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TMI Blog2020 (8) TMI 862X X X X Extracts X X X X X X X X Extracts X X X X ..... the two issues on which the case was picked up for limited scrutiny under CASS. The assessee had claimed TDS credit u/s 194IA and had declared sales consideration in his ITR. The rate of TDS during this period was 1% under Section 194IA of the Act and the amount of TDS which fully corresponds to the amount as declared by the assessee in his ITR. Thus, it cannot be said that the sales consideration declared in ITR is less than the one reported in FORM 26Q filed by buyer. Even the AO has not disputed this fact in the assessment order. No adverse inference has been drawn by him against the assessee on the issue of unsecured loans. In our considered opinion, the findings of the Ld. CIT (A) on this issue are not correct and there was no valid basis for the AO to inquire into other issues while conducting a limited scrutiny, without taking the mandatory permission from the Ld. Pr.CIT. On these facts, when the CBDT instructions did not permit the AO to travel beyond the issues which are authorised by the Board in this regard under CASS, it is held that the addition made by the AO is beyond his jurisdiction. AO has travelled beyond his jurisdiction when he has invoked the provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns from persons who have not filed their return of income. ii. Sales consideration of property in ITR less than sales consideration reported in Form 26QB. 2.1 Subsequently, in the assessment order, the Assessing Officer (AO) did not make any addition on any of the two issues for which the case was selected for limited scrutiny. The AO, however, has not restricted himself to the above said specific issues for which made an addition of ₹ 2,51,75,501/- u/s 50C of the Act and also made another addition of ₹ 8,36,298/- by disallowing the total cost of acquisition of another land sold by the assessee. 2.2 Aggrieved, the assessee filed the first appeal before the Ld. CIT (A) wherein it was contended that provisions of Section 50C of the Act were not at all applicable as the assessee had not sold any asset being land or building or both but had sold a capital asset in the form of booking rights/right to allotment of flat only. The Ld. CIT (A) vide the impugned order deleted the addition of ₹ 8,36,298/- but sustained the addition of ₹ 2,51,75,501/-. Before the Ld. CIT (A), the assessee had also disputed the jurisdiction of the AO in making the addition of & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... date of hearing of the appeal by the learned CIT(Appeals). d) That the learned CIT(Appeals) has erred in arbitrarily holding that the transaction of sale right to allotment by the assessee is the sale of land and building and has erred in upholding the invocation of section 50C by the Assessing Officer. 3) That the learned CIT(Appeals) has further erred in upholding the action of the Assessing Officer in assuming the role of DVO himself and in making the impugned addition without making any reference to the DVO by the Assessing officer. 3.0 The Ld. Authorised Representative (AR) submitted that this case was picked up for limited scrutiny only and no addition was made and no adverse inference was drawn by the AO in respect of either of the two issues on which the jurisdiction for limited scrutiny was vested in the AO. He further submitted that it was an undisputed fact that in the instant case, the AO had not obtained the requisite permission from the Ld. Principal CIT/CIT for expanding the scope of inquiry in a limited scrutiny case and, therefore, the assessment order passed by the AO, making additions beyond the scope of reasons for which the limited scrutiny was initiat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the time of sale by him. The Ld. AR reiterated that the assessee had only purchased booking rights and had sold the same as it is and had earned an amount of ₹ 5,00,000/- which was declared as capital gains income in the ITR. He assailed the findings of the Ld. CIT (A) and contended that the Ld. CIT (A) has erred in holding that the entire payment for the flat had been made and that as per the payment plan of the builder, the construction of the property was complete. The Ld. AR argued that such findings were de hors any material on record. It was further submitted that on the contrary, the Ld. CIT (A) had erred in ignoring substantial documentary evidences in the form of RERA orders dated 6-10- 2017 wherein it was recorded that the construction was not complete and that the builder had quoted the expected date of completion of the project as December 2019. He further drew our attention to a press cutting from the newspaper Times of India dated 14January 2019 to show that there was an inordinate delay in completing the construction of the project in which the rights to allotment had been purchased and sold by the assessee. He also submitted that the finding regarding compl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made a reference to the DVO in this case before making any addition. 4.0 Per contra, the Ld. Departmental Representative (DR) supported the orders of the AO and the Ld. CIT (A) and submitted that the addition made by the AO were within the scope of issues on which the Limited Scrutiny was initiated in this case. According to the Ld. DR, the AO was fully justified in making the impugned addition of ₹ 2,51,75,550/- as the verification of sale consideration formed part of the reasons for initiating the limited scrutiny. He referred to the notice u/s 142(1) dated 06/02/2017 issued to the assessee to contend that the assessee was asked to furnish details of immovable properties sold during Financial Year 2014-15 along with the documentary evidences and that it was in continuation of such inquiry that the addition was made and, thus, it cannot be said that it was outside the scope of limited scrutiny. He further supported the order of the Ld. CIT (A) to contend that the provisions of Section 50C were correctly invoked in this case .He further argued that there was no need to make a reference to the DVO as the assessee had not raised any dispute that the circle rates were higher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inding of the Ld. CIT (A) on this issue, therefore, cannot be upheld and the assessee s first ground of appeal is allowed. 5.1 Even otherwise, we find that the possession of the flat was not offered by the builder as the project was still under construction as proved from the order of RERA dated 6-10-2017 brought on record by the assessee both before the AO and the Ld. CIT (A). Thus, it is a case of transfer of only the booking rights of a residential flat in an under construction project. As the assessee did not have possession of any immovable property, there was no question of sale of any land or building or both. On these facts, in our considered opinion, the provisions of section 50C are not applicable as the assessee has neither sold any land nor any building or both. 5.2 Since it has been held by us that the provisions of Section 50C of the Act are not applicable to the transaction of selling booking rights/rights to allotment of a flat, as has been done by the assessee in the instant case, the issue of making reference or not to the DVO becomes academic and is not adjudicated here. 6.0 In the final result, the appeal of the assesse is allowed. Order pronounced o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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