9911796707
TMI Blog2023 (3) TMI 1416X X X X Extracts X X X X X X X X Extracts X X X X ..... d also subsequent notice issued u/s 142(1) called for further information. In our view this is incomplete disregard of the Instruction No. 5/2016 issued by CBDT on 14.07.2016 which provides that while proposing to take up complete scrutiny which was fixed for limited scrutiny, the AO shall form a reasonable view that there is a possibility of under-assessment of income if the case is not examined under complete scrutiny and that plea has to be on the existence of the credible material not merely on suspicion and conjecture or unreliable sources. We note that the instruction provide that there has to be a direct nexus between the available material and formation of such view. AO has exceeded his jurisdiction in enquiring into those iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scrutiny assessment was selected for limited scrutiny u/s 143(2) and not complete scrutiny. 3. Ld. Counsel for the assessee at the outset submitted that the issue raised in the additional ground challenging the jurisdiction of the AO to make addition in respect of those items which were not subject matter of limited scrutiny u/s 143(2) of the Act is purely a legal issue which does not require any fresh or further verification of facts and therefore the same may kindly be admitted for adjudication as it is a substantive and fundamental issue which goes to the root of the assessment. 4. The Ld. D.R on the other hand objected the admission of the additional ground on the ground that this was never raised either before the AO or before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the last day of the previous year i.e. on 31.03.2015 shares of the assessee company was held by Weilburger Asia which was not carrying more than 51% of the shares of the assessee on the last day of the year for FY 2006-07, 2007-08, 2008-09 2009-10 in which these losses were incurred and consequently rejected the claim. The Ld. A.R submitted that the it was a limited scrutiny covering four items namely i) Receipt of large values foreign remittance, ii) Mismatch in amount paid to related persons u/s 40A(2)(b), iii) Unsecured loans from persons who have not filed their return of income and iv) Loss from currency fluctuations. The Ld. A.R submitted that the issue of setting off and carrying forward of losses was not subject matter in the lim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard rival submissions and perusing the material on record, and also notice dated 143(2) dated 08.04.2016 issued for limited scrutiny covering four issues namely) i) Receipt of large values foreign remittance, ii) Mismatch in amount paid to related persons u/s 40A(2)(b), iii) Unsecured loans from persons who have not filed their return of income and iv) Loss from currency fluctuations and also subsequent notice issued u/s 142(1) dated 25.04.2017 called for further information. In our view this is incomplete disregard of the Instruction No. 5/2016 issued by CBDT on 14.07.2016 which provides that while proposing to take up complete scrutiny which was fixed for limited scrutiny, the AO shall form a reasonable view that there is a possibility of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, conjecture or unreliable source; and c. there must be a direct nexus between the available material and formation of such view. 4. It is further clarified that in cases under 'Limited Scrutiny', the scrutiny assessment proceedings would initially be confined only to issues under 'Limited Scrutiny' and questionnaires, enquiry, investigation etc. would be restricted to such issues. Only upon conversion of case to 'Complete * Scrutiny' after following the procedure outlined above, the AO may examine the additional issues besides the issue(s) involved in 'Limited Scrutiny'. The AO shall also expeditiously intimate the taxpayer concerned regarding conducting 'Complete Scrutiny' in such cases. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO has exceeded his jurisdiction in enquiring into those issues beyond the scope of limited scrutiny which is in clear violation of mandate given by CBDT in the said Circular and has been held by the Co-ordinate Bench in the case of Shri Vijay Kumar (supra) to be bad in law. We note that CBDT has in para 4 of the said instruction clarified that in a limited scrutiny, the scrutiny assessment proceedings would initially be confined only to issues and questionnaire, enquiry, investigation etc. would be restricted to such issues in the limited scrutiny. Only upon conversion of such case to complete scrutiny after following the procedure laid down as stated , the AO may examine the issues other than the issues involved in the limited scrutiny bu ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
