Scope of limited scrutiny - AO went on to examine this aspect of ...

AO's Limited Scrutiny Valid: First-Year LLP's Low Income Justified by Former Company's Share Capital and Security Premium.

June 30, 2022

Case Laws     Income Tax     AT

Scope of limited scrutiny - AO went on to examine this aspect of low income, he then asked the assessee about the investment made during the year because the ld. Assessing Officer wanted to see why the assessee has earned low income when there are huge loans and advances. When AO was examining the loans and advances, he came to know that this is the first year of incorporation and the LLP has been converted from the company. AO asked the assessee about the source of investment. Then based on this question, the assessee submitted that the source is the share capital and security premium of the erstwhile company before being converted to LLP and the ld. AO went on to examine the issue of security premium reserve. - AO has not exceeded the jurisdiction - Decided in favor of revenue - AT

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