MAHENDRA SINGH DHANKHAR, HUF, JHUNJHUNU V. PR.CIT-3, JAIPUR

ITA 265/JPR/2020

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 2266 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 1 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2015-2016
• Appeal Filed On: 21-05-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MANU DHANKHAR
• Keywords: Gift; Revision of order; Opportunity of being heard; Principle of natural justice; Period of limitation; Tangible material; Bad and doubtful debts; Competent authority; Time period of passing order; Set aside
• Section: 147; 143(3); 142(1); 143(2); 13

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S,B JAIPUR JH LAANHI XKSLKBZ] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI SANDEEP GOSAIN, JM & SHRI VIKRAM SING H YADAV, AM VK;DJ VIHY LA-@ ITA. NO. 265/JP/2020 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2015-16 M/S MAHENDRA SINGH DHANKHAR HUF KH-7, OPP. OFFICER CLUB MANN NAGAR, JHUNJHUNU-333011. CUKE VS. THE ACIT, CIRCLE, JHUNJHUNU. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AADHM 9601 A VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI MANU DHANKHAR (ADV.) JKTLO DH VKSJ LS @ REVENUE BY : SHRI B.K. GUPTA (CIT) A LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 28/06/2021 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT : 30/06/2021 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF LD. PCIT(A)-3, JAIPUR DATED 25.02.2020 FOR THE ASSESSME NT YEAR 2015-16 WHEREIN THE ASSESSEE HAS RAISED FOLLOWING GROUNDS O F APPEAL:- 1. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED PR. CIT HAS NO OCCASION TO INITIATE PROCEEDINGS UNDER S ECTION 263 OF THE ACT AS THE ASSESSMENT ORDER SOUGHT TO BE REVISE D IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF THE RE VENUE. ITA NO. 265/JP/2020 M/S MAHENDRA SINGH DHANKHAR, HUF VS. ACIT 2 2. THAT THE LD PR. CIT HAS LEGALLY ERRED IN NOT PAS SING A SPEAKING ORDER AGAINST THE SUBMISSIONS OF THE APPELLANT. AS SUCH, THE ORDER PASSED U/S 263 IS VOID AB-INITIO. THE ACTION OF THE LD. CIT WAS WHOLLY UNREASONABLE, UNCALLED FOR AND BAD IN LAW. 3. THAT UNDER THE FACTS AND CIRCUMSTANCES, THE PR. CIT HAS IGNORED THE 'TRUE AND FAIR APPROACH, THE 'PRINCIPLE S OF THE NATURAL JUSTICE' AND THE 'TAX NEUTRALITY. 4. THAT UNDER THE FACTS AND CIRCUMSTANCES, THE ASSE SSEE HAS RIGHTLY ASSESSED THE VALUE OF THE WIP AND HAS RIGHT LY ASSESSED THE AGRICULTURE INCOME. 2. AT THE OUTSET, THE LD AR SUBMITTED THAT THERE HA S BEEN A DELAY IN FILING THE PRESENT APPEAL. IT WAS SUBMITTED THAT TH E DUE DATE OF FILING OF THE PRESENT APPEAL WAS 25/04/2020, HOWEVER, DUE TO 'COVID-19' PANDEMIC, A NATIONAL LOCKDOWN WAS DECLARED BY THE G OVERNMENT W.E.F. 22/03/2020 AS A RESULT OF WHICH THE APPEAL COULD NO T BE FILED WITHIN DUE DATE. IT WAS SUBMITTED THAT THE LOCKDOWN MAY BE TRE ATED AS SUFFICIENT CAUSE AS NO POSTAL SERVICES, OFFICES AND TRANSPORT WERE ALLOWED TO OPERATE BY THE GOVERNMENT AND EVEN THE COURTS HAVE HELD THAT THE PERIOD OF LOCKDOWN MAY BE EXCLUDED FOR DETERMINING THE LIMITATION PERIOD AND THE DELAY IN FILING THE APPEAL MAY BE CO NDONED AND THE APPEAL BE HEARD ON MERITS. THE DR WAS HEARD WHO DID NT RAISE ANY SPECIFIC OBJECTION. AFTER HEARING BOTH THE PARTIES AND CONSIDERING THE FACTS OF THE CASE, WE FIND THAT THE ASSESSEE WAS PR EVENTED BY SUFFICIENT CAUSE IN FILING THE APPEAL WITHIN STIPULATED TIME P ERIOD DUE TO NATIONAL LOCKDOWN AND IN EXERCISE OF POWERS UNDER SECTION 25 3(5) OF THE ACT, WE HEREBY CONDONE THE SAID DELAY OF 26 DAYS IN FILING THE PRESENT APPEAL AND THE APPEAL IS HEREBY ADMITTED FOR ADJUDICATION. ITA NO. 265/JP/2020 M/S MAHENDRA SINGH DHANKHAR, HUF VS. ACIT 3 3. NOW, COMING TO THE MERITS OF THE CASE. DURING T HE COURSE OF HEARING, THE LD AR SUBMITTED THAT THE ASSESSEE FIRM IS A REAL ESTATE FIRM ENGAGED IN COLONIZING AND DEVELOPING RESIDENTIAL PR OJECTS. THE CASE OF THE ASSESSEE WAS SELECTED FOR LIMITED SCRUTINY THRO UGH CASS ON ACCOUNT OF MISMATCH OF AIR AND CIB DATA, AND MISMATCH IN SA LE TURNOVER REPORTED IN AUDIT REPORT AND ITR. THE A.O. ISSUED T HE NOTICE U/S 143(2) OF THE ACT AND ENQUIRED ABOUT