Appeal details
Counselvise Citation
[2023] 101 COUNSELVISE.COM (IT) 9756 (ITAT-BANGALORE)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
4 month(s) 17 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
29-11-2023
Appeal Filed By
Assessee
Order Result
PartlyAllowed
Bench Allotted
C
Next Hearing Date
29-11-2023
Assessment Year
2016-2017
Appeal Filed On
12-07-2023
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH : BANGALORE BEFORE SHRI GEORGE GEORGE K., VICE PRESIDENT AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER ITA No.506/Bang/2023 Assessment year : 2016-17 Gangaben Premji Patel, # 275/1-1, Mysore Road, NTY Layout, Bengaluru – 560 026. PAN: AEVPP 6203M Vs. The Income Tax Officer, Ward 5[2][4], Bengaluru. APPELLANT RESPONDENT Appellant by : Ms. Sunaina Bhatia, Advocate Respondent by : Shri V. Parithivel, Jt.CIT(DR)(ITAT), Bengaluru. Date of hearing : 30.11.2023 Date of Pronouncement : 30.11.2023 O R D E R Per Laxmi Prasad Sahu, Accountant Member This appeal is filed by the assessee against the DIN & Order No.ITBA/NFAC/S/250/2022-23/1053345870(1) dated 31.05.2023 of the CIT(Appeals), National Faceless Appeal Centre, Delhi [NFAC], for the AY 2016-17 on the following grounds:- “1. The orders of the authorities below in so far as they are against the appellant are opposed to law, equity, weight of evidence, probabilities, facts and circumstances of the case. ITA No.506/Bang/2023 Page 2 of 8 2. The learned CIT[A] is not justified in upholding the order of assessment passed by the learned Income Tax Officer, who did not have proper jurisdiction since the appellant ought to have been assessed by the Assistant Commissioner of Income-tax, considering monetary limit prescribed by the CBDT and consequently the order passed by the learned assessing officer is bad in law and deserves to be cancelled, on the facts and circumstances of the case. 3. Without prejudice to the above, the learned CIT[A] is not justified in upholding the determination of the total income of the appellant at Rs.1,18,19,570/- as against the returned income of Rs. 95,50,232/-, under the facts and in the circumstances of the appellant's case. 4. The learned CIT[A] is not justified in upholding the treatment of the capital gains declared by the appellant from the sale of her share of property as Income from other sources which is not in accordance with law, under the facts and in the circumstances of the appellant's case. 5. The learned CIT[A] is not justified in sustaining the addition of Rs.22,69,335/- being the disallowance of the claim of improvement made by the appellant towards the property, under the facts and in the circumstances of the appellant's case. 5.1 The learned CIT[A] ought to have allowed the cost of improvement claimed by the appellant towards her share in the property which was incurred by the appellant wholly and exclusively towards the development of the property, under the facts and in the circumstances of the appellant's case. 5.2 The learned CIT[A] failed to appreciate that the appellant had furnished a copy of the sale deed dated 13/04/2004 and release deed dated 13/04/2010, as additional evidence in terms of Rule 46A of the IT Rules, 1962, which has not even been considered by the learned CIT[A] while passing the appellate order under the facts and in the circumstances of the appellant's case. ITA No.506/Bang/2023 Page 3 of 8 6. The learned CIT[A] failed to appreciate that the learned assessing officer had travelled beyond his scope of jurisdiction of limited scrutiny and further the selection of scrutiny itself is on a wrong premise and consequently the impugned order of assessment passed is not sustainable in the eyes of law, under the facts and in the circumstances of the appellant's case. 7. Without prejudice to the right to seek waiver with the Hon'ble CCIT/DG, the appellant denies herself liable to be charged to interest u/s. 234-A and 234-C of the Act, which under the facts and in the circumstances of the appellant's case deserves to be cancelled. 8. For the above and other grounds that may be urged at the time of hearing of the appeal, your appellant humbly prays that the appeal may be allowed and Justice rendered and the appellant may be awarded costs in prosecuting the appeal and also order for the refund of the institution fees as part of the costs.” 