NARENDRA SHARMA, DHOLPUR V. PR.CIT, ALWAR

ITA 282/JPR/2020

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 5297 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-09-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2015-2016
• Appeal Filed On: 29-06-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P.C. PARWAL PARWAL
• Keywords: Revision of order; TDS; Set aside; FORM 26AS
• Section: 263; 80C; 143(3); 142(1); 2(A); 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 LANHI XLKA] U;KF;D LNL; ,OA JH FOE FLAG ;KNO ] YS[KK LNL; DS LE{K BEFORE SHRI SANDEEP GOSAIN, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA NO. 282/JP/2020 ASSESSMENT YEAR: 2015-16 SHRI NARENDRA SHARMA, 2 OPP. MIDWAY, GT ROAD, DHOLPUR. CUKE VS. P.C.I.T. ALWAR. PAN NO.: AFIPN 1992 F VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI P.C. PARWAL PARWAL (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI B.K. GUPTA (CIT-DR) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 28/06/2021 MN?KKS'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 15/09/2021 VKNS'K@ ORDER PER: SANDEEP GOSAIN, J.M. THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE A GAINST THE ORDER OF THE LD. PR.CIT, ALWAR DATED 17/03/2020 PAS SED U/S 263 OF THE INCOME TAX ACT, 1961 (IN SHORT, THE ACT) FOR THE A. Y. 2015-16. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, ORDER PASSED BY THE LD. PCIT U/S 263 IS ILLEGAL & BAD IN LAW AND TH E SAME BE QUASHED. 2. THE LD. PCIT HAS ERRED ON FACTS AND IN LAW IN DI RECTING THE AO TO PASS THE ASSESSMENT ORDER AFRESH IGNORING THAT THE CASE OF ASSESSEE WAS SELECTED FOR LIMITED SCRUTINY ON SPECI FIC ISSUES ON WHICH THE AO MADE THE DETAILED ENQUIRY WHICH FACT I S NOT DENIED AND THEREFORE, DIRECTION TO MAKE FRESH ASSESSMENT I S ILLEGAL & BAD IN LAW. ITA 282/JP/2020_ SHRI NARENDRA SHARMA VS PCIT 2 3. THE LD. PCIT HAS ERRED ON FACTS AND IN LAW IN DI RECTING THE AO TO EXAMINE THE CLAIM OF DEDUCTION U/S 80C OF RS.1,50,0 00/- WHICH WAS NOT AN ISSUE FOR LIMITED SCRUTINY AND OTHERWISE VERIFIABLE FROM THE MATERIAL AVAILABLE ON RECORD AND THE REASO N FOR LARGE INCREASE IN SUNDRY CREDITORS AND DIRECT/ INDIRECT E XPENSES WHICH OTHERWISE WAS EXAMINED BY THE AO AND EXPLAINED BEFO RE THE LD. PCIT ON WHICH NO ADVERSE FINDING IS GIVEN. 4. THE LD. PCIT HAS ERRED ON FACTS AND IN LAW IN EN LARGING THE SCOPE OF LIMITED SCRUTINY FOR WHICH THE CASE OF ASSESSEE WAS SELECTED BY DIRECTING THE AO NOT ONLY TO CONSIDER THE ISSUES MENTIONED BY HIM IN THE ORDER BUT ALSO THE ISSUES WHICH MAY SUBS EQUENTLY COME TO HIS NOTICE DURING THE ASSESSMENT PROCEEDING S U/S 143(3)/ 263 OF THE ACT. 5. THE APPELLANT CRAVES TO ALTER, AMEND AND MODIFY ANY GROUND OF APPEAL. 