Smt. Trushaba C. Manek L/H. of Late. Shri Chandrasinh P. Manek (Properitor of Dwarkesh Enterprise) , Okha, Dist. Jamnagar V. The Pr. CIT, Jamnagar, Jamnagar

ITA 91/RJT/2021

AI Insights

The case involves Mrs. Trushaba C. Manek, the legal heir of the late Shri Chandrasinh P. Manek, who appealed against the order of the Principal Commissioner of Income-Tax, Jamnagar. The appeal was directed against the revisionary order passed under Section 263 of the Income-tax Act, 1961, for the Assessment Year 2015-16. The main contention was that the notice under Section 263 was issued in the name of a deceased person, and the issues raised were beyond the scope of the limited scrutiny under which the assessment was conducted. The Tribunal found that the revisionary powers were invoked on issues not covered by the limited scrutiny, leading to the quashing of the PCIT's order.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 301463 (ITAT-RAJKOT)
• Duration Of Justice: 2 year(s) 2 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 21-08-2023
• Assessment Year: 2015-2016
• Appeal Filed On: 06-06-2021
• Other Referred Cases: Principal Commissioner of Income-tax v. Naga Dhunseri Group Ltd., Principal Commissioner of Income-tax v. Shark Mines and Minerals (P.) Ltd., Dr. Chaitnya B. Nagori's Institute for infertility & IVF vs. Principal Commissioner of Income Tax-4, Ahmedabad, The Deccan Paper Mills Co Ltd vs. The Commissioner of Income Tax IV, Pune, M/s 1. & 11. Property vs. Pr. CIT-11, Mumbai, Sanjeev Kr. Khemka va. Pr. CIT, Sonali Hemant Bhavsar v. Pr. CIT-29, Mumbai, M/s Chengmari Tea Co. Ltd. Vs. ACIT Kolkata, Sahita Construction Company vs Pr. CIT, Rajani Venkata Naga Annavarapu Narayana Vs PCIT-20, M/s. Duckwoo Autoind Pvt. Ltd. vs The Principal Commissioner of Income Tax-1, Chennai, Shri Arun Kumar Palawat vs. PCIT, Jaipur-1, Nagji Keshavji Rita vs. Pr.CIT, Mumbai
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Earning of tax free income
• Section: 263; 143(3); 14A; 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, RAJKOT BENCH, RAJKOT BEFORE MRS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND MRS. MADHUMITA ROY, JUDICIAL MEMBER (through web-based video conferencing platform) ITA No. 91/Rjt/2021 िनधा榁रणवष榁/Assessment Year: 2015-16 Mrs. Trushaba C. Manek, L/h. of Late Shri Chandrasinh P. Manek (Prop. Of Dwarkesh Enterprise), Bazar Lane, Raghunath Road, Okha, Gujarat PAN : AIJPM 0949 F Vs. Principal Commissioner of Income-tax, Jamnagar अपीलाथ牸 अपीलाथ牸अपीलाथ牸 अपीलाथ牸/ (Appellant) 灹瀄 灹瀄 灹瀄 灹瀄 यथ牸 यथ牸यथ牸 यथ牸/ (Respondent) Assessee by : Shri Dushyant Maharshi, AR Revenue by : Shri Shramdeep Sinha, CIT-DR सुनवाई क琉 तारीख/Date of Hearing : 22.08.2023 घोषणा क琉 तारीख /Date of Pronouncement: 29.08.2023 आदेश आदेशआदेश आदेश/O R D E R PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER: This appeal filed by the assessee is directed against the order passed by the learned Principal Commissioner of Income-Tax, Jamnagar [hereinafter referred to as “PCIT”] dated 30.03.2021, in exercise of his revisionary powers under Section 263 of the Income-tax Act, 1961 [hereinafter referred to as “the Act”], for the Assessment Year 2015-16. 2. The assessee has raised the following grounds:- “1. Hon'ble Pr. CIT had issued notice u/s. 263 in the name of deceased person, therefore notice issued u/s. 263 is not valid in the eyes of law and hence required to be quashed. 