THE ISSUES UNDER CONS IDERATION. ALL THE SALE DEEDS EXECUTED DURING THE YEAR WERE TAKEN INTO CONSIDERATION AND MATCHED WITH AIR AND CIB DATA. AN ADDITION FOR WRON G CALCULATION OF LTCG WAS MADE BY THE A.O. WHICH WAS NOT CHALLENGED BY THE ASSESSEE. SUBSEQUENTLY, ON THE BASIS OF CERTAIN AUDIT OBJECTI ONS, THE LD. PCIT-3, JAIPUR ISSUED NOTICE U/S 263 OF THE ACT AND RAISED THE FOLLOWING ISSUES:- 1. TAKING THE COST OF COMPLETE PROJECT WHILE CALCULATI NG PROFIT FOR THE YEAR UNDER CONSIDERATION INSTEAD OF COST DEBITED TI LL THE DATE OF BALANCE SHEET 2. TAKING THE AGRICULTURE INCOME IN THE CAPITAL ACCOUN T AND NOT IN THE COMPUTATION OF INCOME. 4. IN RESPONSE, THE ASSESSEE SUBMITTED THAT IT IS A CASE OUTSIDE THE JURISDICTION OF THE COMMISSIONER OF INCOME TAX TO R AISE OBJECTIONS OUTSIDE SCOPE OF LIMITED SCRUTINY. THE LD PCIT-3, J AIPUR HOWEVER ORDERED FOR DENOVO ASSESSMENT WITHOUT CONSIDERING THE REPLY FILED BY THE ASSESSEE. IT WAS SUBMITTED THAT SUCH VIEW OF C ONSIDERING THE ISSUES NOT COVERED BY LIMITED SCRUTINY IS BAD IN LAW WH EN ALL THE ISSUES OF THE SCRUTINY WERE DULY CONSIDERED BY THE A.O. AND I T IS NOT A CASE OF ITA NO. 265/JP/2020 M/S MAHENDRA SINGH DHANKHAR, HUF VS. ACIT 4 ORDER BEING ERRONEOUS AND PREJUDICIAL TO THE REVENU E AND THE SAME THEREFORE BE QUASHED. 5. IT WAS FURTHER SUBMITTED THAT THE CASE WAS SELEC TED FOR LIMITED SCRUTINY THROUGH CASS WHEREIN THE FOLLOWING ISSUES WERE IDENTIFIED FOR EXAMINATION:- (I) SALE CONSIDERATION OF PROPERTY IN ITR IS LESS T HAN SALE CONSIDERATION REPORTED IN CIB (II) MISMATCH IN SALE TURNOVER REPORTED IN AUDIT RE PORT AND ITR (III) VALUE OF PROPERTY TRANSFERRED AS REPORTED IN AIR IS HIGHER THAN THE VALUE OF PROPERTY TRANSFERRED AS REPORTED IN RETURN OF INCOME. 6. IT WAS SUBMITTED THAT THE ISSUES UNDER CONSIDERA TION WERE CONSIDERED BY THE A.O VIDE THE NOTICE U/S 142(1) DA TED 08/06/2017 ON POINT NO. 6,7 AND 8 OF THE NOTICE AND WAS DULY REPL IED BY THE ASSESSEE. THE A.O. ALSO PROVIDED AIR AND CIB DATA DURING THE COURSE OF HEARING IN ORDER TO LET ASSESSEE KNOW REASONS OF MISMATCH IN A IR AND CIB DATA. ALL THE ISSUES WERE RELATING TO VALUE OF SALE DEEDS EXE CUTED AND THEIR MISMATCH WITH REGARD TO THE ITR, AUDIT REPORT, CIB AND AIR DATA. ON PERUSAL OF ALL THE SALE DEEDS, THE A.O. NOTICED CER TAIN WRONG CALCULATION OF LTCG AND MADE AN ADDITION OF 3,83,990/-. AS IT W AS THE CASE OF THE LIMITED SCRUTINY AND ALL THE REASONS FOR THE SCRU TINY WERE DEALT BY THE A.O., THE ORDER PASSED BY THE A.O. IS NEITHER ERRON EOUS NOR PREJUDICIAL TO THE REVENUE AND HENCE NOTICE U/S 263 OF THE ACT CANNOT BE ISSUED AND ORDER SO PASSED IS BAD IN LAW. ITA NO. 265/JP/2020 M/S MAHENDRA SINGH DHANKHAR, HUF VS. ACIT 5 7. REFERRING TO CBDT INSTRUCTIONS NO. 7/2014 DATED 26.09.2014 AND SUBSEQUENT INSTRUCTIONS ISSUED THEREAFTER, IT WAS S UBMITTED THAT POINT 3 AND 4 OF SAID INSTRUCTIONS CLEARLY STATES THAT A.O. JURISDICTION IS ONLY CONFINED TO REASONS MENTIONED IN THE AST. DURING TH E COURSE OF ASSESSMENT PROCEEDINGS I.E. EXPANSION OF THE LIMIT ED SCRUTINY CAN ONLY BE DONE DURING THE COURSE OF SCRUTINY PROCEEDINGS . THE SAID EXPANSION CANNOT BE DONE ON THE BASIS OF SECTION 263 OF THE A CT. SUCH EXPANSION CAN ONLY BE DONE BY THE A.O. DURING THE ASSESSMENT PROCEEDINGS, IF HE FOUNDS POTENTIAL ESCAPEMENT. NO SUCH ACTION WAS INI TIATED BY THE A.O. DURING THE ASSESSMENT PROCEEDINGS. IT IS OUTSIDE TH E JURISDICTION OF THE COMMISSIONER OF INCOME TAX TO RAISE OBJECTIONS OUTS IDE THE SCOPE OF THE LIMITED SCRUTINY . SO, THE ORDER PASSED BY THE A. O. IS NOT ERRONEOUS AND A.O. HAS EXERCISED HER JURISDICTION ON THE MATT ERS REFERRED TO HER BY THE CASS. SIMILAR VIEW HAS BEEN TAKEN BY THE VARI OUS COURTS ON NUMEROUS OCCASIONS IN CASE OF LIMITED SCRUTINY AN D RELIANCE WAS PLACED ON THE FOLLOWING DECISIONS:- SURAJ DIAMONDS DEALERS (P) LTD (ITA NO. 3098/MUM/20 19) GIFT LAND HANDICRAFTS VS CIT (2007) 108 TTJ DELHI 3 12 SANJEEV KUMAR KHEMKA VS. CIT (ITA NO. 1361/KOL/2016 ) M/S AAKASH GANGA PROMOTERS VS. PR. CIT (ITA NO. 164 /CTK/2019) NAYEK PAPER CONVERTERS VS. ASSTT. CIT (2005) 93 ITD 144 KOL. 8. IT WAS SUBMITTED THAT IN ALL THE CASES DISCUSSED ABOVE, THEY WERE SELECTED FOR LIMITED SCRUTINY AND THE DUE VERIFICAT ION WAS DONE BY THE A.O. THE REVISION ORDER PASSED BY THE PT.CIT WAS HE LD AS OUTSIDE THE JURISDICTION OF THE PR. CIT BY THE VARIOUS BENCHES OF THE TRIBUNAL. THE ITA NO. 265/JP/2020 M/S MAHENDRA SINGH DHANKHAR, HUF VS. ACIT 6 CASE OF THE ASSESSEE UNDER CONSIDERATION IS IDENTIC AL TO THESE CASES AND SHOULD BE DECIDED IN THE LIGHT OF THESE JUDICIAL PR ONOUNCEMENTS. 