6. NECESSARY COST BE AWARDED TO THE ASSESSEE. 2. THE HEARING OF THE APPEAL WAS CONCLUDED THROUGH VIDEO CONFERENCE IN VIEW OF THE PREVAILING SITUATION OF COVID-19 PAN DEMIC. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS ENGAGED IN THE BUSINESS OF CIVIL CONTRACTOR. RETURN OF INCOME WAS FILED ON 30.09.2015 DECLARING TOTAL INCOME OF RS.81,53,490/- WHICH WAS REVISED AT TOTAL INCOME OF RS.1,02,03,490/- ON 16.10.2015. THE CASE OF ASSESSEE WAS SELECTED FOR LIMITED SCRUTINY FOR FOUR REASONS, I.E . (I) CONTRACT RECEIPT/ FEES MISMATCH (II) SALES TURNOVER MISMATCH (III) SUNDRY CREDITORS AND (IV) TAX CREDIT MISMATCH. IN COURSE OF THE ORIGINAL ASSESSME NT PROCEEDINGS, THE ASSESSEE EXPLAINED ALL THESE ISSUES VIDE DIFFERENT LETTERS. THE AO AFTER CONSIDERING THE SAME AND AFTER MAKING NECESSARY ENQ UIRIES/ VERIFICATION ITA 282/JP/2020_ SHRI NARENDRA SHARMA VS PCIT 3 ACCEPTED THE INCOME RETURNED BY THE ASSESSEE VIDE O RDER U/S 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT, THE ACT) DATED 30.08.2017 AT AN INCOME OF RS. 1,02,03,490/-. BY THE IMPUGNED ORDER, THE LD. PCIT SET ASIDE THE ASSESSMENT ORDER PASSED BY THE AO U/S 143 (3) OF THE ACT WITH DIRECTION TO PASS SPEAKING ASSESSMENT ORDER AFTER M AKING PROPER ENQUIRES AND AFTER AFFORDING ADEQUATE OPPORTUNITY OF BEING H EARD TO THE ASSESSEE. 4. AGAINST THE ORDER PASSED BY THE LD. PCIT, THE AS SESSEE HAS PREFERRED THE PRESENT APPEAL BEFORE THE ITAT ON THE GROUNDS MENTIONED ABOVE. 5. THE MAIN GRIEVANCE OF THE ASSESSEE RELATES TO CH ALLENGING THE ORDER OF THE LD. PCIT IN PASSING THE ORDER U/S 263 OF THE ACT. IN THIS REGARD, THE LD AR APPEARING ON BEHALF OF THE ASSESSEE HAS REITE RATED THE SAME ARGUMENTS AS WERE RAISED BEFORE THE LD. PCIT AND AL SO RELIED ON THE WRITTEN SUBMISSIONS FILED BEFORE THE BENCH AND THE SAME IS REPRODUCED BELOW: FROM THE FACTS STATED ABOVE IT CAN BE NOTED THAT C ASE OF THE ASSESSEE WAS PICKED UP FOR LIMITED SCRUTINY TO VERIFY THE MI SMATCH BETWEEN CONTRACT RECEIPT, SALES TURNOVER, TAX CREDIT MISMAT CH AND INCREASE IN SUNDRY CREDITORS. ALL THESE FOUR ISSUES WERE EXAMIN ED BY THE AO IN DETAIL BY ISSUING NOTICE U/S 142(1) DT. 04.01.2017 BY RAIS ING SIX QUERIES (PB 4). THE ASSESSEE EXPLAINED ALL THESE QUERIES AND THE MI SMATCH BETWEEN FORM 26AS VIS--VIS AUDITED P&L A/C WITH REFERENCE TO TH E TURNOVER/ GROSS RECEIPT, TDS CREDIT AND THE TURNOVER REPORTED IN AU DIT REPORT AS COMPARED ITA 282/JP/2020_ SHRI NARENDRA SHARMA VS PCIT 4 WITH ITR WAS EXPLAINED. SO FAR AS VERIFICATION OF S UNDRY CREDITORS IS CONCERNED THE SAME WAS EXPLAINED BY FILING CONFIRMA TION OF M/S KRISHNA INFRASTRUCTURE WHICH IS THE MAIN SUNDRY CREDITOR