Hardik Resort (P). Ltd. v. PCIT

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The Tax Publishers2021 TaxPub(DT) 3310 (Agra-Trib)

INCOME TAX ACT, 1961

Section 263

Once AO had examined both the issues as referred to him under limited scrutiny, then it was not incumbent upon him to expand the scope of assessment without seeking aproval from Pr. CIT in accordance with the Board Instructions No. 19 and 20/2015, dated 29-12-2015 and 5/2016, dated 14-7-2016. It was not the case of Pr. CIT that case was required to be converted into the complete scrutiny and the proposal should have been made by AO thus, order passed by AO was not erroneous and prejudicial to the interest of Revenue.

Revision under section 263 - Erroneous and prejudicial order - Non-conversion of limited scrutiny into complete scrutiny -

Pr. CIT treated order passed by AO as erroneous and prejudicial to the interest of revenue on the ground of AO not having properly inquired into the investment made out of amounts shown as share application money against un allotted shares and increase in sundry creditors. Assessee contended that assessee's case was selected for 'limited scrutiny' for the reason that '(1) Large Share Application money received against unallotted shares and (2) large increase in sundry creditors with respect to turnover as compared to preceding year. Held: AO had not only the posed questions with respect to share application as well as sundry creditors by issuing detailed questionnaire to assessee but had also made additions on of sundry creditors. Once AO had examined both the issues as referred to him under limited scrutiny, then it was not incumbent upon him to expand the scope of assessment without seeking aproval from Pr. CIT in accordance with the Board Instructions Nos. 19 and 20/2015, dated 29-12-2015 and Instruction No. 5/2016, dated 14-7-2016. It was not the case of Pr. CIT that case was required to be converted into the complete scrutiny and the proposal should have been made by AO, thus, AO acted within the limits circumscribed by the limited scrutiny in accordance with the material available in his file after the last date of deciding the assessment and accordingly, no fault could be found in the order passed by AO. Therefore, order passed by AO was not erroneous and prejudicial to the interest of Revenue.

Followed:Malabar Industrial Co. Ltd. v. CIT (2000) 243 ITR 83(SC), CIT v. Max India Ltd. (2007) 295 ITR 282(SC), ITO v. D.G. Housing Projects Ltd. 2012 (343) ITR 329 (Del-HC) : 2012 TaxPub(DT) 1727 (Del-HC), CIT v. Nirav Modi, (2016) 390 ITR 292 (Bom-HC) : 2016 TaxPub(DT) 3506 (Bom-HC) and CIT v. Gabriel India Ltd. (1993) 203 ITR 108 (Bom-HC) : 1993 TaxPub(DT) 1357 (Bom-HC).