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TMI Blog2022 (8) TMI 383X X X X Extracts X X X X X X X X Extracts X X X X ..... t verifications as regards the substantial investments made in equity shares by the assessee during the year under consideration. Although, we have principally concurred with the Pr. CIT on the aforesaid issue, but at the same time find some substance in the claim of the ld. AR, that as stated by the assessee before the AO in the course of the assessment proceedings, as the fresh investment in unquoted equity shares made by the assessee company during the year under consideration was sourced out of its old loans and advances that were received back during the year, therefore, the same were made out of it duly disclosed sources. Be that as it may, having principally concurred with the order passed by the Pr. CIT under Sec. 263 qua the aforesaid issue in hand i.e, failure on the part of the AO in carrying out verifications as regards the substantial investments made in equity shares by the assessee during the year under consideration, we herein direct the AO to consider the aforesaid claim of the assessee in the course of the set-aside proceedings. - ITA No. 85/RPR/2020 - - - Dated:- 5-8-2022 - SHRI RAVISH SOOD , JUDICIAL MEMBER AND SHRI ARUN KHODPIA , ACCOUNTANT MEMBER ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id observations the Pr. CIT called upon the assessee to explain as to why the assessment order passed u/s.143(3) of the Act, dated 21.04.2016 may not be revised u/s.263 of the Act. After considering the reply filed by the assessee, the Pr. CIT though accepted its claim that no revision was called for on the issue of share capital and securities premium of the assessee company which as on 31.03.2015 was Rs.33,98,000/- and Rs. 14,91,01,200/-, respectively, but held the order passed by the AO u/s.143(3) of the Act, dated 21.02.2016 as regards the remaining two issues as erroneous in so far it was prejudicial to the interest of the revenue under Sec. 263 of the Act. Accordingly, the Pr. CIT set-aside the assessment order with a direction to the Assessing Officer to examine the aforesaid two issues afresh and pass a fresh assessment order after affording a reasonable opportunity of being heard to the assessee. 4. Aggrieved, the assessee has assailed the order passed by the Pr. CIT u/s.263 of the Act, dated 31.03.2020 before us. 5. Before us the Ld. Authorized Representative (for short AR ) for the assessee has assailed the impugned order passed by the Pr. CIT u/s.263 of the Act p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n and examination of the investment of Rs.15.25 crores that was made by the assessee company in unquoted equity shares, loans/advances, it was submitted by the Ld. AR that the correct amount of investment was Rs.15 crores and not Rs.15.25 crores (supra) as was stated by the Pr. CIT in his order u/s 263. In order to fortify his aforesaid claim the Ld. AR had drawn our attention to the balance sheet of the assessee company for the year under consideration wherein the aggregate amount of the investment in unquoted equity shares was reflected at Rs.15 crores (Page No. 36 39 of the APB). It was submitted by the Ld. AR that out of the investment of Rs.15 crore (supra) as was reflected in the balance sheet as on 31.03.2015, an amount of Rs.11.42 crore was in the nature of an opening balance that was brought forward from the immediately preceding year. As regards the balance amount of Rs.3.58 crores [Rs. 15 crore (-) Rs.11.42 crores], it was submitted by the Ld. AR that the same was sourced out of the short term loans and advances of Rs.3.65 crores that were received back by the assessee company during the year under consideration. In order to buttress his aforesaid claim the Ld. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer after due application of mind had accepted the explanation of the assessee as regards the source of the investments in question, therefore, the Pr. CIT could not have held the order passed by the A.O u/s 143(3), 21.04.2016 qua the issue in hand, viz. investments made by the assessee company in unquoted equity shares, loans/advances to be erroneous in so far it was prejudicial to the interest of the revenue u/s. 263 of the Act. 7. Per contra, the Ld. Departmental Representative ( for short DR ) relied on the orders of the Pr. CIT passed u/s. 263 of the Act, dated 31.03.2020. 