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TMI Blog2020 (3) TMI 961X X X X Extracts X X X X X X X X Extracts X X X X ..... convinced with the argument of the DR that the issue raised by the AO is limited to the activity of the sale of the property only. It is because if we admit the contention of the learned DR then the head of income from capital gain will also get change to the business income despite the fact that there was no question raised in the notice issued for the limited scrutiny under section 143(2) of the Act. The right course of action for the AO was to take the approval from the competent authority for expanding the scope of Limited Scrutiny to the regular assessment but he failed to do so. Thus, in our considered view inaction of the AO should not cause any harassment to the assessee. In holding so we draw support and guidance from the order of Rajesh Jain vs. ITO [ 2005 (4) TMI 629 - ITAT CHANDIGARH] held that CBDT Circular clarifies that the Assessing Officer does not have the powers to make the entire assessment of income in limited scrutiny cases. There is no doubt that the power of the Commissioner (Appeals) is co-terminus with the power of the AO In the instant case, when the Assessing Officer did not have the power to make a full-fledged assessment in limited scrutiny cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conclusion of the transaction being an adventure in the nature of trade and consequently erred in assessing the total income at ₹ 3,57,65,520/- against the return income of ₹ 1,50,G4,250/-. The Ld. CIT(A) Gandhinagar has also erred in confirming the action of the A.O. without properly appreciating the totality of the facts of the case. 3. The Ld.AO has erred in law and facts of the case in considering Capital Gain income of ₹ 1,48,86,543/- earned as income under head Business income by considering transaction of sale of land plot as adventure in nature of business and recalculate at ₹ 3,54,87,S13/-. Ld. CIT(A) Gandhinagar has also erred in confirming the action of the A.O. without properly appreciating the totality of the facts of the case. 4. The Ld. AO has erred in law and on facts in not properly appreciating and considering various submissions, evidences and supporting placed on record during the course of the assessment proceedings and not properly appreciating various facts and law in its perspective. Ld. CIT(A) Gandhinagar has also erred in confirming the action of the A.O. without properly appreciating the totality of the facts of the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder section 143(2) was issued only for the purpose of investigation of mismatch of income with form 26AS. But the AO converted the limited scrutiny into complete scrutiny and held the capital receipt as business receipt without obtaining any approval from the higher authority. The AO in this process violated the notification issued by the CBDT bearing no. 7/2014 dated 26th Sept, 2014 and notification no 20/2015 dated 29th Dec, 2015. Accordingly the assessee prayed to the leaned CIT (A) to hold the assessment as void and bad in law. 8. The ld. CIT-A called for the remand report from the AO who in turn submitted that the contention of the assessee is unacceptable as the notice was issued with respect sale of property and all the investigation was carried out during the proceedings only related to such sale of property. Therefore he/she did not travel beyond the jurisdiction. 8.1 The learned CIT (A) after considering the submission of the assessee and remand report confirmed the action of the assessee by holding as under: 5.2 I have carefully considered the facts of the case, submissions made by the appellant, remand report and the order of the AO. So far as the ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue is - Deduction claimed under the head capital gain . Thus the AO has confined himself to the limited issue of claim made under the head capital gain. However, on further scrutiny, when he found that the capital gain claimed is not correct as the transaction is found to be an adventure in the nature of trade, he has denied this claim. Thus, this contention of the appellant is rejected as the AO has not gone beyond the mandate given, yes he made an intense enquiry by delving deep in the issue. The scrutiny carried out is not horizontal but vertical on which there is no censor. Question of seeking permission for conversion from 'Limited Scrutiny' to the 'Complete Scrutiny' would have arisen when the AO would have noticed any other issue apart from those four issues identified in CASS. As there is no such issue, there was no need to seek permission of PCIT. The appellant has relied on the decision of ITAT, Mumbai in the case of ITO vs. Pericles foods (P) Ltd. decided on 31,07.2007 and in relation to the AY 2001-02. At the relevant time, the scrutiny assessments were governed under two distinct provisions of section 143(2)0) and 143(2)(ii) of the Act and the scope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he issue mentioned therein. If the AO of the view that there is a potential escapement of income, he may convert the Limited Scrutiny into Complete Scrutiny but such view should be reasonable view based on credible information or material available on record. Furthermore, there should be direct nexus between such view and information/material. The relevant portion of the instruction stands as under: 3. As far as the returns selected for scrutiny through CASS-2015 are concerned, two type of cases have been selected for scrutiny in the current Financial Year-one is 'Limited Scrutiny' and other is 'Complete Scrutiny'. The assessees concerned have duly been intimated about their cases falling either in 'Limited scrutiny' or 'Complete Scrutiny' through notices issued under section 143(2) of the Income-tax Act, 1961 ( Act ). The procedure for handling 'Limited Scrutiny' cases shall be as under: a. In 'Limited Scrutiny' cases, the reasons/issues shall be forthwith communicated to the assessee concerned. b. The Questionnaire under section 142(1) of the Act in Limited Scrutiny' cases shall remain confined only to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the fact whether the assessee was engaged in the business of property development. Accordingly, we hold that the Assessing Officer has exceeded his jurisdiction by denying the deduction claimed under section 54 of the Act on the reasoning that the assessee is engaged in the business of property development as the same was not mandated under the Limited Scrutiny notice issued under section 143(2) of the Act. 14. We are also conscious about the fact that this tribunal in the case of the co-owner namely Shri Harshadkumar Amrutlal Patel in ITA No. 361/AHD/2019 has decided the issue against the assessee on merit. Accordingly, the question arises once the issue involved in the case of the co-owner has been decided against the assessee, then can the Bench take of contrary view from the case of other co-owners. However, we find that the technical issue raised by the assessee in the case on hand was not there in the case of co-owner namely Shri Harshadkumar Amrutlal Patel. Thus we are adjudicating the present appeal from altogether a different perspective. Thus, the question of taking the contrary view does not arise. 15. In the case of the other co-owner namely Shri Harshadkumar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wer of the Commissioner (Appeals) is co-terminus with the power of the Assessing Officer. So, however, in the instant case, when the Assessing Officer did not have the power to make a full-fledged assessment in limited scrutiny cases, the Commissioner (Appeals) s power could not be enlarged beyond the power of the Assessing Officer in limited scrutiny cases. So, it was considered appropriate to remit the issue relating to allowance of depreciation in respect of the plinth to the file of the Assessing Officer for the purpose of fresh decision in accordance with law. Since the notice under section 143(2)(i ) was issued for limited scrutiny, the Assessing Officer was precluded from considering any other issue while making the assessment under section 143(3) under limited scrutiny. The decision of the Commissioner (Appeals) in considering the other claim of the assessee not covered in the notice issued under section 143(2)(i) for limited scrutiny was contrary to the provisions of the Act and, accordingly, was set aside. In view of the above and after considering the facts in totality as discussed above, we are not convinced with the finding of the authorities below. As such the ent ..... X X X X Extracts X X X X X X X X Extracts X X X X
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