No Revision Order can be passed u/s 263 of Income Tax Act  against  issues which are not arising out of Limited Scrutiny: ITAT upholds Assessment Order [Read Order]

The Income Tax Appellate Tribunal (ITAT), Chennai bench, held that no revision order could be passed under Section 263 of the Income Tax Act, 1961, against issues not arising out of limited scrutiny. Therefore, the bench upheld the assessment order.

The assessee, Epimoney Private Limited, had filed its return of income for the assessment year 2018-19, claiming a total loss of ₹3,58,59,222. The assessment under section 143(3) r.w.s. 143(3A) & 143(3B) of the Income Tax Act was completed by accepting the claimed loss.

Subsequently, observing that the Assessing Officer hadn't examined the return, the PCIT issued a show-cause notice under section 263. After examining details from the assessee, the PCIT passed a revision order, deeming the AO's order erroneous and prejudicial to the interest of Revenue.

Aggrieved, the assessee filed an appeal before the tribunal. During the proceedings, R. Vijayaraghavan, Counsel for the assessee, argued that the return was selected for "Limited Scrutiny" to verify unsecured loans and share capital/other capital.

It was further argued that the Assessing Officer had completed the assessment under section 143(3) r.w.s. 143(3A) & 143(3B), and thus, the order wasn't erroneous or prejudicial to Revenue's interest.

V. Nandakumar, Counsel for Revenue, strongly supported the PCIT's order. The tribunal observed that the assessment order was under section 143(3) read with section 143(3A) & 143(3B), not under section 147 r.w.s. 144, as mentioned by the PCIT.

It was determined that the Assessing Officer had already fulfilled his duties under "Limited Scrutiny," making the order not erroneous or prejudicial.

After reviewing facts, the bench held that the issue identified by the PCIT wasn't the subject matter of "Limited Scrutiny." Therefore, as the AO couldn't go beyond its scope, the PCIT couldn't claim the order as erroneous and prejudicial. The bench allowed the appeal filed by the assessee.

To Read the full text of the Order CLICK HERE

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