8. We have heard the ld. authorized representatives of both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by them to drive home their respective contentions. As the Pr. CIT had held the order passed by the Assessing Officer u/s.143(3) of the Act, dated 21.04.2016 as erroneous in so far it was prejudicial to the interest of the revenue on two grounds, therefore, we shall deal with them in a chronological manner as herein below : (A).Claim of loss from derivatives : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such unrelated issues while framing the assessment. Our aforesaid view is fortified by the decision of the co-ordinate Bench of the Tribunal in the case of M/s Su-Raj Diamond Dealers Pvt. Ltd Vs. Pr. CIT, (2020) 203 TTJ 137 ( Mum.) (of which one of us i.e., Judicial Member was a party), wherein it was held as under : 6. We have heard the authorized representatives for both the parties, perused the orders of the lower authorities and the material available on record, as well as the judicial pronouncements relied upon by them. Admittedly, the case of the assessee was selected for limited scrutiny through 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. Insofar the fact that the case of the assessee was selected for limited scrutiny for the aforesaid reasons is concerned, the same as observed by us hereinabove is not disputed and is clearly discernible from the order passed by the Pr. CIT under Sec. 263 of the Act. In fact, we find, that the Pr. CIT in his order had categorically observed that the case of the assessee was not selected for examination on the issue relating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 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 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 specific reasons/issues for which case has been picked up for scrutiny Further, the scope of enquiry shall be restricted to the Limited Scrutiny' issues. c. These cases shall be completed expedit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erved by us hereinabove, as per the CBDT instruction No. 20/2015, dated 29.12.2015, in a case which had been selected for scrutiny assessment on the basis of Computer Aided Scrutiny Selection ('CASS'), the scrutinising of such case would be confined only to the specific reasons/issues for which the case has been picked up for scrutiny. However, the case may thereafter be taken up for complete scrutiny with the approval of the administrative Principal commissioner of income-tax/Commissioner of income-tax, where it is felt that apart from the CASS information there is potential escapement of income of more than Rs.10,00,000/-. Accordingly, the CBDT had in clear and unequivocal terms clarified that for broadening the scope of a case selected for limited scrutiny as per CASS information the approval of the administrative Principal commissioner of income-tax/Commissioner of income-tax would be required. In the case before us, it is an admitted fact that the case of the assessee was selected for limited scrutiny under CASS,for the 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. In f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , that he had failed to dwell upon certain other issues which did not form part of the reasons for which the case was selected for limited scrutiny under CASS. We thus not being able to concur with the view taken by the Pr. CIT that the order passed by the A.O under Sec. 143(3), dated 08.12.2016 is erroneous, therefore, set aside his order and restore the order passed by the A.O. As we have quashed the order passed by the Pr. CIT under Sec. 263 on the ground of invalid assumption of jurisdiction by him, therefore, we refrain from adverting to and therein adjudicating the contentions advanced by the ld. A.R on the merits of the case, which thus are left open. On the basis of our aforesaid observations, we are of a strong conviction, that as stated by the Ld. AR, and rightly so, the Pr. CIT had clearly traversed beyond the scope of his jurisdiction and revised the order passed by the Assessing Officer by holding the same as erroneous, for the reason that he had while framing the assessment failed to look into and carry out necessary verification and examination of the assessee s claim of loss from derivatives i.e, an issue which was never the subject matter for selection of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2(1) dated 04/04/2017 has simply asked the assessee to furnish the details of investment. Counsel for the assessee vide his reply, received by the AO on 10/04/2017, has furnished list of investment. The list shows that during the year under consideration assessee has made substantial investment in unquoted equity shares. It is seen that the assessing officer has not made any enquiry in this regard. He has not asked the assessee to furnish the detail ledger of investment. He has not asked for the relevant documents such as broker s details, ledger account of the assessee in the broker s books of account etc,, He has not made any enquiry so as to enquire that whether the assessee company, director or family members of the assessee company in which the investment has been made by the assessee. Thus the AO has not properly examined the issue. On a perusal of the order passed by the Pr. CIT u/s 263 of the Act, it transpires that the Assessing Officer vide his notice u/s. 142(1) of the Act, dated 04.04.2017 had in the course of the assessment proceedings simply asked the assessee to furnish the details of investment. In reply, the assessee had vide its letter dated 10.04.2017 furni ..... X X X X Extracts X X X X X X X X Extracts X X X X
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