9. IT WAS SUBMITTED THAT THE AO MENTIONED IN THE AS SESSMENT ORDER THAT THE CASE WAS SELECTED FOR LIMITED SCRUTINY WIT H REFERENCE TO THREE ITEMS AS DISCUSSED ABOVE. ALL THE ITEMS AS MENTIONE D WERE DULY VERIFIED BY THE A.O. DURING THE ASSESSMENT PROCEEDINGS AND H ENCE THE A.O. HAS SATISFIED THE CONDITIONS OF THE SECTION 263(1) AND CONDITIONS AS MENTIONED IN EXPLANATION 2 SUB CLAUSE (A). AS PER S UB CLAUSE (A) OF THE EXPLANATION 2, THE A.O HAS MADE ALL INQUIRES AND VE RIFICATION THAT SHOULD HAVE BEEN MADE I.E AS DIRECTED BY THE CASS IN CASE OF LIMITED SCRUTINY. IT IS CLEARLY DISCERNIBLE THAT THE AO HAS MADE ENQU IRY AND DELIBERATION ON ALL THE POINTS AND AS PER CBDT CIRCULARS (SUPRA) , HE IS NOT ALLOWED TO TRAVEL BEYOND THE AMBIT OF THE POINTS FOR WHICH THE CASE WAS SELECTED FOR LIMITED SCRUTINY SO, AS ALL THE DUE COMPLIANCES HAVE BEEN MADE BY THE A.O., THE ORDER PASSED U/S 143(3) IS NOT ERRONE OUS AND REVISION U/S 263(1) IS TOTALLY UNCALLED FOR. 10. IT WAS FURTHER SUBMITTED THAT THE REASONS THAT THE VALUATION OF THE CLOSING WIP AND ASCERTAINMENT OF TAXABLE INCOME IS PART OF THE REASONS LISTED FOR LIMITED SCRUTINY AS ALLEGED BY T HE LD PCIT IS NOT CORRECT. THE SALES TURNOVER IN THE CASE OF REAL ESTATE BUSINESS IS DETERMINED THROUGH THE EXECUTED SALE DEEDS AND HAS NOTHING TO DO WITH THE CLOSING STOCK OF WIP. IN HIS ORDER, THE LD PCIT HAS NOT MADE ANY CONCLUSIVE FINDINGS THAT HOW THE ASCERTAINMENT OF CORRECT TAXABLE INCOME AND CLOSING STOCK OF THE WIP IS ONE OF THE R EASONS MENTIONED IN ITA NO. 265/JP/2020 M/S MAHENDRA SINGH DHANKHAR, HUF VS. ACIT 7 THE CASS AND HENCE, THE ORDER SO PASSED IS A NON-SP EAKING ORDER AND MUST BE QUASHED. 11. IT WAS FURTHER SUBMITTED THAT DURING THE YEAR U NDER CONSIDERATION, THE COST INCURRED TILL DATE WAS DEBITED IN THE BOOK S OF ACCOUNTS. THE PROJECT WAS COMPLETED TILL 15 TH SEPTEMBER,2015. THE ASSESSEE HAS ADOPTED PERCENTAGE OF COMPLETION METHOD. AS PER T HE METHOD, THE PROBABLE COST OF THE PROJECT IS ACCOUNTED WHILE ARR IVING AT THE PROFIT. HOWEVER, AS THE PROJECT WAS COMPLETE BEFORE FINALIZ ING THE AUDIT, THE ACTUAL COST FIGURES WERE AVAILABLE AND SUCH ACTUAL COST FIGURES WERE USED TO ARRIVE AT COST OF UNITS SOLD. THE PROPORT IONATE VALUE OF COST OF GOODS SOLD IS CORRECT AS PER THE POCM METHOD. 12. IT WAS FURTHER SUBMITTED THAT THE INCOME TAX AC T AND VARIOUS JUDICIAL PRONOUNCEMENTS HAVE HELD THAT THE BOOKS OF ACCOUNTS MUST ASCERTAIN TRUE AND FAIR VIEW OF THE PROFIT. IN CA SE OF THE REAL ESTATE PROJECTS, SOME PART OF THE INVENTORY IS COMPLETED A ND SOME PART OF INVENTORY IS STILL IN PROGRESS. WHEN THE REVENUE R ECOGNITION IS DONE, IT IS IMPOSSIBLE TO ASCERTAIN THE COST OF COMPLETED IN VENTORY AND INVENTORY IN WIP. IT IS ALSO UNFAIR, IF THE COST OF INCOMPLET E PROJECT IS TAKEN INTO CONSIDERATION AND DIVIDED WITH SALEABLE AREA OF WH OLE PROJECT. THIS WILL RESULT IN LOW COST PER SQUARE FEET ON INVENTORY S OLD AND HIGHER PROFITS. GENERALLY THE POCM METHOD IS USED IN WHICH PROBA BLE COST OF THE PROJECT IS TAKEN. IN OUR CASE, THE ACTUAL COST OF PROJECT WAS AVAILABLE ON THE DATE OF AUDIT, SO WE TOOK THAT COST. IT IS ALSO A VIEW THAT COMPLETED PART OF INVENTORY (ON WHICH REVENUE IS RECOGNIZED) HAS HIGHER COST THAN ITA NO. 265/JP/2020 M/S MAHENDRA SINGH DHANKHAR, HUF VS. ACIT 8 THE INVENTORY IN WIP. THE APEX COURT HAS SEVERAL TIMES HAS HELD THAT TRUE PROFIT MUST BE TAKEN IRRESPECTIVE OF THE TEC HNICALITIES OF LAW. 13. WITHOUT PREJUDICE, IT WAS FURTHER SUBMITTED THA T EVEN IF THE SUBMISSIONS ARE NOT CONSIDERED AND 263 ORDER FOR TH E YEAR UNDER CONSIDERATION IS SUSTAINED, THAN FOR THE SUBSEQUENT YEARS, THE ASSESSEE BE ALLOWED TO CARRY FORWARD THE REVISED FIGURE OF W IP