The Jaipur bench of the Income Tax Appellate Tribunal ( ITAT ) has ruled that, Determining Fair Market Value of the Property without Converting Limited Scrutiny to Comprehensive Scrutiny is Nullity.
In a recent case, ITAT held that the A.O. has determined the fair market value of the property without converting the limited scrutiny to comprehensive scrutiny by taking the prior approval of the competent authority then the said order passed by the A.O. will be a nullity as beyond his jurisdiction.
The appeal by the assessee is against the order passed by the CIT(A)-I, Jaipur U/s 154 of the Income Tax Act, 1961. The questions in consideration are A.O. has grossly erred in passing order U/s 154 of the Act after passing the assessment order U/s 143(3) and also grossly erred in referring the matter to the Departmental Valuation Officer u/s 55A of the Act which was beyond the scope of Limited Scrutiny Assessment and thus entire action is bad in law, nullity and void and deserves to be quashed and set aside.”
The assessee submitted that the assessment was taken up by the A.O. in CASS for limited scrutiny on the issue of deduction claimed by the assessee U/s 54 of the Act, large amount of sale consideration of the property reported in the return of income but less than the sale considered reported in the TDS return U/s 194IA of the Act and cash deposit in the savings bank account of the assessee, therefore, the issue of fair market value of the property was not within the scope of limited scrutiny which cannot be expanded without prior approval of the appropriate authority. Further, the scope of the limited scrutiny cannot be expanded while passing the order U/s 154 of the Act when the said issue was not within the scope of scrutiny assessment. It has submitted that the order passed by the A.O. U/s 154 of the Act is invalid as the same is beyond the scope of scrutiny assessment undertaken by the A.O.
The department submitted that when the scrutiny assessment was taken up on the issue of sale consideration of the property sold by the assessee as well as the deductions claimed by the assessee under Chapter-IV of the Act then the determination of the fair market value of the property is very much within the scope of scrutiny assessment.
The bench comprising of members Judicial Member Vijay Pal Rao and Accountant Member Vikram Singh Yadav held in the light of the judgment in case CBS International Projects P. Ltd. Vs CIT that the A.O. not raised query about the fair market value of the property in question, therefore, the said issue cannot be treated as part of the limited scrutiny under CASS when none of the queries raised under the scrutiny relating to the computation of the capital gain but all are regarding deduction claimed under Chapter IV and particularly U/s 54 of the Act. So the issue which was taken up by the A.O. while passing the order U/s 154 of the Act, determining the fair market value of the property was not within the scope of scrutiny assessment. The A.O. has taken up the issue of determining the fair market value of the property in question without converting the limited scrutiny to comprehensive scrutiny by taking the prior approval of the competent authority then the said order passed by the A.O. will be a nullity as beyond his jurisdiction. So quashed the order passed by the AO, the appeal of the assessee is allowed.
Subscribe Taxscan Premium to view the Judgment
