of this contention, we find it necessary and appropriate to reproduce the provisions of section 263 of the Act, which reads as follows: 263. (1) The Principal Commissioner or Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Assessing Officer is erroneous in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment. 20. From the spirit and mandate of section 263 of the Act, which provides revisional powers to Pr. CIT/CIT in the cases where the assessment order or any other proceedings under this Act, passed by the AO is erroneous and prejudicial to the interests of the revenue. This section is itself a mini code wherein proceedings for revision has also been provided and as per this provision, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the information about estimated cost of construction of the project, estimated sale value of the project, selling price of individual flats, period of construction etc should have been examined before completion of scrutiny assessment but the ld ACIT failed to consider that it was a case of limited scrutiny only on two points and from the assessment order dated 21.3.2017, it is clearly discernible that the AO has made enquiry and deliberation on both the points and as per CBDT Circulars (supra), he is not allowed to travel beyond the ambit of the points for which, case was selected for limited scrutiny. Therefore, the ld ACIT, who was not having revisional power u/s.263 wrongly alleged that the AO has not made enquiry on certain points. Therefore, we are unable to agree with the conclusions drawn by ld PCIT in paras 10 11 of the impugned order and hold that the assessment order is neither erroneous nor prejudicial to the interests of the revenue and the AO has made sufficient enquiries, investigations and examination on both the points. Consequently, the revisional proceedings, issue of notice and impugned order u/s.263 of the Act is quashed. 22. In the result, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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