SO THAT THE ASSESSEE CAN CLAIM DEDUCTION OF COST OF CONSTRUCTIO N IN ALL SUBSEQUENT YEARS AND REVISE HIS PROFIT. IN ANY CASE, THE SAID ACTIVITY WILL HAVE NIL TAX IMPACT AS THE ASSESSEE BEING AN HUF FALLS IN T HE TAX BRACKET OF 30% IN ALL YEARS AND WILL ONLY LEAD TO INCREASE IN THE LITIGATION COST OF THE ASSESSEE AND ADMINISTRATIVE COST OF THE DEPARTM ENT. THE TAX NEUTRALITY ALSO MAKES THE ORDER NOT PREJUDICIAL TO THE REVENUE AND HENCE INVOCATION OF 263 IS ILLEGAL AND BAD IN LAW. 14. REGARDING AGRICULTURE INCOME SHOWN IN THE CAPIT AL ACCOUNT AND NOT IN THE COMPUTATION OF INCOME, IT WAS SUBMITTED THAT THE ASSESSEE HAS RECEIVED AGRICULTURE INCOME FROM THE HUF OF HER MOTHER SMT. BARJI DEVI. THE ASSESSEE HAS NO AGRICULTURE LAND AND ALL THE LAND HELD BY THE ASSESSEE IS HELD AS STOCK IN TRADE. THE ASSESSEE HAS ANCESTRAL PROPERTY HELD BY MOTHER SMT. BARJI DEVI WHICH GENERATES YEAR LY INCOME OF RS. 2.5 TO 3 LAKHS. THE ASSESSEE ALONG WITH HIS BROTHER REC EIVE A PART OF AGRICULTURE INCOME FROM THE HUF OF HER MOTHER, WHIC H IS EXEMPT FROM TAX AS HER MOTHER HAS NO OTHER INCOME AND RECEIVES ONLY AGRICULTURE INCOME. SO, THE AGRICULTURAL INCOME IS TAKEN IN THE CAPITAL ACCOUNT AND NOT IN THE COMPUTATION OF INCOME. ITA NO. 265/JP/2020 M/S MAHENDRA SINGH DHANKHAR, HUF VS. ACIT 9 15. PER CONTRA, THE LD. CIT/DR SUBMITTED THAT IN VI EW OF PARA 4 OF THE INSTRUCTION ISSUED BY THE CBDT, IF THERE IS POTENTI AL ESCAPEMENT OF INCOME ABOVE RS 5 LAC, THE AO IS REQUIRED TO CONVER T THE LIMITED SCRUTINY CASE INTO A COMPREHENSIVE SCRUTINY CASE AF TER TAKING THE PRIOR APPROVAL OF LD. PCIT AND IF THE AO DOES NOT GET THE LIMITED SCRUTINY CASE CONVERTED TO COMPREHENSIVE SCRUTINY CASE, THE ASSES SMENT ORDER BECOMES ERRONEOUS AS IT IS PREJUDICIAL TO THE INTER EST OF REVENUE AND PROVISIONS OF SECTION 263 OF THE ACT ARE APPLICABLE . IN SUPPORT, RELIANCE WAS PLACED ON ORDER DATED 08.11.2019 OF COCHIN BENC HES OF THE TRIBUNAL IN THE CASE OF M/S BABY MEMORIAL HOSPITAL LTD VS ACIT (IN ITA NO.420/COCH/2019). FURTHER, LD CIT/DR RELIED ON THE FINDING OF THE LD PCIT AND OUR REFERENCE WAS DRAWN TO THE FINDINGS OF THE LD. PCIT WHICH ARE CONTAINED AT PARA 5 TO 8 OF THE IMPUGNED ORDER WHICH READ AS UNDER:- 5. I HAVE CONSIDERED THE FACTS AND CIRCUMSTANCES O F THE CASE AND ALSO EXAMINED THE CASE RECORDS ALONG WITH WRITTEN S UBMISSION FILED BY THE ASSESSEE BEFORE ME. HERE IT IS ALSO MENTIONED THAT U/S 263 OF THE INCOM E TAX ACT THE COMMISSIONER MAY CALL FOR AND EXAMINE THE RECORD OF ANY PROCEEDING UNDER THIS ACT, AND IF HE CONSIDERS THAT ANY ORDER PASSED THEREIN BY THE ASSESSING OFFICER IS ERRONEOU S IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, HE, MAY, AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD A ND AFTER MAKING OR CAUSING TO BE MADE SUCH INQUIRY AS HE DEE MS NECESSARY, PASS SUCH ORDER THEREON AS THE CIRCUMSTA NCES OF THE CASE JUSTIFY, INCLUDING AN ORDER ENHANCING OR MODIF YING THE ASSESSMENT, OR CANCELLING THE ASSESSMENT AND DIRECT ING A FRESH ASSESSMENT. ACCORDINGLY, THE RECORDS OF THE ASSESSE E WERE CALLED FOR AND EXAMINED WITH ALL MATERIAL AVAILABLE THEREI N FOR FORMING AN INFORMED OPINION IN THE CASE. ITA NO. 265/JP/2020 M/S MAHENDRA SINGH DHANKHAR, HUF VS. ACIT 10 THE CASE LAWS CITED BY THE ASSESSEE WERE ALSO EXAMI NED AND IT IS SEEN THAT THEY DO NOT HELP THE ASSESSEE AS THE CASE LAWS CITED BY THE ASSESSEE ARE NOT DIRECTLY RELATED TO THE FACTS OF THE CASE. THE FACTS RELATED IN THE CASE LAWS CITED IN THE AFORE-Q UOTED REPLY ARE NOT SIMILAR TO THE ASSESSE'S CASE. THEREFORE THEY C ANNOT BE APPLIED AT ALL. AS REGARDS, ASSESSEE'S ALLEGED STATEMENT IN HIS AR'S WRITTEN SUBMISSION DATED 18.02.2020 THAT THE CASE HAD BEEN SELECTED FOR LIMITED SCRUTINY AND 'IT IS OUTSIDE THE JURISDICTIO N OF THE COMMISSIONER OF INCOME TAX TO RAISE OBJECTIONS OUTS IDE THE SCOPE OF THE LIMITED SCRUTINY' IS NOT CORRECT. THE CASE W AS SELECTED FOR LIMITED SCRUTINY FOR THE FOLLOWING REASONS:- SALE CONSIDERATION OF PROPERTY IN ITR IS LESS THAN SALE CONSIDERATION REGISTERED REPORTED IN CIT ( CIB401); AND ITR BOTH THE REASONS HAS A DIRECT BEARING ON OPENING AN D CLOSING COST OF