OF RS.4.10 CRORES OUT OF TOTAL SUNDRY CREDITORS OF RS.4,59,61,765/-. THE SUN DRY CREDITORS WERE MAINLY IN RESPECT OF OUTSTANDING SUB-CONTRACTOR PAY MENT AND THE EXPLANATION FOR INCREASE IN SUNDRY CREDITORS VIS-- VIS LAST YEAR WAS ALSO FURNISHED BEFORE THE CIT (PB 6-7) AS WELL AS THE AO (PB 24-26). IT MAY BE NOTED THAT ON THE ISSUE OF MISMATCH OF TURNOVER AND TDS CREDIT LD. CIT HAS NOT RAISED ANY ISSUE BUT IN RESPECT OF SUNDRY C REDITORS HE HAS RAISED THE ISSUE IN SEC.263 ORDER IGNORING THAT THIS ISSUE HAS BEEN THOROUGHLY EXAMINED BY THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THUS, ON THIS ISSUE THE ORDER OF AO CANNOT BE HELD TO BE ERRONEOUS OR PREJUDICIAL TO THE INTEREST OF REVENUE. THE PCIT HAS OBSERVED THAT ASSESSEE HAS NOT REPLIED ON THE ISSUES RAISED IN SHOW CAUSE NOTICE U/S 263 DT. 05.02.2020. THIS I S INCORRECT IN AS MUCH AS ALL THE THREE ISSUES RAISED IN THE SHOW CAUSE NO TICE HAS BEEN REPLIED BY ASSESSEE VIDE LETTER DT. 02.03.2020 (PB 9-10). IT M AY BE NOTED THAT IN RESPECT OF CLAIM OF DEDUCTION UNDER CHAPTER VI-A, W HEN THIS ISSUE IS NOT A SUBJECT MATTER OF LIMITED SCRUTINY, THE AO IS TO CO NFINE HIMSELF TO THOSE ISSUES ONLY AS PER THE CBDT INSTRUCTION NO.20/2015 DT. 29.12.2015 (PB 13) WHERE IT IS SPECIFICALLY MENTIONED THAT IN CASE OF LIMITED SCRUTINY QUESTIONNAIRE U/S 142(1) SHALL REMAIN CONFINED TO S PECIFIC REASONS/ ISSUES FOR WHICH CASE HAS BEEN PICKED UP FOR SCRUTINY. ONL Y WHEN THE AO NOTICES THAT THERE IS POTENTIAL ESCAPEMENT OF INCOME EXCEED ING RS.5 LACS THEN THE CASE MAY BE TAKEN FOR COMPLETE SCRUTINY. HOWEVER, O N VERIFICATION OF THE ISSUES TAKEN UP FOR LIMITED SCRUTINY, AO HAS NOT FO UND ANYTHING INCORRECT AND THEREFORE, THERE WAS NO REASON FOR HIM TO ASK F OR COMPLETE SCRUTINY. THEREFORE, IN RESPECT OF CHAPTER VI-A DEDUCTION, IF THE AO HAS NOT MADE AN ENQUIRY THE SAME CANNOT BE CONSIDERED AS ERRONEO US OR PREJUDICIAL TO THE INTEREST OF REVENUE MORE PARTICULARLY WHEN SUCH CLAIM IS ALLOWED IN ITA 282/JP/2020_ SHRI NARENDRA SHARMA VS PCIT 5 THE PRECEDING YEAR AND IS VERIFIABLE FROM THE CAPIT AL ACCOUNT OF ASSESSEE FOR THE YEAR UNDER CONSIDERATION (PB 38). FURTHER O N THE ISSUE OF LARGE AMOUNT OF SUNDRY CREDITORS AND EXPENSES CLAIMED IN THE P&L A/C THE SAME IS DULY EXPLAINED BEFORE THE AO AS STATED ABOV E WHO AFTER MAKING NECESSARY VERIFICATION AND ENQUIRY FROM THE ASSESSE E HAS ACCEPTED THE EXPLANATION OF ASSESSEE. THEREFORE, ON THE ISSUE OF INCREASE IN SUNDRY CREDITOR WITH RESPECT TO TURNOVER AS COMPARED TO TH E PRECEDING YEAR, THE ORDER PASSED BY AO CANNOT BE HELD TO BE ERRONEOUS O R PREJUDICIAL TO THE INTEREST OF REVENUE. THE PCIT HAS DIRECTED THE AO TO PASS THE ASSESSMENT