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TMI Blog2024 (8) TMI 424X X X X Extracts X X X X X X X X Extracts X X X X ..... issue of valuation of shares with applicability of provisions of section 56(2)(viib) as raised in SCN u/s 263 being beyond the scope of limited scrutiny is also beyond the scope of section 263. Order u/s 263 based partially on the issue raised in the notice and also on entirely new issue without any SCN or without providing any opportunity is beyond the mandate of section 263. Keeping in view the entire facts and circumstances of the case and the judicial pronouncements mentioned above, we hold that, the order of the ld. PCIT passed u/s 263 cannot be affirmed owing to the reasons of, i) the order is passed beyond jurisdiction, ii) the order passed is beyond the limited scrutiny, iii) the order has been passed on the issues for which no show cause notice has been issued, iv) the issues flagged by the PCIT have examined by the AO, v) the decision of the ld. PCIT determining the difference on the value of the shares at Rs. 1.50 per share is against the provisions of the Act as the assessee can resort to the method of valuation as per DCF/NAV as per Rule 11UA at their discretion. Appeal of the assessee is allowed. - Dr. B. R. R. Kumar, Accountant Member And Sh. Sudhir Kumar, Judicial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of M/s Sanvaria Gas Pvt. Ltd. as per Rule 11UA of the Income Tax Rules, 1962 r.w.s 56(2)(viia) of the Income Tax Act, 1961. The Long Term loans advanced, sources thereof and receipt of income and interest thereon. 4. Aggrieved, the assessee filed appeal before the Tribunal. 5. The main arguments of the ld. AR were that the case has been originally selected for limited scrutiny by CASS and hence the issues that were examined by the ld. PCIT were beyond the scope of limited scrutiny and hence beyond jurisdiction. Secondly, the ld. AR argued that the ld. PCIT has directed the AO to examine the issue of Long Term loans advanced, even though the issue is beyond the scope of limited scrutiny and also without issuing any show cause notice on this head. On the other hand, the ld. DR relied on the order of the ld. PCIT and argued that the AO has not conducted sufficient enquiries and verifications which should have been made. 6. Heard the arguments of both the parties and perused the material available on record. 7. We find that the case of the assessee was selected for limited scrutiny u/s 143(2) of the Income Tax Act, 1961 for A.Y. 2015-16. The assessment proceedings for A.Y. 2015-16 were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny to enquire large investment in unquoted share and ld. AO duly examined the source and genuinity of such investment with reason thereof whereby assessee had a vested interest in Sanwariya Gas Ltd., as per scope and ambit of limited scrutiny, therefore the issue of valuation of shares with applicability of provisions of section 56(2)(viib) as raised in SCN u/s 263 being beyond the scope of limited scrutiny is also beyond the scope of section 263. 15. Reliance is placed on the following Judicial Pronouncements: i) PCIT vs. Shark Mines and Minerals (P.) Ltd. [2023] 151 taxmann.com 71 (Orissa) 9. Indeed, the Court finds that the Madras High Court has while affirming the decision of ITAT in Smt. Padmavathi (supra) taken the view that while exercising suo motu revisional power under section 263 of the Act, the CIT cannot travel beyond the scope of the issues which form part of the 'limited scrutiny' in the original Assessment Order. This Court concurs with the above view. 10. What persuades this Court to reach this conclusion is the requirement in law that if the AO has to go beyond the scope of the issues for which 'limited scrutiny' has to be undertaken by him, he has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iii) Naga Dhunseri Group Ltd. [2023] 146 taxmann.com 424 (Calcutta) (iii) Whether on the facts and circumstances of the case and in law Learned Income-tax Appellate Tribunal is justified in not appreciating the facts that one of the reasons for selection of the case for limited scrutiny was to verify the introduction of capital in NBFC/Investment Companies which is connected with the issue of disallowance under section 14A of the Income-tax Act, 1961? 6. A bare reading of the above instruction clearly shows that the PCIT cannot make a roving enquiry in the guise of a limited scrutiny and as such the instruction issued by the CBDT is binding on the Department.' 16. Order u/s 263 based partially on the issue raised in the notice and also on entirely new issue without any SCN or without providing any opportunity is beyond the mandate of section 263. 17. Further, reliance is placed on the following case laws: (i) Krishak Bharati Cooperative Ltd. Vs. ACIT [2016] 67 taxmann.com 138 (Delhi) 14. Keeping in view of the facts and circumstances of the case and the precedents relied upon, the validity of the order passed u/s. 263 needs to be considered. As per the admitted position, show c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le defining balance sheet , there should not be material change in the financials of the Balance Sheet after audit so that it may not lose the tenacity and relevance of balance sheet on the date of valuation . 9. In light of the facts discussed above, we hold that the balance sheet on the basis of which FMV of shares allotted on 31.3.2016 was determined by the assessee falls within the meaning of Balance Sheet as envisaged under Rule 11U. Hence, we find no error in the FMV of shares determined by the assessee on the basis of balance sheet drawn on 31.3.2016. 18. Hence, keeping in view the entire facts and circumstances of the case and the judicial pronouncements mentioned above, we hold that, the order of the ld. PCIT passed u/s 263 cannot be affirmed owing to the reasons of, i) the order is passed beyond jurisdiction, ii) the order passed is beyond the limited scrutiny, iii) the order has been passed on the issues for which no show cause notice has been issued, iv) the issues flagged by the ld. PCIT have examined by the AO, v) the decision of the ld. PCIT determining the difference on the value of the shares at Rs. 1.50 per share is against the provisions of the Act as the assesse ..... 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