CONSTRUCTION AND WIP AS THE ASSESSEE-HUF IS ENGAGED IN REAL ESTATE ALONG WITH BUILDING AND CONSTRUCTION BU SINESS. FURTHER, IT IS SIMPLE PRINCIPLE OF TAXATION THAT AO IS DUTY BOUND TO EXAMINE THE REAL TAXABLE INCOME OF THE ASSESSEE FOR THE YEAR WHICH IS UNDER ASSESSMENT. IF ANY DISCREPANCY IS NO TICED, THE AO WAS TO EXAMINE DISCREPANCY IN THE TAXABLE INCOME. I N THIS CASE CLOSING STOCK OF WIP WAS SHOWN LESS BY RS. 39,01,5 60/- WHICH DIRECTLY AFFECT THE NET TAXABLE INCOME OF THE ASSES SEE. THIS CRUCIAL ISSUE WHICH IS THE BASIC ISSUE FOR EXAMINAT ION AT THE TIME OF SCRUTINY ASSESSMENT WAS NOT EXAMINED BY THE ASSE SSEE. BOOKS OF ACCOUNTS ARE PRODUCED FOR THE VERIFICATION BY TH E AO. HOWEVER, NO EXAMINATION OF BOOKS OF ACCOUNTS WAS CA RRIED OUT DURING THE ASSESSMENT PROCEEDINGS. ONE OF THE REASO NS OF LIMITED SCRUTINY WAS MISMATCH IN SALES TURNOVER REPORTED IN AUDIT REPORT AND 1TR. SALES TURNOVER IS THE ONLY FACTOR WHICH DE TERMINE THE CLOSING STOCK OF WIP. THIS ISSUE OF CLOSING STOCK O F WIP WAS NOT EXAMINED AND ORDER WAS PASSED WITHOUT APPLICATION O F MIND. SINCE THE ISSUES OF LIMITED SCRUTINY WERE NOT EXAMI NED DURING THE ASSESSMENT PROCEEDINGS AND ORDER HAS BEEN PASSED MECHANICALLY, THE ISSUES RAISED BY THE AR ARE NOT C ORRECT AND HENCE NOT ACCEPTED. ITA NO. 265/JP/2020 M/S MAHENDRA SINGH DHANKHAR, HUF VS. ACIT 11 6. WHILE HOLDING SO, AO FAILED TO TAKE NOTE OF VARI OUS FACTS WHICH WERE AVAILABLE ON RECORD. SOME OF THE RELEVANT FACT S RELATING TO THE ISSUE IN HAND ARE SUMMARIZED AS BELOW. 1. THE ASSESSEE SOLD 14 UNITS COMPRISING THEREIN AR EA OF 19965.9 SQ. FT. 2. TOTAL SALABLE AREA AS PER AUDIT REPORT IS 90358. 05 SQ. FT. 3. COST OF CONSTRUCTION AND WIP AS DEBITED IN TRADI NG ACCOUNT IS 9,77,74,808/- 4. COST PER SQ. FT. WORKS OUT TO RS. 1082.08 5. CLOSING STOCK OF WIP RS. 1082.08* 70392.15 SQ.FT. IS EQUAL TO RS. 7,61,69,937/- 6. CLOSING WIP SHOWN IN TRADING ACCOUNT AS ON 31.03 .2015 IS 7,22,68,377/- 7. CLOSING WIP SHOWN SHORT BY RS. 39,01,560/-. 8. THE AO ASSESSED INCOME IN SCRUTINY ASSESSMENT SH ORT BY RS. 39,01,560/- 9. THE AO HAS ALSO NOT EXAMINED THE ISSUE OF AGRIC ULTURAL INCOME AMOUNTING TO RS. 1,00,000/-. 7. THIS OMISSION AS MADE BY THE ASSESSING OFFICER R ESULTED IN AN ORDER WHICH IS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF REVENUE. IT HAS NECESSITATED THE INITIATION OF PROC EEDINGS UNDER SECTION 263 OF THE INCOME TAX ACT. THIS ORDER HAS B EEN DONE IN A VERY MECHANICAL WAY. THIS ACTION OF THE AO HAS RE SULTED IN AN ERRONEOUS PASSING OF ASSESSMENT ORDER U/S 143(3) OF INCOME TAX ACT, 1961 WHICH REQUIRED HIGH LEVEL OF CARE WHI LE FINALIZING AN ASSESSMENT ORDER. THE ORDER DATED 27.07.2017 U/S 143(3) PASSED BY THE AO IS CLEARLY PREJUDICIAL TO THE INTE REST OF REVENUE AND CLEARLY CALLS FOR INVOCATION OF SECTION 263 OF THE INCOME TAX ACT 1961. 8. KEEPING THE ABOVE DISCUSSION IN VIEW BY THE VIRT UE OF THE POWERS CONFERRED ON THE UNDERSIGNED UNDER THE PROVI SIONS OF SECTION 263 OF THE IT ACT 1961 I HOLD THAT THE ORDE R UNDER 143(3) DATED 27/07/2017 FOR ASSESSMENT YEAR 2015-16 PASSED ITA NO. 265/JP/2020 M/S MAHENDRA SINGH DHANKHAR, HUF VS. ACIT 12 BY THE ASSESSING OFFICER IS ERRONEOUS INSOFAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE AS THE ORDER HAS BEEN PA SSED BY THE ASSESSING OFFICER IN A ROUTINE AND PERFUNCTORY MANN ER BY WITHOUT APPLICATION OF MIND. IT IS THEREFORE LIABLE TO REVISION UNDER EXPLANATION (2) CLAUSE (A)& (B) OF SECTION 26 3 OF THE INCOME TAX ACT. THEREFORE HOLDING THAT THEORDER DAT ED 27.07.2017 BEING ERRONEOUS AND PREJUDICIAL TO THE I NTEREST OF REVENUE IS SET ASIDE ON BOTH THE ISSUES WITH A DIRE CTION TO THE ASSESSING OFFICER TO PASS THE SAME IN THE CASE OF T HE ASSESSEE DENOVO IN ACCORDANCE WITH LAW AFTER MAKING THE NECE SSARY EXAMINATION AND VERIFICATION REGARDING THE ISSUES U NDER DISCUSSION. THE AO IS DIRECTED TO FINALIZE THE PENA LTY ORDER KEEPING IN VIEW THE FACTS OF THE CASE AND CORRECT A PPLICATION OF LAW. HOWEVER AN OPPORTUNITY TO THE ASSESSEE TO STA TE ITS CASE IS TO BE ALLOWED IN THE INTEREST OF NATURAL JUSTICE . 16. