M/s. Rudra Construction, Vadodara V. The Dy.CIT, Circle-1(2), Vadodara

ITA 803/AHD/2023

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 2423 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-05-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 12-02-2024
• Assessment Year: 2014-2015
• Appeal Filed On: 12-10-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: A.K.KHANDELWAL
• Keywords: TDS; Set aside
• Section: 68; 43B; 37(1); 250; 143(2); 13

Judgement Text

आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरणआयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण,अहमदाबाद यायपीठ अहमदाबाद यायपीठअहमदाबाद यायपीठ अहमदाबाद यायपीठ ‘SMC’ अहमदाबाद। अहमदाबाद।अहमदाबाद। अहमदाबाद। IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD ] ] BEFORE SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA No.803/Ahd/2023 Asstt.Year :2014-15 Rudra Construction 806, Ozone Opp: Sarabhai Campus Wadi-Wadi, Baroda. PAN : AAHFR 2616 J Vs DCIT, Cir.1(2) Baroda. (Applicant) (Responent) Assessee by : Shri A.K. Khandelwal, AR Revenue by : Shri N.J. Vyas, Sr.DR सुनवाई क तारीख/D a t e o f He a r in g : 13 / 0 2 / 2 0 2 4 घोषणा क तारीख /D a t e o f P r o no u nc e me nt : 1 0 / 0 5 / 2 0 2 4 आदेश आदेशआदेश आदेश/O R D E R The present appeal has been filed by the assessee against order passed by the Commissioner of Income Tax(Appeals), National Faceless Appeal Centre, Delhi [in short referred to as ld.CIT(A)] under section 250 of the Income Tax Act, 1961 dated 31.7.2023 pertaining to Asst.Year 2014-15. 2. The grounds on which the present appeal has been filed, as mentioned in appeal memo read as under: “1. In law, on the facts and in the circumstances of the case, the Ld.CIT(A) is not justified confirming the addition of Rs.5,00,000/- made u/s 68 of the IT. Act,1961 in spite of the case was selected for limited scrutiny and the scope of addition was beyond the power confirmed vide CBDT's Instruction No.7/2014and20/2015. 2. In law, on the facts and in the circumstances of the case, the Ld.CIT(A) is not justified confirming the addition of Rs.6,25,000/- made u/s 43B of the I.T..Act,1961 in spite of the case was selected for limited scrutiny and the scope of addition was beyond the power confirmed vide CBDT's Instruction No.7/2014 and 20/2015. ITA No.803 /Ahd/2024 2 3. In law, on the facts and in the circumstances of the case, the Ld.CIT(A) is not justified confirming the addition of Rs.5,555/- u/s 37(1) of the IT. Act, as the interest on late payment of TDS is compensatory in nature and allowable as interest expenses. The addition is also beyond the power confirmed vide CBDT's Instruction No.7/2014 and 20/2015. 4. The Ld. CIT(A) is not justified in concluding that the appellant has not respond the notices issued u/s 250 of the Act. The appellant has respond the notice issued on 22.06.2023. 3. The present appeal was first heard at length. On 16.1.2024 ,the delay in filing the present appeal by 14 days was condoned by a speaking order. Also the arguments of the ld.counsel for the assessee was noted to the effect that the assessment order passed by the AO was beyond his powers, since he travelled beyond the scope of issues for which the assessment was taken up for a limited scrutiny and made additions thereof. Noting this argument of the ld.counsel for the assessee, in support of which, the ld.counsel for the assessee had cited various case laws, the ld.DR was directed to produce records of the assessment before me so as to verify the pleadings made by the ld.counsel for the assessee before me to the effect that the assessment was limited scrutiny assessment for examining specific issues and the AO had gone beyond the scope of limited scrutiny to frame assessment in the present case, making the additions on issues, on which the limited scrutiny was not prescribed. 4. The detailed order-sheet entry to this effect was made and noted on 16.1.2024 which is reproduced hereunder: “The assessee has filed the present appeal before us. At the outset, it is stated that appeal was time barred by 14 days. He stated that the delay was on account of the fact that the appeal was to be filed on or before 30.9.2023, but the AR/CAs was busy in time barring audit work. The Id.DR had no objection to the small delay of 14 days in filing the present appeal. Accordingly, considering smallness of the delay and bona fide reasons given by the assessee for the same, the delay in filing present appeal by 14 days is condoned. Order was pronounced in the Open Court. Thereafter, the Id.counsel for the assessee submitted that before the Id.CIT(A) he had raised the issue of assessment framed beyond the scope of the powers of the AO, since it was limited scrutiny assessment and the additions were made ITA No.803 /Ahd/2024 3 beyond the scope of limited scrutiny. He contended that the Id.CIT(A) had not dealt with this issue raised before him. He also pointed out from the documents filed before us, being a notice issued