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TMI Blog2024 (9) TMI 1377X X X X Extracts X X X X X X X X Extracts X X X X ..... .2016, read with instruction No. 20/2015, dated 29.12.2015. Thus, the assessment orders passed u/s 143(3) of the Act, dated 14.12.2016, become bad in law. The assessee`s case was selected for limited scrutiny to examine the provisions of section 54B of the Act and not for examination of provisions of section 45 of the Act, (determination of cost of acquisition) therefore, we find that assessing officer has exceeded his jurisdiction assigned to him. If the assessing officer wants to examine cost of acquisition, (which is not the subject matter of limited scrutiny) then in that circumstances, the assessing officer has to take permission from the higher authorities, which the assessing officer failed to do so. Assessee`s case was selected for limited scrutiny to examine two issues, viz: (i) Large Investment, and (ii) Deduction claimed u/s 54B of the Act, however, the assessing officer has not made addition on both the issues of Limited Scrutiny Notice. AO cannot travel beyond the issue raised under Limited Scrutiny , as stated in the two instructions of CBDT, which are binding to all the Assessing Officer, viz, (i)Instruction No. 20/2015, dated 29.12.2015 and (ii)Instruction no. 5/201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hi), has erred in law and on facts in holding that the issue involved (i.e.) Sec. 45 54B highly related and inter linked despite the facts that both sections are independent, and both have their own machinery for application in the income tax law. 3. The Ld. CIT(A)-NFAC (Delhi), has erred in law and on facts in confirming the addition of Rs. 2,50,07,170/-on account of capital gain by not accepting the FMV adopted by the assessee which was supported by the Govt. Approved Valuer. 4. The Ld. CIT(A)-NFAC (Delhi), has erred in holding the action of the assessing officer of not allowing the following deduction which are prima facie allowable against the capital gain income: (a) Agricultural land purchased at Ramnagar Rs. 35,00,157/- u/s. 54B (b) Residential House Purchased Rs. 29,12,500/- u/s. 54F It is prayed that the order passed by the assessing officer may be annulled and the addition made by the assessing officer and confirmed by the CIT(A) may be deleted. 3. Succinctly, the factual panorama of the case is that assessee before us is an Individual, and has filed his return of income on 26-07-2014, for Assessment year 2014-15, declaring total income of Rs. 2,05,044/- and agricultural ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has submitted its reply, before the assessing officer, which is reproduced below: We have received your letter dated 6.12.2016. On the basis of valuation report favourable on your side, you are willing to increase and worked out the capital gain. The valuation of your government officer is totally contrary to the valuation done by our govt. approved valuer. Our govt valuer has already assigned the plus point of our land. The said plus point are shown by our valuer on page 2 in item 6 and 7 and 8 and plus point are also mentioned on page 3 of the valuation report. Not only all these points are not considered properly but have been rejected summarily. The Explanation given on page no. 5 against the item no.9 is also not considered lawfully. All these points suggest that your departmental valuer has not remained serious while deciding the issue. Subsequent objection by our reply has not been rejected. The decision taken by your valuer is harsh, heavy and arbitrary based on whimsical reasons. Under these circumstances you are hereby requested to direct your valuation cell to consider entire valuation report together with subsequent objection. The reasons cited by your valuer are not at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of acquisition. The Valuation Cell, vide order u/s 55A of the Act dated 29.11.2016, estimated the fair market value of the property in question at Rs. 5,82,098/- as on 01/04/1981 instead of Rs. 35,61,360/-taken by the registered valuer of the assessee. Therefore, in light of valuation done by assistant valuation officer, Valuation Cell of 1.1. Department, the working of capital gain by assessing officer is as under: Sale consideration received by the assessee Rs. 6,71,82,000/- Less Indexed cost of acquisition: (1) Cost of acquisition as on 01.04.1981 FMV, as on 01.04.1981 valued by DVO at Rs. 5,82,098/- Cost of acquisition x cost of index Rs 5,82,098 x 939/100= Rs. 54,65,900/- Long term capital gain Rs. 6,17,16,100/- The long-term capital gain arised from the agriculture land sold during the year under consideration, was worked out by the assessing officer at Rs. 6,17,16,100/-. The benefit of deduction claimed under section 54B in the return of income of Rs. 3,67,08,930/- was allowed to the assessee. The claim of additional deduction under section 54B and 54F claimed by the assessee, vide assessee`s submission letter dated 12.12.2016, was not allowed to the assessee. Therefore, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ument, relied on the following decisions: 1. ITA Nos.02 03/Ahd/2023 dated 28.06.2023 in the case of Mohhmed Hanif Nannamiya Kazi. 2. ITA No.981/Ahd/2019 dated 20.03.2020 in the case of Shri Narendra kumar Rameshbhai Patel. 3. ITA No.2611/Kol/2019, dated 22.02.023, in the case of Sukhdham Infrastructures LLP. 4. ITA No.391/Pun/2023 dated 07.08.2023, Manikrao Amrutrao Satav 11. On the other hand, Learned Senior Departmental Representative (Ld. Sr. DR) for the Revenue submitted that computation of capital u/s 45 of the Act and providing exemption u/s 54B of the Act, are co-related issue, therefore provisions of section 54B of the Act should not be read alone, it should be read with section 45 of the Act. Besides, ld DR relied on the findings of the assessing officer and stated that addition made by the assessing officer may be confirmed. 12. We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. We find that assessee`s return of income was selected for Limited Scrutiny by CASS for two issues to verify: (i) Large investment in property (AIR), as compared to total income, and (ii) Large ded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice. The assessing officer cannot travel beyond the issue raised under Limited Scrutiny, as stated in the two instructions of CBDT, which are binding to all the Assessing Officer, viz, (i)Instruction No. 20/2015, dated 29.12.2015 and (ii)Instruction no. 5/2016, dated 14.07.2016. The Limited Scrutiny has narrow scope of inquiry, as mentioned in Para 3 (d) of Instruction No. 20/2015 and Para No. 4 of Instruction No. 5/2016 of the CBDT. Thus, we find that the assessing officer has violated the Board Instructions and therefore the addition needs to be deleted, for that reliance can be placed on the following decisions: 1. Manikrao Amrutrao Satav V/s Dy.CIT ITA NO. 391/PUN/2023. 2. Narendra Kumar Rameshbhai Patel v/s Dy. CIT ITA No. 981/Ahd/2019. 3. Sukhdham Infrastructures LLP v/s ITO ITA No. 2611/Kol/2019 15. Thus, we find that provisions of section 54B of the Act, cannot be linked with section 48 of the Act, for enhancement of Capital gain u/s 45 of the Act. If the assessing officer wants to enhance the Capital Gain u/s 45 of the Act, the assessing officer must have to take prior permission of Pr. CIT, which he has failed to do so. It is settled law that the Revenue Authorities are n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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