The Chandigarh Bench of Income Tax Appellate tribunal ( ITAT )has held that the issue not subjected to limited scrutiny could not be raised in revisionary proceedings.
Assessee-Longia Engineers, was a contractor, selling the goods to different parties and also had retail outlet for electric goods and contractor work for Air Force. Assessee filed his return of income declaring total income of Rs. 4,71,510/- which was selected for limited scrutiny under CASS and thereafter, the assessment was completed under section 143(3) of the Income Tax Act 1961, Act wherein the returned income filed by the assessee was accepted. But the assessment order passed by the AO had been revised u/s 263 of the income tax act and AO was directed to pass a fresh assessment order.
Tejmohan Singh, who appeared for the appellant submitted that the AO had conducted necessary enquiries and AO had also accepted the receipts disclosed in the return of income, could not be held to be erroneous and prejudicial to the interest of the Revenue. He also contended that the total receipts have been shown after adding receipts of towards labour charge which equated the total receipts which had shown in the profit/loss account.
It was further submitted that the matter relating to wages/labour expenses which was not subject matter of limited scrutiny could not be raised in revisionary proceedings u/s 263 for the first time.
Sandip Dahiya, on behalf of the revenue submitted that the AO had not conducted proper enquiry either from the assessee or from the third parties in respect of receipts shown by the assessee during the financial year relevant to the impugned Assessment Year.
The Chandigarh Bench of Income Tax Appellate Tribunal (ITAT)of Vikram Sing Yadav AM observed that the matters related to wages/labour expenses which were not subjected to the of limited scrutiny could not be raised in revisionary proceedings u/s 263 of the Income Tax Act 1961 for the first time. The bench also observed that the order passed by the AO could not be treated as erroneous and prejudicial to the interest of the Revenue. The bench thereby upheld the decision of the AO and set aside the revision order.
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