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THERE IS NO DISPUTE THAT THE C ASE OF THE ASSESSEE WAS SELECTED FOR LIMITED SCRUTINY UNDER CASS ON ACC OUNT OF MISMATCH OF SALES TURNOVER AS REPORTED IN AUDIT REPORT, ITR, AI R AND CIB DATA. THE A.O. ISSUED NOTICE U/S 143(2) OF THE ACT AND ENQUIR ED ABOUT THE ISSUES UNDER CONSIDERATION AND IN RESPONSE, THE ASSESSEE S UBMITTED COPIES OF THE SALE DEEDS EXECUTED DURING THE YEAR UNDER CONSI DERATION AND ALSO SUBMITTED RECONCILIATION OF SALES TURNOVER WITH FIN ANCIALS, ITR, AIR AND CIB DATA WHICH IS ALSO PLACED ON RECORD BEFORE US. BEING SATISFIED, THE AO COMPLETED THE ASSESSMENT U/S 143(3) WITHOUT ANY ADVERSE FINDING REGARDING THE ISSUES FOR WHICH THE MATTER WAS SELEC TED FOR LIMITED SCRUTINY. ITA NO. 265/JP/2020 M/S MAHENDRA SINGH DHANKHAR, HUF VS. ACIT 13 17. THERE IS NO DISPUTE THAT SCOPE OF ENQUIRY IN CA SE OF LIMITED SCRUTINY IS ONLY TO THE EXTENT OF THE ISSUES FOR WH ICH CASE WAS SELECTED FOR SCRUTINY UNDER CASS. THE CBDT HAS ISSUED INSTRU CTIONS FROM TIME TO TIME IN THIS RESPECT AND HAS SPECIFICALLY INSTRUCTE D THE TAXING AUTHORITIES THAT SCOPE OF ENQUIRY SHOULD BE LIMITED TO VERIFICA TION OF ALL THE PARTICULARS FOR WHICH LIMITED SCRUTINY WAS TAKEN UP UNDER CASS. HOWEVER, IN CASE DURING THE ASSESSMENT PROCEEDING I F THE AO IS OF THE VIEW THAT SUBSTANTIAL VERIFICATION OF OTHER ISSUE I S ALSO REQUIRED THEN THE CASE MAY BE TAKEN UP FOR COMPREHENSIVE SCRUTINY WIT H THE APPROVAL OF THE PR.CIT/DIT CONCERNED. IT IS ALSO INSTRUCTED THA T SUCH AN APPROVAL SHALL BE ACCORDED BY THE PR.CIT/DIT IN WRITING AFTE R BEING SATISFIED ABOUT THE MERITS OF THE ISSUE(S) NECESSITATING WIDE R AND DETAILED SCRUTINY IN THE CASE. IN THE LATEST INSTRUCTION NO. 5/ 2016 DATED 14-07- 2016, CBDT HAS AGAIN INSTRUCTED THE TAXING AUTHORIT IES IN PARA 2 TO 4 AS UNDER:- 2. IN ORDER TO ENSURE THAT MAXIMUM OBJECTIVITY IS MAINTAINED IN CONVERTING A CASE FALLING UNDER LIMITED SCRUTINY INTO A COMPLETE SCRUTINY CASE, THE MATTER HAS BEEN FURTHER EXAMINE D AND IN PARTIAL MODIFICATION TO PARA 3(D) OF THE EARLIER OR DER DATED 29.12.2015, BOARD HEREBY LAYS DOWN THAT WHILE PROPO SING TO TAKE UP COMPLETE SCRUTINY IN A CASE WHICH WAS ORIGINAL LY EARMARKED FOR LIMITED SCRUTINY, THE ASSESSING OFFICER (AO ) SHALL BE REQUIRED TO FORM A REASONABLE VIEW THAT THERE IS PO SSIBILITY OF UNDER ASSESSMENT OF INCOME IF THE CASE IS NOT EXAMI NED UNDER COMPLETE SCRUTINY. IN THIS REGARD, THE MONETARY L IMITS AND REQUIREMENT OF ADMINISTRATIVE APPROVAL FROM PR. CIT /CIT/PR. ITA NO. 265/JP/2020 M/S MAHENDRA SINGH DHANKHAR, HUF VS. ACIT 14 DIT/DIT, AS PRESCRIBED IN PARA 3(D) OF EARLIER INST RUCTION DATED 29.12.2015, SHALL CONTINUE TO REMAIN APPLICABLE. 3. FURTHER, WHILE FORMING THE REASONABLE VIEW, THE ASSESSING OFFICER WOULD ENSURE THAT: A. THERE EXISTS CREDIBLE MATERIAL OR INFORMATION AV AILABLE ON RECORD FOR FORMING SUCH VIEW; B. THIS REASONABLE VIEW SHOULD NOT BE BASED ON MERE SUSPICION, CONJECTURE OR UNRELIABLE SOURCE; AND C. THERE MUST BE A DIRECT NEXUS BETWEEN THE AVAILAB LE MATERIAL AND FORMATION OF SUCH VIEW. 4. IT IS FURTHER CLARIFIED THAT IN CASES UNDER LIM ITED SCRUTINY, THE SCRUTINY ASSESSMENT PROCEEDINGS WOULD INITIALLY BE CONFINED ONLY TO ISSUES UNDER LIMITED SCRUTINY AND QUESTIONNAIR ES, ENQUIRY, INVESTIGATION ETC. WOULD BE RESTRICTED TO SUCH ISSU ES. ONLY UPON CONVERSION OF CASE TO COMPLETE SCRUTINY AFTER FOL LOWING THE PROCEDURE OUTLINED ABOVE, THE AO MAY EXAMINE THE AD DITIONAL ISSUES BESIDES THE ISSUE(S) INVOLVED IN LIMITED SC RUTINY. THE AO SHALL ALSO EXPEDITIOUSLY CONCERNED REGARDING CONDUC TING COMPLETE SCRUTINY IN SUCH CASES. 18. THUS THE AO IS DUTY BOUND TO FOLLOW THE INSTRUC TIONS IN CASE LIMITED SCRUTINY ASSESSMENT PROCEEDING ARE PROPOSED TO BE CONVERTED INTO COMPLETE SCRUTINY AND WITHOUT FOLLOWING SAID P ROCEDURE AND NECESSARY APPROVAL OF THE COMPETENT AUTHORITY CONDU CTING AN ENQUIRY ON THE ISSUE WHICH IS OUTSIDE THE LIMITED SCRUTINY WOULD BE BEYOND THE JURISDICTION OF THE AO. AS A NECESSARY COROLLARY, T HE PR. CIT U/S 263 CANNOT BE PERMITTED TO TRAVERSE BEYOND THE JURISDIC TION THAT WAS VESTED ITA NO. 265/JP/2020 M/S MAHENDRA SINGH DHANKHAR, HUF VS. ACIT 15 WITH THE A.O WHILE FRAMING THE ASSESSMENT AS WHAT C ANNOT BE DONE DIRECTLY CANNOT BE DONE INDIRECTLY. THEREFORE, WHER E THE MATTER WAS SELECTED FOR LIMITED SCRUTINY, REVISIONAL JURISDICT ION CANNOT BE EXERCISED FOR BROADENING THE SCOPE OF JURISDICTION THAT WAS O RIGINALLY VESTED WITH THE A.O WHILE FRAMING THE ASSESSMENT AS ALSO HELD C ONSISTENTLY BY VARIOUS BENCHES OF THE TRIBUNAL AS REFERRED SUPRA. 