ORDER AFRESH IGNORING THAT WHEN THE CASE IS SELECTED FOR LIMITED SCRUTINY THE JURISDICTION OF CIT FOR HOLDING THE ORDER ERRONEOUS OR PREJUDICI AL TO THE INTEREST OF REVENUE IS CONFINED ONLY TO THE ISSUE OF LIMITED SC RUTINY AND NOT TO DIRECT THE AO TO PASS A DENOVO ASSESSMENT AFRESH BY RAISIN G ISSUES BEYOND WHAT IS PERMITTED IN THE LIMITED SCRUTINY. HENCE, T HE DIRECTION GIVEN BY LD. CIT IS ALSO BAD IN LAW. HE RELIED ON THE FOLLOWING CASE LAWS: I. TORRENT PHARMACEUTICALS LTD. VS. DCIT (2018) 17 3 ITD 130 (AHD.) (TRIB.) II. AMIRA PURE FOODS PVT. LTD. VS. PCIT (2017) 63 I TR(TRIB.) 355/ 51 CCH 473 (DEL.) (TRIB.) 6. ON THE OTHER HAND, THE LD CIT-DR HAS VEHEMENTLY SUPPORTED THE ORDER OF THE PCIT AND ALSO RELIED ON THE FOLLOWING CASE LAWS: (I) CIT VS SMT. SARASWATI DEVI (1995) 212 ITR 445 ( RAJ) (II) BABY MEMORIAL HOSPITAL LTD. VS ACIT, CIRCLE 1( 1), KOZHIKODE (2019) 111 TAXMANN.COM 189 (COCHIN-TRIB) ITA 282/JP/2020_ SHRI NARENDRA SHARMA VS PCIT 6 7. WE HAVE HEARD THE LD. COUNSELS OF BOTH THE PARTI ES AND HAVE PERUSED THE MATERIAL PLACED ON RECORD. WE HAVE ALSO DELIBERATED UPON THE DECISIONS CITED IN THE ORDERS PASSED BY THE AUT HORITIES BELOW AS WELL AS CITED BEFORE US AND WE HAVE ALSO GONE THROUGH TH E ORDERS PASSED BY THE REVENUE AUTHORITIES. AS PER THE FACTS OF THE PR ESENT CASE, WE NOTICED THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF CIV IL CONTRACTOR. RETURN OF INCOME WAS FILED DECLARING TOTAL INCOME OF RS.81 ,53,490/- THEREAFTER THE SAME WAS REVISED AT A TOTAL INCOME OF RS.1,02,0 3,490/- WHICH WAS ACCEPTED BY THE A.O. THEREAFTER, THE LD. PCIT ISSUED NOTICE U/S 263 OF T HE ACT DATED 05.02.2020 STATING THAT (I) ASSESSEE HAS CLAIMED DEDUCTION UNDER CHAPTER VI-A OF RS.1,50,000/- BUT NO SUPPORTI NG DOCUMENTS/ EVIDENCE IS PLACED ON RECORD (II) ASSESSEE HAS SHOW N LARGE AMOUNT OF SUNDRY CREDITORS AMOUNTING TO RS.4,59,61,765/- BUT CONFIRMATION AND VERIFICATION WAS NOT MADE DURING THE ASSESSMENT PRO CEEDINGS (III) ASSESSEE HAS DEBITED DIRECT EXPENSES OF RS.13,69,88 ,804/- AND INDIRECT EXPENSES OF RS.58,41,645/- AGAINST TOTAL RECEIPT OF RS.15,31,83,951/- AND SHOWN NET PROFIT OF RS.1,03,53,493/- WHICH IS NOT J USTIFIED/ VERIFIED (IV) AS PER CBDT INSTRUCTION NO.20/2015 DATED 29.12.2015, I F THE AO NOTICE THAT THERE IS POTENTIAL ESCAPEMENT OF INCOME EXCEEDING R S.5 LACS REQUIRING SUBSTANTIAL VERIFICATION ON ANY OTHER ISSUE, THE CA SE MAY BE TAKEN UP FOR COMPLETE SCRUTINY WITH THE APPROVAL OF PCIT/CIT. HO WEVER, THE AO HAS ITA 282/JP/2020_ SHRI NARENDRA SHARMA VS PCIT 7 NOT MADE PROPER ENQUIRY/INVESTIGATION ON THE ABOVE ISSUES AND THEREFORE, ORDER PASSED BY AO IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. 