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TMI Blog2025 (3) TMI 1166X X X X Extracts X X X X X X X X Extracts X X X X ..... any enquiry or investigation done in the matter. He thus opined that the order so passed is erroneous and prejudicial to the interest of the Revenue. Further ld. PCIT observed that the deduction claimed u/s 54 of the Act at Rs. 5,00,00,000/- was allowed by the Assessing Officer, however, as the assessee has sold the land and has not invested the entire amount of sale consideration in the acquisition of the house property, only proportionate deduction should be allowed. According to Ld. PCIT, the same is worked out at Rs. 4,67,16,151/- as against Rs. 5,00,00,000/- allowed by the AO in the order passed u/s 143(3) of the Act. The Ld. PCIT further observed that assessee has declared the sale consideration on the basis of the agreement of sale/registered sale deed whereas the sale price as per provisions of section 50C being higher. Thus, the provisions of section 50C are to be invoked. This fact has not been examined by the Assessing Officer. Accordingly, the Ld. PCIT vide order passed u/s 263 of the Act has held the order so passed u/s 143(3) as erroneous in so far as it is prejudicial to the interest of Revenue and direct the AO for passing fresh a fresh assessment order in accordanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stice and the same has been passed without affording proper specific lawful opportunity to the assessee. As such too, the order u/s 263 deserves to be quashed. 8. That the order of the Ld. PCIT is against law and facts of the case involved. 9. That the Grounds of Appeal as herein are without prejudice to each other. 10. That the appellant craves leave to add, amend, modify and/or forgo any of the grounds of appeal before or at the time of hearing." 5. Before us, the Ld. AR of the assessee argued that the case was selected for limited scrutiny and after examination of the reason for limited scrutiny i.e., deduction claimed against the long term capital gain, the assessment order was passed accepting income declared by the assessee. The allegation of Ld. PCIT with regard to the application of provisions of section 50C, it is submitted that the same is beyond the scope of limited scrutiny, therefore, the same could not be considered for holding the order as prejudicial as well as erroneous, as the AO was not supposed to examine or visit on this issue. 6. With regard to the deduction claimed u/s 54 of the Act, it was submitted by Ld. AR that the issue of allowability of deducti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act at Rs. 5,00,00,000/- as claimed by the assessee, and, therefore, their remained no question to hold to assessment order as erroneous and prejudicial to the interest of Revenue on this point. It is also seen from the effect order dated 21.03.2024 that the deduction claimed/s 54 of the Act at Rs. 5,00,00,000/- was offered for the tax after expiry of three years in AY 2021-22 when the assessee has failed to make investment as per law, therefore, if any further addition/disallowance is made in the year under appeal it would be double taxation. Thus, this issue does not service for consideration at this stage. 10. With regard to the second issue of application of provisions of section 50C, it is seen that in the instant case, the case of assessee was selected for limited scrutiny for the reason "Capital Gains deduction claimed". The Assessing Officer while completing the assessment has already examined this issue and completed the assessment. Now alleging that the AO has not examined the applicability of section 50C is beyond the jurisdiction of the Assessing Officer under limited scrutiny, and therefore, he cannot make any enquiry on the same. In this regard, the CBDT has i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome was not one of the issues which was selected for scrutiny. The learned Tribunal in paragraph 2 of its order has set out the three items which have been selected for scrutiny namely, (i) Introduction of capital in NBFC/investment company; (ii) large deduction claimed u/s. 57 of the Act; and (iii) Mismatch of amount paid to related persons u/s. 40A(2)(b) reported in audit report and ITR. 5. If that is the undisputed factual position, we find the reasoning given by the learned Tribunal is fully justified. That apart, the learned Tribunal has rightly pointed issued out that the CBDT has issued....................... 6. A bare reading of the of the above Instruction clearly shows that the PCIT cannot make a roving enquiry in the quise of a limited scrutiny and as such the instruction issued by the CBDT is binding on the Department. Hon'ble Orrisa High High Court on similar circumstances in the case of Pr. CIT v. Shark Mines & Minerals (P.) Ltd. [2023] 151 taxmann.com 71 (Orissa) has held as under: 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this Tribunal in the other two cases also, relied upon by the assessee. In the circumstances, in view of the consistent view taken in similar matters we are of the considered opinion that when the assessing officer is bound to follow the CBDT instructions and while following such instructions and after verification of the material furnished by the assessee on the aspect covered by the limited scrutiny, is not open for the Ld. PCIT to say that not adverting to the other aspects of the competition would render the assessment order erroneous and prejudicial to the interest of the Revenue. With this view of the matter we find that the impugned order cannot be sustained and, therefore, the same is liable to be quashed. We accordingly quash the same. 12. In the result, appeal of the assessee is allowed." 11. In view of the above discussion and by respectfully following the decisions of various High Courts and Co-ordinate Bench of Tribunal, in our opinion the AO has no jurisdiction to examine the issue which is beyond his jurisdiction, therefore, there is no error in the assessment order of the AO for which the same could be held as erroneous and prejudicial to the interest of Revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X
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