19. A CONTENTION WHICH HAS BEEN RAISED BY THE LD CI T/DR IS THAT WHERE THERE IS A POTENTIAL ESCAPEMENT OF INCOME, TH E AO IS REQUIRED TO CONVERT THE LIMITED SCRUTINY CASE INTO A COMPREHENS IVE SCRUTINY CASE AFTER TAKING THE PRIOR APPROVAL OF LD. PCIT AND IF THE AO DOES NOT GET THE LIMITED SCRUTINY CASE CONVERTED TO COMPREHENSIVE SC RUTINY CASE EVEN THOUGH THERE ARE MATERIAL ON RECORD, THE ASSESSMENT ORDER BECOMES ERRONEOUS AS IT IS PREJUDICIAL TO THE INTEREST OF R EVENUE AND PROVISIONS OF SECTION 263 OF THE ACT ARE APPLICABLE. FOR THE P URPOSES OF CONVERTING LIMITED SCRUTINY TO COMPLETE SCRUTINY, WHAT IS RELE VANT IS THAT THERE MUST BE SOME CREDIBLE MATERIAL OR INFORMATION ON FACE OF THE RECORD AND BASIS REVIEW THEREOF DURING THE ASSESSMENT PROCEEDINGS, T HE AO IS REQUIRED TO FORM A REASONABLE VIEW THAT THERE IS POSSIBILITY OF UNDER ASSESSMENT OF INCOME IF THE CASE IS NOT EXAMINED UNDER COMPLE TE SCRUTINY AND AFTER SEEKING APPROVAL FROM THE COMPETENT AUTHORITY , THE CASE CAN BE CONVERTED INTO COMPLETE SCRUTINY AND THAT TOO, DURI NG THE CURRENCY OF ASSESSMENT PROCEEDINGS. THEREFORE, WHAT IS ESSENTI AL IS THE EXISTENCE OF CREDIBLE MATERIAL AND BASIS EXAMINATION THEREOF AND FORMATION OF BELIEF BY THE AO AT FIRST PLACE DURING THE COURSE O F ASSESSMENT PROCEEDINGS THAT THERE IS A CASE OF UNDER ASSESSMEN T OR ESCAPEMENT OF INCOME WHICH IS SIMILAR TO PROVISIONS OF SECTION 14 7 OF THE ACT. IN THE ITA NO. 265/JP/2020 M/S MAHENDRA SINGH DHANKHAR, HUF VS. ACIT 16 INSTANT CASE, WE FIND THAT THE ASSESSEE, BEING IN B USINESS OF REAL ESTATE DEVELOPMENT HAS FOLLOWED PERCENTAGE COMPLETION METH OD OF ACCOUNTING AND HAS ACCOUNTED FOR ACTUAL COSTS INCURRED THOUGH AFTER THE END OF THE FINANCIAL YEAR AS THE PROJECT WAS SUBSTANTIALLY COM PLETED AND REVENUES HAVE BEEN RECOGNIZED. THEREFORE, WE FIND THAT THERE IS NO INFIRMITY IN ASSESSEE FOLLOWING THE ACCEPTED METHOD OF ACCOUNTIN G AND BASIS THEREOF, DETERMINATION OF INCOME WHICH IS OFFERED T O TAX AND THUS, WE FIND THAT THERE WAS NO TANGIBLE MATERIAL OR INFORMA TION AVAILABLE DURING THE COURSE OF ASSESSMENT PROCEEDINGS BASIS WHICH RE ASONABLE BELIEF CAN BE FORMED OF ESCAPEMENT OR UNDER ASSESSMENT OF INCO ME AND WHICH COULD HAVE LED THE AO TO SEEK PERMISSION TO CONVERT LIMITED SCRUTINY INTO COMPLETE SCRUTINY. THEREFORE, THE AO NOT SEEKI NG PERMISSION TO CONVERT LIMITED SCRUTINY TO COMPLETE SCRUTINY IS NO T BORNE OUT OF FACTS ON RECORD. EVEN FOR SAKE OF ARGUMENTS, IF WE WERE TO ASSUME THAT THERE IS MATERIAL ON RECORD POINTING TOWARDS POTENTIAL ESCAP EMENT OF INCOME AND WHICH HAS ESCAPED THE ATTENTION OF THE AO DURIN G LIMITED SCRUTINY ASSESSMENT PROCEEDINGS AND NO ACTION HAS BEEN TAKEN BY HIM, IT IS NOT THAT THE REVENUE DOESNT HAVE ANY RECOURSE AND CORR ECT COURSE OF ACTION WOULD HAVE BEEN FOR AO TO RECORD HIS SATISFA CTION THOUGH AFTER COMPLETION OF CURRENT ASSESSMENT PROCEEDINGS AND IN VOKE JURISDICTION U/S 147 OF THE ACT SUBJECT OF COURSE TO SATISFACTIO N OF CONDITIONS SPECIFIED THEREIN RATHER THAN THE LD. PCIT INVOKING JURISDICTION U/S 263 OF THE ACT. AS WE HAVE DISCUSSED EARLIER, THE REVISION AL JURISDICTION U/S 263 CANNOT BE EXERCISED FOR BROADENING THE SCOPE OF JUR ISDICTION THAT WAS ORIGINALLY VESTED WITH THE A.O FOR LIMITED SCRUTINY WHILE FRAMING THE ASSESSMENT AND ENLARGING HIS SCOPE OF LIMITED ENQUI RY. ITA NO. 265/JP/2020 M/S MAHENDRA SINGH DHANKHAR, HUF VS. ACIT 17 20. THE DECISION IN CASE OF BABY MEMORIAL HOSPITAL (SUPRA) IS DISTINGUISHABLE AS IN THAT CASE, THE ASSESSEE ITSEL F HAD AGREED THAT PCIT IS JUSTIFIED IN GIVING DIRECTION TO WORK MAT INCOME AFTER ADDING BACK THE PROVISION FOR DOUBTFUL DEBTS AND BASIS SUCH CONCESS ION ON PART OF THE ASSESSEE, THE TRIBUNAL HAS HELD THAT THE ARGUMENT O F THE ASSESSEE THAT IN CASE OF LIMITED SCRUTINY, THE PCIT COULD NOT EXE RCISE JURISDICTION U/S 263 IS DEVOID OF MERIT. THEREFORE, THE SAID DECISIO N DOESNT SUPPORT THE CASE OF THE REVENUE. 