8. WE NOTICED THAT THE ASSESSEE IN RESPONSE TO SHOW CAUSE NOTICE, VIDE ITS LETTER DATED 02.03.2020 SUBMITTED THAT IN COURSE OF ASSESSMENT PROCEEDINGS, THE AO REQUIRED THE ASSESSEE TO FURNIS H VARIOUS INFORMATION VIDE NOTICE U/S 142(1) DATED 04.01.2017 INCLUDING T HE ISSUES FOR WHICH ASSESSMENT WAS TAKEN UP FOR LIMITED SCRUTINY AND TH E SAME IS DULY EXPLAINED BEFORE THE AO. WITH REFERENCE TO THREE IS SUES RAISED IN SHOW CAUSE NOTICE U/S 263 OF THE ACT IT WAS EXPLAINED TH AT CLAIM OF DEDUCTION UNDER CHAPTER VI-A WAS NOT AN ISSUE FOR LIMITED SCR UTINY, IN RESPECT OF LARGE AMOUNT OF SUNDRY CREDITORS, ASSESSEE HAS FILE D COMPLETE EXPLANATION FOR THE SAME IN COURSE OF ASSESSMENT PROCEEDINGS (P B 24, POINT NO.6) AND IN RESPECT OF DIRECT AND INDIRECT EXPENSES CLAI MED IN THE P&L A/C, THE SAME IS EXPLAINED WITH REFERENCE TO THE INCREASE IN TURNOVER/ EXPENSES VIS--VIS THAT IN THE PREVIOUS YEAR. THUS, IT IS CO NTENDED THAT AO PASSED THE ORDER AFTER COMPLETE VERIFICATION/ ENQUIRY AND THUS, ORDER PASSED BY HIM IS NOT ERRONEOUS OR PREJUDICIAL TO THE INTEREST OF REVENUE. THE LD. PCIT, HOWEVER, AT PAGE 12-13 OF THE ORDER OBSERVED THAT (I) AO HAS NOT ASKED THE ASSESSEE TO FURNISH THE CAPITAL ACCOUNT I N SUPPORT OF CLAIM OF DEDUCTION UNDER CHAPTER VI-A NOR THE SAME IS MENTIO NED IN THE TAX AUDIT ITA 282/JP/2020_ SHRI NARENDRA SHARMA VS PCIT 8 REPORT (II) THE MAJOR SUNDRY CREDITORS OF RS.4.10 C RORES IS IN THE NAME OF M/S KRISHNA INFRASTRUCTURE BUT CONFIRMATION OF SUND RY CREDITOR IS NOT FILED EXCEPT IN CASE OF M/S KRISHNA INFRASTRUCTURE, FURTH ER COPY OF LEDGER ACCOUNT OF ASSESSEE IN THE BOOKS OF SUB-CONTRACTOR HAS NOT BEEN CALLED (III) NET PROFIT SHOWN IS UNVERIFIED WITH REFERENCE TO DIRECT AND INDIRECT EXPENSES CLAIMED IN P&L A/C OF WHICH THE MAJOR EXPE NSES TO THE EXTENT OF RS.8,53,19,970/- RELATE TO SUB-CONTRACT EXPENSES OF WHICH RS.7,92,35,635/- PERTAIN TO M/S KRISHNA INFRASTRUCT URE AND THUS, THE CLAIM OF DIRECT EXPENSES IS INTERLINKED WITH SUNDRY CREDI TORS. ACCORDINGLY, THE ORDER PASSED BY AO IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE ON ACCOUNT OF NON-EXAMINATION OF CASE PROPERLY ON T HE ISSUE SPECIALLY LARGE INCREASE IN SUNDRY CREDITORS WITH RESPECT TO TURNOVER AS COMPARED TO PRECEDING YEAR . HE FURTHER OBSERVED THAT DURING PROCEEDINGS U/S 263 ASSESSEE FAILED TO SUBMIT THE REPLY ON THE ISSUES R AISED THROUGH NOTICE DATED 05.02.2020 AND AO HAS NOT MADE PROPER INVESTI GATION AND VERIFICATION ON THESE ISSUES. ACCORDINGLY, THE ORDE R PASSED BY AO IS SET SIDE WITH THE DIRECTION TO PROPERLY EXAMINE ALL THE ISSUES. 9. FROM PERUSAL OF THE RECORDS, WE OBSERVED THAT TH E CASE OF THE ASSESSEE WAS PICKED UP FOR LIMITED SCRUTINY TO VERI FY THE MISMATCH BETWEEN CONTRACT RECEIPT, SALES TURNOVER, TAX CREDI T MISMATCH AND INCREASE IN SUNDRY CREDITORS. ALL THESE FOUR ISSUES WERE EXAMINED BY THE ITA 282/JP/2020_ SHRI NARENDRA SHARMA VS PCIT 9 AO IN DETAIL BY ISSUING NOTICE U/S 142(1) OF THE AC T DATED 04.01.2017 BY RAISING SIX QUERIES, WHICH IS AVAILABLE AT PAGE NO. 4 OF THE ASSESSEES PAPER BOOK. THE ASSESSEE EXPLAINED ALL THESE QUERIE S AND THE MISMATCH BETWEEN FORM 26AS VIS--VIS AUDITED P&L A/C WITH RE FERENCE TO THE TURNOVER/ GROSS RECEIPT, TDS CREDIT AND THE TURNOVE R REPORTED IN AUDIT REPORT AS COMPARED WITH ITR WAS EXPLAINED. SO FAR A S VERIFICATION OF SUNDRY CREDITORS IS CONCERNED THE SAME WAS EXPLAINE D BY FILING CONFIRMATION OF M/S KRISHNA INFRASTRUCTURE WHICH IS THE MAIN SUNDRY CREDITOR OF RS.4.10 CRORES OUT OF TOTAL SUNDRY CRED ITORS OF RS.4,59,61,765/. THE SUNDRY CREDITORS WERE MAINLY IN RESPECT OF OUTS TANDING SUB-CONTRACTOR PAYMENT AND THE EXPLANATION FOR INCREASE IN SUNDRY CREDITORS VIS--VIS LAST YEAR WAS ALSO FURNISHED BEFORE THE CIT, WHICH ARE A VAILABLE AT PAGE NO. 6-7 OF THE ASSESSEES PAPER BOOK AS WELL AS THE AO WHICH ARE AVAILABLE AT PAGE NO. 24 -26 OF THE ASSESSEES PAPER BOOK. IT MA Y BE NOTED THAT ON THE ISSUE OF MISMATCH OF TURNOVER AND TDS CREDIT, T HE LD. PCIT HAS NOT RAISED ANY ISSUE BUT IN RESPECT OF SUNDRY CREDITORS HE HAS RAISED THE ISSUE IN SEC.263 ORDER IGNORING THAT THIS ISSUE HAS BEEN THOROUGHLY EXAMINED BY THE AO DURING THE COURSE OF ASSESSMENT PROCEEDIN GS. THUS, ON THIS ISSUE, THE ORDER OF AO CANNOT BE HELD TO BE ERRONEO US OR PREJUDICIAL TO THE INTEREST OF REVENUE. ITA 282/JP/2020_ SHRI NARENDRA SHARMA VS PCIT 10 10. WE FURTHER OBSERVED THAT THE PCIT HAS HELD THA T ASSESSEE HAS NOT REPLIED ON THE ISSUES RAISED IN SHOW CAUSE NOTICE U /S 263 DATED 05.02.2020. THIS IS INCORRECT INASMUCH AS ALL THE T HREE ISSUES RAISED IN THE SHOW CAUSE NOTICE HAS BEEN REPLIED BY ASSESSEE VIDE LETTER DATED 02.03.2020, WHICH ARE AVAILABLE AT PAGE NO. 9-10 OF THE ASSESSEES PAPER BOOK. IT MAY BE NOTED THAT IN RESPECT OF CLAIM OF D EDUCTION UNDER CHAPTER VI-A, WHEN THIS ISSUE IS NOT A SUBJECT MATTER OF LI MITED SCRUTINY, THE AO IS TO CONFINE HIMSELF TO THOSE ISSUES ONLY AS PER THE CBDT INSTRUCTION NO.20/2015 DATED 29.12.2015, WHICH IS AVAILABLE AT PAGE NO. 13 OF THE ASSESSEES PAPER BOOK WHERE IT IS SPECIFICALLY MENT IONED THAT IN CASE OF LIMITED SCRUTINY QUESTIONNAIRE U/S 142(1) SHALL REM AIN CONFINED TO SPECIFIC REASONS/ ISSUES FOR WHICH CASE HAS BEEN PICKED UP F OR SCRUTINY. ONLY WHEN THE AO NOTICES THAT THERE IS POTENTIAL ESCAPEM ENT OF INCOME EXCEEDING RS.5 LACS THEN THE CASE MAY BE TAKEN FOR COMPLETE SCRUTINY. HOWEVER, ON VERIFICATION OF THE ISSUES TAKEN UP FOR LIMITED SCRUTINY, THE AO HAS NOT FOUND ANYTHING INCORRECT AND THEREFORE, THERE WAS NO REASON FOR HIM TO ASK FOR COMPLETE SCRUTINY. THEREFORE, IN RESPECT OF CHAPTER VI-A DEDUCTION, IF THE AO HAS NOT MADE AN ENQUIRY THE SA ME CANNOT BE CONSIDERED AS ERRONEOUS OR PREJUDICIAL TO THE INTER EST OF REVENUE MORE PARTICULARLY WHEN SUCH CLAIM IS ALLOWED IN THE PREC EDING YEAR AND IS VERIFIABLE FROM THE CAPITAL ACCOUNT OF ASSESSEE FOR THE YEAR UNDER ITA 282/JP/2020_ SHRI NARENDRA SHARMA VS PCIT 11 CONSIDERATION. FURTHER ON THE ISSUE OF LARGE AMOUNT OF SUNDRY CREDITORS AND EXPENSES CLAIMED IN THE P&L A/C THE SAME IS DUL Y EXPLAINED BEFORE THE AO, WHO AFTER MAKING NECESSARY VERIFICATION AND ENQUIRY FROM THE ASSESSEE HAS ACCEPTED THE EXPLANATION OF ASSESSEE. THEREFORE, ON THE ISSUE OF INCREASE IN SUNDRY CREDITOR WITH RESPECT T O TURNOVER AS COMPARED TO THE PRECEDING YEAR, THEREFORE, IN OUR VIEW, THE ORDER PASSED BY THE AO CANNOT BE HELD TO BE ERRONEOUS OR PREJUDICIAL TO TH E INTEREST OF REVENUE. THE LD. PCIT HAS DIRECTED THE AO TO PASS THE ASSESS MENT ORDER AFRESH IGNORING THAT WHEN THE CASE IS SELECTED FOR LIMITED SCRUTINY, THE JURISDICTION OF CIT FOR HOLDING THE ORDER ERRONEOUS OR PREJUDICIAL TO THE INTEREST OF REVENUE IS CONFINED ONLY TO THE ISSUE O F LIMITED SCRUTINY AND NOT TO DIRECT THE AO TO PASS A DENOVO ASSESSMENT AF RESH BY RAISING ISSUES BEYOND WHAT IS PERMITTED IN THE LIMITED SCRUTINY. H ENCE, THE DIRECTION GIVEN BY LD. CIT IS ALSO BAD IN LAW. WE DRAW STRENG TH FROM THE DECISION AS RELIED BY THE LD AR, IN THE CASE OF TORRENT PHARMACEUTICALS LTD. VS. DCIT (2018) 173 ITD 130 (AHD.) (TRIB.) WHEREIN THE COORDINATE BENCH HAS OBSERVED AS UNDER: EVEN AFTER THE INSERTION OF EXPLANATION 2, THE REVI SIONAL COMMISSIONER IS EXPECTED TO SHOW THAT THE VIEW TAKEN BY THE AO IS WHOLLY UNS USTAINABLE IN LAW BEFORE EMBARKING UPON EXERCISE OF REVISIONARY POWERS. THE REVISIONAL POWERS CANNOT BE EXERCISED FOR DIRECTING A FULLER INQUIRY TO MERELY FIND OUT IF THE EARLIER VIEW TAKEN IS ERRONEOUS PARTICULARLY WHEN A VIEW WAS ALREADY TAKE N AFTER INQUIRY. IF SUCH COURSE OF ACTION AS INTERPRETED BY THE REVISIONAL COMMISSI ONER IN LIGHT OF THE EXPLANATION 2 IS PERMITTED, REVISIONAL COMMISSIONER CAN POSSIBL Y FIND FAULT WITH EACH AND EVERY ASSESSMENT ORDER WITHOUT HIMSELF MAKING ANY INQUIRY OR VERIFICATION AND WITHOUT ITA 282/JP/2020_ SHRI NARENDRA SHARMA VS PCIT 12 ESTABLISHING THAT ASSESSMENT ORDER IS NOT SUSTAINAB LE IN LAW. THIS WOULD INEVITABLY MEAN THAT EVERY ORDER OF THE LOWER AUTHORITY WOULD THUS BECOME SUSCEPTIBLE TO SECTION 263 OF THE ACT AND IN TURN WILL CAUSE