under section 143(2) of the Act, stating that the assessment was limited scrutiny assessment for the purpose of examining two issues (i) of sales turnover mismatch, and (ii) increase in capital. He also pointed out from the assessment order that the AO did not make any addition on account of the same, but in fact travelled beyond the scope of limited scrutiny and made additions/disallowance pertaining to the claim of interest on TDS, royalty expenses, unexplained unsecured loans and disallowance under section 40 (a) (ia) of the Act. He drew our attention to several orders/decision of the ITAT holding the assessment orders passed beyond the scope of the limited scrutiny to be null and void. The Id.DR on the other hand, sought ti.me to seek a report of the AO on the aspect of travelling beyond the scope of limited scrutiny in the assessment framed. The Id.DR was also asked to produce records of the case before us on the next date of hearing. Appeal, accordingly, stands adjourned to 07/02/2024, and to continue as part-heard with the above directions to the Id.DR.” 5. The case was thereafter adjourned to 7.2.2024, kept as part- heard to seek response of the ld.DR on the same. Subsequently, the case finally heard on13.2.2024 when the ld.DR filed a letter of the AO on the directions of the ITAT, as noted above. The contents of the same are reproduced hereunder: ITA No.803 /Ahd/2024 4 6. As is evident from the report of the AO, it is an admitted fact that the present case was selected for limited scrutiny under CASS for verification of two issues viz. (i) mismatch in sales turnover reported in audit report and ITR, and (ii) substantial increase in capital in a year. The AO further states in its report that no permission for conversion of limited scrutiny to complete scrutiny is available on record. Having so noted in the proceedings before me, we shall now proceed to adjudicate the issue before me. 7. As is evident from the grounds raised before me, the assessee has challenged the addition made to his income by the AO and confirmed by the ld.CIT(A) on account of – (i) addition made under section 68 of the Act of Rs.5.00 lakhs, and (ii) addition made of Rs.6,25,000/- under section 43B of the Act, and (ii) addition confirmed of Rs.5,555/- under section 37(1) of the Act. All the additions, besides being challenged on merits, have also been challenged for the reasons that they were beyond the scope of power of the AO. The reasons for that as stated above, the case was selected for limited scrutiny assessment and scope of addition made in the preset case on the above issues was beyond the power of the AO, being on issues not listed for limited scrutiny purpose. Admittedly, the case was selected for scrutiny assessment for issues as per the report of the AO also, as reproduced above, viz. (i) mismatch in sales turnover reported in audit report and ITR, and (ii) substantial increase in capital in a year. Whereas, the additions have been made on issues which are totally different and beyond the scope of limited scrutiny ITA No.803 /Ahd/2024 5 i.e. (i) under section 68 of the Act of Rs.5.00 lakhs, and (ii) addition made of Rs.6,25,000/- under section 43B of the Act, and (iii) addition confirmed of Rs.5,555/- under section 37(1) of the Act. The AO in his report before me does not dispute the fact that the AO having travelled beyond the scope of limited scrutiny, while framing the assessment in the present. It is also admitted in his report filed before me that no permission for conversion of limited scrutiny to complete scrutiny is available on record. 8. In view of the above, there is no doubt that the assessment framed in the present case being beyond the scope and powers of the AO, is invalid. The ITAT in a number of decisions cited before me has held that the assessment order passed by the AO exceeding his jurisdiction, any inquiry into the issue beyond the scope of limited scrutiny, is bad in law and liable to quashed as “nullity”. i) Kintukumar Ambalal Patel Vs. DCIT, ITA No.348/Ahd/2019 order dated 31.5.2022; ii) Sukhdham Infrastructure LLP Vs. ITO, ITA No. 2611/Kol/2019 dated 23.2.2023; iii) Urban Improvement Co. P.Ltd. Vs. ITO, New Delhi, ITA No.7496/Del/2019 dated 7.2.2020; iv) CIT Vs. Smt. Padmavathi, (2020) 120 taxmann.com 187 (Mad); v) Shri Kumjal Chandrakant Vs. ITO, ITA No.2183/Ahd/2018 order dated 22.2.2021; vi) Rajnikant S. Bhalavat Vs. ACIT, ITA No.495/Ahd/2019 dated 23.12.2022 In view of the above, the assessment order passed in the present case, is held to be bad in law, and therefore, set aside. All the additions ITA No.803 /Ahd/2024 6 made in the present case, which are challenged in the above grounds, are directed to be deleted for the above reasons. All the grounds are dismissed. 9. In the result, the appeal of the assessee is allowed. Order pronounced in the Court on 10 th May, 2024 at Ahmedabad. Sd/- (ANNAPURNA GUPTA) ACCOUNTANT MEMBER Ahmedabad, dated 10/05/2024