21. NOW, COMING BACK TO REASONING ADOPTED BY THE L D PCIT TO INVOKE HIS JURISDICTION U/S 263 IN THE INSTANT CASE. AS P ER LD PCIT, THE REASON FOR WHICH THE MATTER WAS SELECTED FOR LIMITED SCRUT INY I.E, MIS-MATCH OF THE SALES TURNOVER VIS--VIS ITR, CIB & AIR HAS A D IRECT BEARING ON OPENING AND CLOSING STOCK OF COST OF CONSTRUCTION A ND W.I.P AND IN TURN, ON TAXABLE INCOME, THEREFORE, THE AO WAS DUTY BOUND TO EXAMINE THESE ISSUES AND THE AO HAVING FAILED TO EXAMINE THESE IS SUES, THE AO HAS EFFECTIVELY FAILED TO EXAMINE THE ISSUES FOR WHICH MATTER WAS SELECTED FOR LIMITED SCRUTINY. IN OUR VIEW, THE TRANSACTION S REFLECTED IN THE FINANCIAL STATEMENTS ARE SUM TOTAL OF VARIOUS INDEP ENDENT TRANSACTIONS UNDERTAKEN DURING THE YEAR, AND THE BALANCE SHEET R EPRESENT A CONSOLIDATED PICTURE OF THE FINANCIAL POSITION OF T HE ASSESSEE AT THE END OF THE YEAR AND SIMILARLY, THE PROFIT/LOSS ACCOUNT REPRESENT THE CONSOLIDATED POSITION OF REVENUES AND COSTS AND NET PROFIT DURING THE FINANCIAL YEAR. IT IS LIKELY THAT SOME OF THE TRAN SACTIONS ARE DIRECTED CONNECTED AND SOME ARE INDIRECTLY CONNECTED, HOWEVE R, THEY ALL HAVE A COMMON THREAD IN TERMS OF IMPACTING THE FINANCIAL P OSITION OF THE ASSESSEE AND FOR TAX PURPOSES, IN DETERMINATION OF NET TAXABLE INCOME. ITA NO. 265/JP/2020 M/S MAHENDRA SINGH DHANKHAR, HUF VS. ACIT 18 THEREFORE, THE REASONING ADOPTED BY THE LD PCIT THA T TRANSACTIONS OF COST OF CONSTRUCTION WILL HAVE AN EFFECT ON CLOSING WORK IN PROGRESS AND TAKING SALES TURNOVER AND CLOSING WIP INTO ACCOUNT, ALL THESE TRANSACTIONS TAKEN TOGETHER WILL EFFECT THE DETERMI NATION OF NET TAXABLE INCOME IS NO DOUBT CORRECT BUT AS FAR AS DETERMINAT ION OF CORRECT SALES TURNOVER IS CONCERNED FOR WHICH THE MATTER WAS SELE CTED FOR LIMITED SCRUTINY, THE SAME CAN BE DETERMINED ON A STANDALON E BASIS ON EXAMINATION OF SALE DEEDS AND RELATED DOCUMENTS FOR SALE OF FLATS AND IS NOT CONNECTED WITH DETERMINATION AND EXAMINATION OF COST OF CONSTRUCTION AND WORK IN PROGRESS. 22. AS WE HAVE DISCUSSED ABOVE, IN CASE OF LIMITED SCRUTINY, THE AO IS DUTY BOUND TO RESTRICT HIMSELF TO EXAMINE THE MATTE RS FOR WHICH MATTER WAS SELECTED FOR LIMITED SCRUTINY AND WHERE THE AO TAKES A VIEW AND FORMS A REASONABLE BELIEF THAT SOME OTHER MATTERS A RE REQUIRED TO BE EXAMINED, THE SAME WILL IN EFFECT BE TRAVERSING BEY OND THE SCOPE OF LIMITED SCRUTINY WHICH IS NOT PERMISSIBLE UNLESS TH E MATTER IS CONVERTED INTO COMPLETE SCRUTINY AND WHICH HAS NOT HAPPENED D URING THE COURSE OF PRESENT ASSESSMENT PROCEEDINGS. THEREFORE, THE I SSUE OF VALUATION OF CLOSING WORK-IN-PROGRESS AS WELL AS MATTER RELATING TO AGRICULTURE INCOME, WHICH ARE HELD BY THE LD PCIT AS MATTERS NO T BEEN EXAMINED BY THE AO, ARE MATTERS WHICH ARE NOT PART OF THE REASO NS FOR WHICH THE CASE WAS SELECTED FOR LIMITED SCRUTINY AND ARE NOT EVEN REMOTELY CONNECTED, THEREFORE, NO FAULT LIE ON THE PART OF T HE AO RESULTING IN ORDER BEING HELD AS ERRONEOUS AND PREJUDICIAL TO TH E INTEREST OF REVENUE. AS FAR AS MATTERS FOR WHICH CASE WAS SELECTED FOR L IMITED SCRUTINY IN TERMS OF MIS-MATCH OF SALES TURNOVER, THE SAME HAS BEEN DULY EXAMINED ITA NO. 265/JP/2020 M/S MAHENDRA SINGH DHANKHAR, HUF VS. ACIT 19 BY THE AO AND EVEN THE LD PCIT HAS NOT RECORDED ANY ADVERSE FINDINGS IN TERMS OF LACK OF ENQUIRY OR INADEQUATE ENQUIRY O N PART OF THE AO. IN LIGHT OF AFORESAID DISCUSSIONS, WE HEREBY SET-ASIDE THE ORDER PASSED BY THE LD PCIT U/S 263 AND THE ORDER OF THE AO IS SUST AINED. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 30/06/2021. SD/- SD/- LANHI XKSLKBZ FOE FLAG ;KNO ( SANDEEP GOSAIN ) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 30/06/2021. *SANTOSH VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S MAHENDRA SINGH DHANKHAR HUF, JHUNJHUNU. 2. IZR;FKHZ@ THE RESPONDENT-ACIT, CIRCLE, JHUNJHUNU. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE { ITA NO. 265/JP/2020} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR