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TMI Blog2021 (4) TMI 173X X X X Extracts X X X X X X X X Extracts X X X X ..... making re-characterization of the income from capital gains to business head qua subject share sale transaction firstly without any adequate and corresponding show cause notice of enhancement, secondly on extant facts said enhancement could not have been done as per dear proscription under the statute and thirdly only limited scrutiny proceedings was going on before Ld AO as per notice u/s 143(2) dated 20/09/2016 on issue of"deduction claimed under the head capital gains" which was never converted to complete scrutiny as per extant CBDT instructions and fourthly said re-characterization on its merits also is misdirected and clearly against the principle of consistency and CBDT circulars which covers the issue in favor of appellant on its me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has received the bonus shares having the 'NIL' value as cost. Therefore, the loss amounting to Rs. 7,61,581/- claimed by the assessee against the profit from other transactions of sale of securities was disallowed. Accordingly, the total income of the assessee was assessed at Rs. 1,35,71,401/- against the returned income of Rs. 1,28,09,820/- by the order under Section 143(3) of the Act dated 21.09.2017. 4. Assessee aggrieved with the above order, preferred appeal before the ld. CIT (Appeals). The ld. CIT (Appeals) held that the transactions of purchase and sale of Tech Mahindra and Infosys ltd is chargeable to tax under the head business income and not capital gain. Therefore, he issued a show cause notice that why the income of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arguments contesting that the addition made by the Assessing Officer by disallowing the loss, enhancement by the ld. CIT (Appeals), characterizing the capital gains into business income by the CIT (Appeals) are all devoid of merit. 7. The ld. DR relied upon the orders of the lower authorities. 8. On a query from the bench, that whether the case of the assessee was converted into complete scrutiny from the limited scrutiny, the answer was categorically 'No'. The assessment order as well as the appellate order also did not show that any such exercise was carried out. Instead of that, the notices issued during the years of assessment proceedings emphatically shows that the case was of limited scrutiny for verification of deduction under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore now the facts before us shows that assessing officer has made an adjustment to the total income of the assessee on the issue which was not part of the limited scrutiny issue for which the case of the assessee was picked up for scrutiny. There is no evidence placed before us that such a limited scrutiny assessment proceedings have been converted into complete scrutiny proceedings. The assessment order as well as the orders of the learned and CIT - A also does not show any indication of the same. If the Assessing Officer desires to look into any other adjustment or examination of any issue, then what is mentioned as reasons for limited scrutiny, the CBDT has issued a clear instruction No. 5 of 2016 dated 14.07.2016 wherein after obtaini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the above quoted instructions of the CBDT. It also shows that if that happens then without obtaining the approval of Commissioner of Income Tax and CCIT, the whole assessment of the assessee remains open, despite the fact that the learned assessing officer has looked into the issues contained in the limited scrutiny notice. We do not find such an intention of the CBDT in issuing the instructions of limited scrutiny case. On this score, we do not approve the enhancement made by the ld. CIT (Appeals) on issues, which were not part of limited scrutiny. 11. Even on the merits of the case the facts clearly shows that assessee has purchased 575 shares of Infosys Ltd. against which he has received 575 bonus shares. The purchase cost of 575 sha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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