2. Hon'ble Pr. CIT, Jamnagar has erred in law and in facts in invoking his revisionary powers u/s. 263 without having valid jurisdiction for addition of income u/s. 2(24)(x) r.w.s. 36(1)(va) of the Act for EPF for Rs. 8,35,800/- whereas case was selected for Limited Scrutiny on the following grounds: 2 ITA No. 91/Rjt/2021 Trushaba C. Panek, L/h of Late Shri Chandrasinh P. Panek Vs. PCIT. AY : 2015-16 a) Contract Receipts/Fees Mismatch b) Sales Turnover Mismatch c) Tax Credit Mismatch Hence, revision powers u/s. 263 of the IT Act cannot be invoked on the issues other than the limited grounds under limited scrutiny which were subject matter of Assessment Order u/s. 143(3) dated 31.08.2017. 3. Without prejudice to above ground, Hon'ble Pr. CIT, Jamnagar has erred in law and in facts in invoking his revisionary powers u/s. 263 in this case where there were two views possible for allowability of EPF contribution 36(1)(va) of the Act and particularly when the Ld. AO while framing the assessment u/s 143(3) had considered the favourable view and accepted the returned income.” 3. The first argument raised by the ld. Counsel for the assessee was that that there was no error in the assessment order since the assessment was a limited scrutiny assessment and the error noted by the ld. PCIT was beyond the scope of limited scrutiny of the AO. In this regard, he drew our attention to the notice issued to the assessee, during the assessment proceedings, under Section 143(2) of the Act mentioning that it is a limited scrutiny assessment for examination of the following issues:- a) Contract Receipts/Fees Mismatch b) Sales Turnover Mismatch c) Tax Credit Mismatch 3.1 He further pointed out that the error noted by the ld. PCIT in the assessment order was that the employees’ contribution of EPF deposited late by the assessee were not disallowed by the Assessing Officer as per the provisions of Section 36(1)(va) r.w.s 2(24)(x) of the Act. Ld. Counsel for the assessee pointed out that this issue was not within the purview of examination of the Assessing Officer in the limited scrutiny assessment and, therefore, the Assessing Officer having not made any disallowance on this score, there was no error in his order. In this regard, he drew our attention to the following 3 ITA No. 91/Rjt/2021 Trushaba C. Panek, L/h of Late Shri Chandrasinh P. Panek Vs. PCIT. AY : 2015-16 decisions of both the Hon’ble High Courts and Co-ordinate Benches of the ITAT holding that where an error noted by the ld. PCIT in the assessment order related to an issue which was beyond the scope of limited scrutiny for which the assessment was picked up, the revisionary order was not sustainable in law and liable to be quashed:- “a) Hon'ble High Court of Calcutta in the case of Principal Commissioner of Income-tax v. Naga Dhunseri Group Ltd. [2023] 146 taxmann.com 424 (Calcutta) has held in Para 6 that where Principal Commissioner invoked revisionary proceedings on grounds that disallowance under section 14A in respect of exempt income was not considered by AO even when assessee's case was selected for limited scrutiny to verify introduction of capital in NBFC/investment companies which was linked to such disallowance, since issue of disallowance under section 14A was not an issue selected for limited scrutiny. Principal Commissioner could not make a roving enquiry in guise of a limited scrutiny and thus, impugned revisionary order was to be quashed. b) Hon'ble High Court of Orissa in the case of Principal Commissioner of Income-tax v. Shark Mines and Minerals (P.) Ltd. [2023] 151 taxmann.com 71 (Orissa) has held in Para 10 that It is not open to Commissioner while exercising power under section 263 to find fault with assessment order on ground of its being erronesous on an issue not covered by limited scrutiny when Assessing Officer could not have possibly examined such issue. c) Hon'ble ITAT Ahmedabad Bench in the case of Dr. Chaitnya B. Nagori's Institute for infertility & IVF vs. Principal Commissioner of Income Tax-4, Ahmedabad in I.T.A. No. 377/Ahd/2020; d) Hon'ble ITAT Pune Beach 'B' in the case of The Deccan Paper Mills Co Ltd vs. The Commissioner of Income Tax IV, Pune in ITA Hos 1013& 1635/PUN/2014; e) Hon'ble ITAT Mumbai Bench 'D' in the case of M/s 1. & 11. Property vs. Pr. CIT-11, Mumbai in ITA No. 1906/Mum/2019; f) Sanjeev Kr. Khemka va. Pr. CIT in ITA No. 1361/Kol/2016 A.Y. 2011-12 dated 02.06.2017; g) Sonali Hemant Bhavsar v. Pr. CIT-29, Mumbai in ITA No. 742/M/2019 h) M/s Chengmari Tea Co. Ltd. Vs. ACIT Kolkata in ITA V. No.812/Kol/2019 4 ITA No. 91/Rjt/2021 Trushaba C. Panek, L/h of Late Shri Chandrasinh P. Panek Vs. PCIT. AY : 2015-16 i) Sahita Construction Company vs Pr. CIT (ITAT Indore) in ITA No. 119/Ind/2021 j) Rajani Venkata Naga Annavarapu Narayana Vs PCIT-20 (ITAT Delhi) in ITA No. 1817/Del/2020 k) M/s. Duckwoo Autoind Pvt. Ltd. vs The Principal Commissioner of Income Tax-1, Chennai in ITA No.232/Chny/2021 l) Shri Arun Kumar Palawat vs. PCIT, Jaipur-1 in ITA No. 144/JP/2022. m) NagjiKeshavji Rita vs. Pr.CIT, Mumbai in I.T.A. No. 612/Mum/2021. 4. The ld. DR was unable to controvert both the factual contentions of the assessee that the assessment in the present case was a limited scrutiny assessment and the error noted by the ld. PCIT in the assessment order was beyond the scope of limited scrutiny; nor was he able to controvert the proposition of law laid down by the various courts in this regard as pointed out by the ld. Counsel for the assessee before us that there cannot be any error in the assessment framed in limited scrutiny on issues which were beyond the scope of limited scrutiny. In view of the above, we are in complete agreement with the ld. Counsel for the assessee that the impugned order passed by the ld. PCIT under Section 263 of the Act is not sustainable in law, and it is, therefore, directed to be quashed. 5. In the result, the appeal of the assessee is allowed. Order pronounced in the open Court on 29/08/2023 at Ahmedabad. Sd/- Sd/- (MADHUMITA ROY) JUDICIAL MEMBER (ANNAPURNA GUPTA) ACCOUNTANT MEMBER Ahmedabad; Dated 29/08/2023 **bt 5 ITA No. 91/Rjt/2021 Trushaba C. Panek, L/h of Late Shri Chandrasinh P. Panek Vs. PCIT. AY : 2015-16 आदेश क琉 灹ितिलिप अ灡ेिषत/Copy of the Order forwarded to : 1. अपीलाथ牸 / The Appellant 2. 灹瀄यथ牸 / The Respondent. 3. संबंिधत आयकर आयु猴 / Concerned CIT 4. आयकर आयु猴)अपील (/ The CIT(A)- 5. िवभागीय 灹ितिनिध ,आयकर अपीलीय अिधकरण/DR,ITAT, Rajkot, 6. गाड榁 फाईल /Guard file. आदेशानुसार/ BY ORDER, TRUE COPY सहायक पंजीकार (Asstt. Registrar) आयकर अपीलीय अिधकरण ITAT, Rajkot 1. Date of dictation ......24.08.2023........ 1. Date on which the typed draft is placed before the Dictating Member ..25.08.2023.......... 2. Other Member...28.08.2029.................. 3. Date on which the approved draft comes to the Sr.P.S./P.S......28.08.2029.................... 4. Date on which the fair order is placed before the Dictating Member for pronouncement...29.08.2029....... 5. Date on which the fair order comes back to the Sr.P.S./P.S......29.08.2029............. 6. Date on which the file goes to the Bench Clerk...29.08.2029.......... 7. Date on which the file goes to the Head Clerk....... 8. The date on which the file goes to the Assistant Registrar for signature on the order............ 9. Date of Despatch of the Order..................