2. The brief facts of the case are that the assessee field return of income on 31.5.2017 declaring total income of Rs.95,50,230. The case was selected for scrutiny and statutory notices were issued to the assessee. The assessee filed only computation of income and declared large amount of capital gain on account of sale of land. Hence the assessee was requested to produce copy of purchase and sale of property, details of cost of improvement, but the assessee did not file any documents. Even the bank statement was not furnished. On verification of computation of income, it was noticed that the assessee has claimed cost of improvement of Rs.22,69,335 and balance amount of Rs.92,30,665 has been offered to tax as long term capital gain. Since the assessee did not file any details of cost of improvement, accordingly it was disallowed. ITA No.506/Bang/2023 Page 4 of 8 3. Before the CIT(Appeals) also, the assessee did not file details of cost of improvement as claimed. The CIT(Appeals) confirmed the order of the AO. The assessee raised legal issue in ground No.7 which was also not decided by the CIT(A). Aggrieved, the assessee is in appeal before the Tribunal. 4. The ld. AR submitted that the case was selected for limited scrutiny for examination of “Return filed after 7.11.2016 and Cash deposit during demonetisation period”, however, the AO travelled beyond his scope of jurisdiction of limited scrutiny without obtaining approval from the Competent Authority for converting limited scrutiny into full scrutiny. The AO has not made any addition on the reason of selection of scrutiny. Therefore, the entire assessment is bad in law and not sustainable. She relied on the coordinate Bench decision of the Tribunal in the case of H.N. Ravindra in ITA No.1065/Bang/2019 dated 10.1.2020 which is placed at page 68 to 72 of PB. 5. On the other hand, the ld. DR relied on the orders of lower authorities and submitted that the assessee filed return after 7.11.2016 and case has been selected for scrutiny on two counts noted supra as per scrutiny notice which is placed at pages 10-11 of PB. During the course of assessment, the assessee was unable to produce any documents, except computation of income and accordingly the AO is justified in making the addition and the CIT(Appeals) has rightly dismissed the appeal of the assessee. ITA No.506/Bang/2023 Page 5 of 8 6. After hearing both the sides, perusing the entire material on record and the orders of the lower authorities, we note that the sole issue raised by the assessee is that the case is selected for limited scrutiny under CASS on the reason of ‘Return filed after 7.11.2016 and cash deposits during the demonetisation period’. The AO has not made any addition on this reason and the demonetization period falls in the AY 2017-18 The AO disallowed the claim of cost of improvement while computing the long term capital gain on sale of property. The ld. DR was unable to show any evidence regarding the AO converting the limited scrutiny into full scrutiny with prior approval from the competent authority. Accordingly, we find substance in the submission of the ld. AR. The findings of the case law relied on by him (supra) is reproduced below:- “4. I have considered the rival submissions. First of all, I produce para No.2 of the Assessment Order in which the AO has noted the reasons for selecting the case of the assessee for limited scrutiny. This para reads as under: 2. Present case was selected for limited scrutiny with respect to the following reasons- 1. Whether the cash deposit has been made from disclosed sources 2. Whether cash in hand shown in the return of Income is correct (Cash deposit for demonetization period (9th November to 30th December) reported as per SFT reporting. 5. From the above para reproduced from the Assessment Order, it comes out that the only point on which the assessee's case was selected for limited scrutiny was regarding cash deposit in bank and cash in hand shown in the return of income and hence, the disallowance under section 43B of the IT Act, 1961 for non- ITA No.506/Bang/2023 Page 6 of 8 payment of VAT is not within the scope of limited scrutiny. Under these facts, now I examine the applicability of the Tribunal order cited by the learned AR of the assessee. I reproduce para Nos.7 and 8 of this Tribunal order. These paras are as under: "7. From the above Para reproduced from the order of CIT (A), it is seen that Id. CIT (A) has, also stated in this Para that technically in the limited scrutiny, other issues not supposed to be examined unless there is an approval from CIT/Pr. CIT and after the approval only, it can be wide open to examine issues other than issues raised for the limited scrutiny purpose. But thereafter, the Id. CIT(A) has gone back and she says that AO has examined the entire expenses claimed / debited to profit and loss account as per the requirement of limited scrutiny and proved that the appellant wrongly claimed depreciation @ 30%. We have already seen that as per the limited scrutiny notice ITA No. 1065/Bang/2019 appearing on page no. 47 of paper book, only two issues have been identified for examination and these are as under:- i) Payment to related persons mismatch ii) Other expenses claimed in the Profit & Loss a/c 8. It is also seen that as per the details of other expenses, available on page no. 105 of the paper book, there are 18 items of expenses but it does not include depreciation. In fact, depreciation is covered under item no. 45 on page no 106 of paper book and not in item no. 39 available on page no.105 of paper book. Hence, in my considered opinion, in the present case, examination of depreciation is not covered in the two issues selected for examination for limited scrutiny. This is not the case of the revenue that the approval was taken by the AO from CIT/Pr. CIT for converting the scrutiny from limited scrutiny case to total scrutiny case. Hence, in my considered opinion, the AO is not justified in taking up the examination of depreciation claimed which is beyond the issues selected for limited ' scrutiny without obtaining prior approval from CIT/Pr. CIT. I. therefore. hold that AO was not justified in making disallowance out of the depreciation claim of the assessee and therefore, the same is deleted." ITA No.506/Bang/2023 Page 7 of 8 6. As per para 7 of this Tribunal order, this finding is given by the Tribunal in that case that in the limited scrutiny case, the other issues are not supposed to be examined unless there is an approval from CIT/Pr. CIT and after the approval only, it can be wide open to examine issues other than issues raised for the limited scrutiny purpose. As per the assessment order, this is not the case of the AO that he has obtained the approval from the concerned CIT/Pr. CIT. It is also seen that disallowance under section 43B was not the issue for which the assessee's case was selected for limited scrutiny. Under these facts, in my considered opinion, even if some other issue comes to the notice of the AO, he cannot make any other addition / disallowance without obtaining prior approval from concerned CIT/Pr. CIT. I also feel that in the absence of such approval from the CIT/PCIT, even the voluntary offer of the assessee also cannot give the AO jurisdiction to make any other addition although such offer by the assessee can be a basis for the AO to seek approval of CIT/PCIT . On this aspect, argument was made before the learned CIT(A) also but in para 5 of his order, he has not decided this aspect. He has simply stated in this para ITA No. 1065/Bang/2019 that submission was made before him on the technical issue and the case was selected for scrutiny assessment under the CASS system of selection "limited type" and no prior approval was taken from the higher authorities, have been considered and found that the AO has rightly examined as to whether the cash deposit has been made from disclosed sources and whether cash in hand shown in the return of income is correct for which purpose the case was selected for scrutiny. But after observing so, he has not given any finding as to how the other addition made by the AO under section 43B of the IT Act, 1961 is justified under these facts. Respectfully following this Tribunal order cited by the learned AR of the assessee, I delete the disallowance made by the AO.” 7. Respectfully following the above decision of the coordinate Bench, we allow ground No.6 of the assessee. Therefore, we are not considering the other grounds. ITA No.506/Bang/2023 Page 8 of 8 8. In the result, the appeal of the assessee is partly allowed. Pronounced in the open court on this 30 th day of November, 2023. Sd/- Sd/- ( GEORGE GEORGE K. ) (LAXMI PRASAD SAHU ) VICE PRESIDENT ACCOUNTANT MEMBER Bangalore, Dated, the 30 th November, 2023. /Desai S Murthy / Copy to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR, ITAT, Bangalore. By order Assistant Registrar ITAT, Bangalore.
