The Income Tax Appellate Tribunal (ITAT), Delhi Bench ruled that PCIT not justified in assuming jurisdiction for Revision as AO conducted proper enquiry.
The assessee, Pawansut Media Services is a company and is stated to have not done any business activity during the year. It filed its return of income declaring loss. The AO completed the assessment accepting the returned loss.
Subsequently, the PCIT examined the records and noted that the case was selected for limited scrutiny.
The A.O. during the course of assessment proceedings has not examined the issue of applicability of provisions of Section 56(2)(viia) of Income Tax Act for basis of determination of Fair Market Value. Similarly, the other reason for scrutiny was investment in unlisted equity shares during the year. However, although the A.O. has examined with regard to source of investment and income derived from this investment, however, the A.O. has not examined the fair market value of investment. He, therefore, was of the opinion that the order passed by the A.O. under section 143(3) of the I.T. Act, 1961 appears to be erroneous in so far as it is prejudicial to the interests of revenue. He, therefore, issued a show cause notice to the assessee to explain as to why the order passed by the A.O. should not be set aside.
It was submitted by the assessee that the A.O. after considering the various written submissions filed by the assessee from time to time has completed the assessment.
The coram of Judicial Member, Amit Shukla and Accountant Member R.K.Panda held that since in the instant case the A.O. had made enquiries as per the reasons for which the case was selected for limited scrutiny and the case was not converted to full scrutiny, therefore, respectfully following the decision of theDelhi High court in the case of PCIT vs., M/s. Brahma Centre Development Pvt. Ltd., the ITAT held that the PCIT was not justified in assuming the jurisdiction under section 263 of the Income Tax Act, 1961.
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