Quashing a revision order passed under section 263 of the Income Tax Act, 1961, the Income Tax Appellate Tribunal (ITAT), Jaipur bench has held that the scope of limited scrutiny is confined to its purpose and such an assessment cannot be treated as “erroneous”in order to invoke revisional jurisdiction.
The assessee appellant, Shri Balaji’s case was selected under CASS for scrutiny to examine the cash deposits made in the bank during the demonetarization period. The assessee is engaged in the business of readymade garments. During the course of scrutiny, the AO has caused enquiry by way of issuing notice under section 143(2) and notice under section 142(1) of the IT Act, 1961 along with a detailed questionnaire on the issue of cash deposits made by the assessee appellant during the demonetarization period.
However, the CIT ininitiated revisionary proceedings under section 263 finding that the AO has accepted the agricultural income of Rs. 5,01,200/- even when the assessee has failed to furnish the details/supporting details in respect of the agricultural income earned.
A bench of Dr. M.L. Meena, AM & Dr. S. Seethalakshmi, JMheld that the assessee’s case was selected for scrutiny under CASS for examination of cash deposits made in the bank during the demonetarization period. It is prima facie not clear whether it was a limited scrutiny case or a detailed scrutiny case with the approval of the competent authority.
“To our understanding, it was a limited scrutiny case being selected under CASS for examination of cash deposits made in the bank during demonetarization period and, therefore, the authorities below ought to have restricted their examination and enquiries limited for the purpose of cash deposits made by the appellant during the period of demonetarization only. By expanding the scope of scrutiny beyond the issue of cash deposits during demonetarization period, amounts to exceeding the jurisdiction by the ld. PCIT without following the prescribed procedure and the administrative guidelines under the law.”
In concluding the order, the Tribunal held that scrutiny of the documents in respect of the cash deposits, the AO has accepted the cash deposits in the bank during the period of demonetarization made by the appellant as duly explained.
“Thus, the AO to his satisfaction accepted the cash deposits in the bank account of the assessee during the period of demonetarization as explained money in accepting the returned income of the assessee under section 143(3) of the IT Act. In our view, the ld. PCIT was not justified in adversely commenting on the said cash deposits of the assessee and adopting a divergent view where two views are possible that too on the issues of agricultural income and unsecured loans, which were not even parameters of selection of the case for scrutiny under CASS. The case laws relied upon by the ld. PCIT are distinguishable on the peculiar facts of the case,” the Tribunal said.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to TaxscanAdFree. Follow us on Telegram for quick updates.