SERIO US UNINTENDED HARDSHIP TO THE TAX PAYER CONCERNED FOR NO FAULT ON HIS PART. APPARENTL Y, THIS IS NOT INTENDED BY THE EXPLANATION. HOWSOEVER WIDE THE SCOPE OF EXPLANATIO N 2(A) MAY BE, ITS LIMITS ARE IMPLICIT IN IT. IT IS ONLY IN A VERY GROSS CASE OF INADEQUACY IN INQUIRY OR WHERE INQUIRY IS PER SE MANDATED ON THE BASIS OF RECORD AVAILABLE BEFORE THE AO AND SUCH INQUIRY WAS NOT CONDUCTED, THE REVISIONAL POWER SO CONFERRE D CAN BE EXERCISED TO INVALIDATE THE ACTION OF AO. WE ALSO DRAW STRENGTH FROM THE DECISION IN THE CASE OF AMIRA PURE FOODS PVT. LTD. VS. PCIT (2017) 63 ITR(TRIB.) 355/ 51 CCH 473 (DEL.) (TRIB.) WHEREIN THE COORDINATE BENCH HAS OBSERVED AS UNDER : EXPLANATION 2 TO S. 263 INSERTED W.E.F. 01.06.2015 DOES NOT OVERRIDE THE LAW AS INTERPRETED BY THE VARIOUS HIGH COURTS WHEREBY IT I S HELD THAT THE CIT CANNOT TREAT THE AO'S ORDER AS BEING ERRONEOUS AND PREJUDICIAL T O THE INTEREST OF REVENUE WITHOUT CONDUCTING AN ENQUIRY AND RECORDING A FINDI NG. IF THE EXPLANATION IS INTERPRETED OTHERWISE, THE CIT WILL BE EMPOWERED TO FIND FAULT WITH EACH AND EVERY ASSESSMENT ORDER AND ALSO TO FORCE THE AO TO CONDUC T ENQUIRIES IN THE MANNER PREFERRED BY THE CIT, THUS PREJUDICING THE MIND OF THE AO. THIS WILL LEAD TO UNENDING LITIGATION AND NO FINALITY IN THE LEGAL PROCEEDINGS WHICH CANNOT BE THE INTENTION OF THE LEGISLATURE IN INSERTING THE EXPLANATION. HENCE, WE ARE NOT IN AGREEMENT WITH THE VIEW TAKEN BY THE LD. PR.CIT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND THEREFO RE WE HOLD THAT THE ASSESSMENT ORDER, SUBJECTED TO REVISION U/S 263, IS NOT ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE CAS E LAWS RELIED UPON BY THE LD. CIT-DR ARE NOT APPLICABLE ON THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, THEREFORE, CONSIDERING THE TOTALITY O F FACTS AND CIRCUMSTANCES OF THE CASE, THE IMPUGNED ORDER PASSE D U/S 263 OF THE ACT BY THE LD. PR.CIT, IS THEREFORE, QUASHED. ITA 282/JP/2020_ SHRI NARENDRA SHARMA VS PCIT 13 11. ONCE, WE QUASH THE ORDER PASSED U/S 263 OF THE ACT, THEN IN THAT EVENTUALITY, THE OTHER GROUNDS RAISED BY THE ASSESS EE BECOME INFRUCTUOUS AND NEEDS NO ADJUDICATION. 12. IN THE RESULT, THIS APPEAL OF THE ASSESSEE IS A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH SEPTEMBER, 2021 SD/- SD/- FOE FLAG ;KNO LANHI XLKA (VIKRAM SINGH YADAV) (SANDEEP GOSAIN) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 15/09/2021 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- SHRI NARENDRA SHARMA, DHOLPUR. 2. IZR;FKHZ @ THE RESPONDENT- THE P.C.I.T. ALWAR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 282/JP/2020) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR