Shri Vijay Haribhai Patel, Valsad V. The PCIT, Valsad, Valsad

ITA 96/SRT/2022

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 0401 (ITAT-SURAT)
• Duration Of Justice: 5 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 12-10-2022
• Assessment Year: 2017-2018
• Appeal Filed On: 25-04-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Revision of order; Audit objection; Assessment record; TDS
• Section: 68; 263; 139; 143(3); 142(1); 194C; 69A; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JM & DR. A. L. SAINI, AM आयकर अपील सं./ITA No.96/SRT/2022 Ǔनधा[रणवष[/Assessment Year: (2017-18) (Physical Court Hearing) Vijay Haribhai Patel, Patel Falia, Tithal Road, At & Post – Tithal, Valsad, Surat – 396001. Vs. The PCIT, Valsad (Appellant) (Respondent) èथायीलेखासं./जीआइआरसं./PAN/GIR No.: AEDPP1271R Assessee by Shri Rajesh Upadhyay, AR Respondent by Shri Ashok B. Koli, CIT-DR Date of Hearing 13/10/2022 Date of Pronouncement 18/10/2022 आदेश / O R D E R PER DR. A. L. SAINI, AM: Captioned appeal filed by the assessee, pertaining to Assessment Year (AY) 2017-18, is directed against the order passed by the Learned Principal Commissioner of Income Tax, Valsad (in short “ld. PCIT”], under section 263 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”), dated 27.03.2022. 2. Grounds of appeal raised by the assessee are as follows: “1. Ld. PCIT, Valsad has erred in law and on facts to pass revision order u/s 263 of the Act ignoring the fact and law that order of the ACIT, Valsad is neither erroneous nor prejudicial in the interest of the Revenue.” 3. Facts of the case, which can be stated quite shortly, are as follows. The Learned Principal Commissioner of Income Tax, (Ld. PCIT), called the assessment records of Shri Vijay Haribhai Patel, and it was noticed by ld PCIT that assessment order u/s 143(3) of the I.T. Act passed by the AO i.e. ACIT, Valsad Circle, Valsad, need to be revised under Section 263 of the I.T. Act 1961, as the AO has not verified the audit report submitted by the assessee and Page | 2 ITA 96/SRT/2022/AY.2017-18 Shri Vijay Haribhai Patel in which the auditor had pointed out that the interest on TDS not deducted on Rs.13,12,836/-, hence the same is disallowable. It was also observed by ld PCIT that there was a survey under section 133(A) of the Income Tax Act in which the assessee had declared Rs.40,00,000/- as undisclosed income for the year under consideration. It was noted that the assessee offered the undisclosed income under the head income from business or profession for taxation at normal rate. The AO has neither examined the issues emerging out of survey proceedings nor subsequent declaration of Rs.40,00,000/- by the assessee during the assessment proceedings. The AO has failed to go to the crux of the matter and pinpoint the issue on the basis of which the declaration during the course of survey operation was made by the assessee. Thus, as per ld PCIT, the income of Rs.40,00,000/- which was to be taxed under section115BBE of the Income Tax Act has been taxed under normal provisions and thus the assessment order is not only erroneous but also prejudicial to the interest of revenue. 4. The ld PCIT has further noted that assessee had filed his Return of Income on 29.10.2017 declaring total income of Rs.69,51,570/-. The assessee`s case was selected for Limited scrutiny under CASS to verify Share Capital and sale turnover. The assessment proceedings u/s 143(3) of the I.T. Act were completed on 21.12.2019 determining total income at Rs.69,60,747/-. In the assessment addition only of Rs.9177/-, on account of difference found in 26AS statement was made by the assessing officer. 5. In view of the above factual background, a show cause notice, dated 15.03.2022 was issued to the assessee. The contents of the Show-cause notice dated 15.03.2022 is reproduced below: “2. In this case the assesses had filed his Return of Income on 29.10.2017 declaring total income of Rs,69,51,570/-. The case was selected for limited scrutiny under CASS to verify Share Capital and sale turnover. The assessment proceedings u/s. 143(3) of the I.T. Act completed on 21.12.2019 determining total assessed income at Rs.69,60,747/- after making addition of Rs.9177/- on account of difference found in 26AS statement. Page | 3 ITA 96/SRT/2022/AY.2017-18 Shri Vijay Haribhai Patel 3. On verification of assessment records, it is noticed from the Form 3CD at point No. 34(a), (whether the assessee is required to deduct or collect tax as per the provisions of Chapter XVII-6 or Chapter XVII-BB, if yes, please furnish the details), in answer to this, there was a note written by the Auditor of the assessee that the interest on Ser. TDS not deducted Rs.13,12,836/- amount disallowable. It is noticed that the same is neither added back by the assessee in the computation nor it was verified or disallowed by the AO during the course of assessment proceedings. 4. Further, it is noticed that a survey action u/s,133(A) was carried out in the case of the assessee on 21.09.2016 and the assessee has declared Rs.40,00,000/- as undisclosed income for the A.Y.2017-18. The AO did not even mention this fact in the assessment order. Accordingly, the assessee had filed ITR and offered Rs.40,00,000/- under the head income from business or profession for taxation at normal rates. The income disclosed during survey can never be a Revenue head. Assessee was supposed to make complete disclosure as to whether it represents suppressed sales, expanses or suppressed stock. However, neither AO examined the same nor sought any explanation. No penalty was also initiated on this count. 5. According to Section 68 of the I.T. Act, where any sum is found credited in the books of an assessee maintained for any previous year and the assessee offers no explanation about the nature and source of the same are not satisfactory on the opinion of AO, the sum so credited may be charged to income tax as the income of the assessee of that previous year. For the reference the Taxation Laws Act 2016 amendment in the Section 115BBE for A.Y. 2017-18 w.e.f. 01.04.2017 is reproduced is as under: "To sum up the tax in the cases covered U/s 115BBE is worked out as under- 1. Tax on income U/S 115BBE 60% 2. Surcharge 25% of such tax 3. In case where income not included in return filed U/S 139 Penalty U/S 271AAC 10% of such tax. a) The amount of income Tax calculated on the income referred to in Sections 68, 69, 69A to 69D at the rate of 60% (plus surcharge @ 25% on such tax and cess, as applicable). Thus effectively the rate comes to 77.25% .If such income is reflected in the Return of Income furnished u/s 139. It may be noted that if such income is not reflected in the Return of income furnished u/s.139, then penalty of 10% on tax payable u/s 115BBE shall be imposed u/s.271AAC w.e.f. A.Y. 2017-18. In such a case the burden including penalty will come to 83.25%. b) The amount of income-tax with which the assessee would have been chargeable had his total income been reduced by the amount of income referred to is Sections 68, 69, 69A to 69D. c) Moreover, no deduction in respect of any expenditure or allowance (or Set off of any loss) shall be allowed to the assessee under any provision of the Page | 4 ITA 96/SRT/2022/AY.2017-18 Shri Vijay Haribhai Patel income tax Act in computing his income referred to in Sections 68, 69A to 69D. 6. From the facts as discussed above, it is clear that the above said issue has not been considered by the Assessing Officer in the assessment order passed u/s. 143(3) of the I.T. Act dated 21.12.2019. Thus the income has been under assessed. Considering the facts, as discussed above, it appears that the order u/s. 143(3) of the I.T. Act dated 21.12.2019 is not only erroneous but also prejudicial to the interest of Revenue. I, therefore intend to revise the order u/s. 263 of the Income Tax, 1961, to suitable modify the said order of the AO dated 21.12.2019. 7.In view of the above, you are, therefore, required to show-cause as to why the said assessment order is not set-aside by invoking the provisions of 263 of IT. Act, 1961. You are requested to submit your reply on or before 23.03.2022. Your reply must explain each entry separately and clearly establish why this order dated 21.12.2019 is neither erroneous nor prejudicial; to the interest of Revenue.” 6. However, the assessee has not furnished any explanation before the ld PCIT, therefore, ld PCIT noted that assessee has nothing further to state other than what has been submitted during assessment proceedings. After going through the assessment record and notice under section 263 of the I.T Act dated 15.03.2022, it was observed by ld PCIT that the AO completed the assessment without carrying out any verification whatsoever about the issue which are the subject matter of the present proceedings. The complete absence of inquiry on the part of the AO, makes the order of the AO erroneous as well as prejudicial to the interest of Revenue. Therefore, ld PCIT held that assessment order u/s 143(3) of the IT. Act, 1961 in the case of Shri Vijay Haribhai Patel for A.Y.2017-18, passed on 21.12.2019, by the Assessing Officer is erroneous in so far it is prejudicial to the interest of revenue. Therefore, ld PCIT directed the assessing officer to frame the assessment De novo after making proper enquiries on aforesaid issues. 7. Aggrieved by the order of the ld. PCIT, the assessee is in appeal before us. 8. Shri Rajesh Upadhyay, Learned Counsel for the assessee, begins by pointing out that assessee’s case was selected for limited scrutiny through Page | 5 ITA 96/SRT/2022/AY.2017-18 Shri Vijay Haribhai Patel CASS to examine the share capital/sale turnover. Having examined the limited issue of share capital/sale turnover, the assessing officer framed the assessment order. The assessing officer has also not converted the limited scrutiny case into full scrutiny case. However, ld PCIT has exercised his revisionary jurisdiction under section 263 of the Act on those issues which were not the subject matter of limited scrutiny. Therefore, order passed by ld PCIT should be quashed only on this plea. 9. Without prejudice to the above, the ld Counsel further argued that assuming (without accepting), ld PCIT has power to exercise his jurisdiction on those issues which were not the subject matter of limited scrutiny, then in that situation also, the order passed by the assessing officer is neither erroneous nor prejudicial to the interest of Revenue. The ld Counsel pointed out that assessing officer has raised the query by issuing notices under section 142(1) of the Act and in response to these notices, the assessee has replied to the assessing officer. The assessee submitted to the AO that in the Tax Audit Report, the amount of Rs.13,12,836/- has been shown wrongly and such amount has never been received by the assessee. About amount declared during the survey proceedings to the tune of Rs.40,00,000/-, the assessee has shown in its profit and loss account and paid the taxes thereon. The assessing officer after going through the reply of the assessee has applied his mind and took possible view and then after framed the assessment order. Therefore, such order passed by the assessing officer should not be erroneous, hence, ld Counsel prays the Bench that order passed by ld PCIT may be quashed. 10. However, on the other hand, Learned Departmental Representative (Ld. DR) for the Revenue submitted that although the assessee’s case was selected for limited scrutiny wherein the Assessing Officer was required to examine share capital and sales turnover only and the issue of tax deducted at source (TDS) was not there before the Assessing Officer. However, the ld. PCIT, under section 263 of the Act, has wide powers and the powers of ld. PCIT cannot restrict to the items or the issues of limited scrutiny. The ld. DR for the Page | 6 ITA 96/SRT/2022/AY.2017-18 Shri Vijay Haribhai Patel Revenue took us through Section 263 of the Act and stated that under section 263 of the Act, it is clearly mentioned that ld. PCIT 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 erroneous, in so far as it is prejudicial to the interest of the Revenue, he may after giving the assessee an opportunity of being heard may pass such order including the order of enhancing or modifying the order or directing the afresh assessment. At this juncture, the ld. CIT-DR also stated that the meaning of the record is defined in Point No. (b) below, Section 263(1) of the Act, which states that “record shall include and shall be deemed always to have included, all records relating to any assessment proceeding in this Act, available at the time of examination by the PCIT”. Therefore, ld. DR contended that the concept of limited scrutiny does not apply to the revision order passed by the ld PCIT under section 263 of the Act. 11. The Ld. DR also submitted that since the amount has been shown in the Tax Audit Report and the Tax Auditor has audited the books of accounts, as per information given by the assessee, therefore, ld. PCIT has rightly invoked his jurisdiction. The ld. DR also took us through the profit and loss account, submitted by the assessee, wherein the assessee has shown the amount disclosed during the course of survey to the tune of Rs.40,00,000/- and assessee has claimed expenses also which is not permitted. The entire amount disclosed to the tune of Rs.40,00,000/- during survey proceeding is assessable under section 68 of the Act and therefore assessee cannot claim the expenses out of such disclosed amount. However, the assessee has claimed the expenditure also, therefore, the ld. PCIT has rightly exercised his jurisdiction under section 263 of the Act. This way, the Ld. DR contended that the order of ld. PCIT may be upheld. 12. We have heard both the parties and carefully gone through the submissions put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the facts of the case Page | 7 ITA 96/SRT/2022/AY.2017-18 Shri Vijay Haribhai Patel including the findings of the ld. PCIT and other material brought on record. First of all, we have to see whether the requisite jurisdiction necessary to assume revisional jurisdiction is there existing before the Pr. CIT to exercise his power. For that, we have to examine as to whether in the first place the order of the Assessing Officer found fault by the Principal CIT is erroneous as well as prejudicial to the interest of the Revenue. For that, let us take the guidance of judicial precedents laid down by the Hon’ble Apex Court in Malabar Industries Ltd. vs. CIT [2000] 243 ITR 83(SC) wherein their Lordship have held that twin conditions needs to be satisfied before exercising revisional jurisdiction u/s 263 of the Act by the CIT. The twin conditions are that the order of the Assessing Officer must be erroneous and so far as prejudicial to the interest of the Revenue. In the following circumstances, the order of the AO can be held to be erroneous order, that is (i) if the Assessing Officer’s order was passed on incorrect assumption of fact; or (ii) incorrect application of law; or (iii)Assessing Officer’s order is in violation of the principle of natural justice; or (iv) if the order is passed by the Assessing Officer without application of mind; (v) if the AO has not investigated the issue before him; then the order passed by the Assessing Officer can be termed as erroneous order. Coming next to the second limb, which is required to be examined as to whether the actions of the AO can be termed as prejudicial to the interest of Revenue. When this aspect is examined, one has to understand what is prejudicial to the interest of the revenue. The Hon’ble Supreme Court in the case of Malabar Industries (supra) held that this phrase i.e. “prejudicial to the interest of the revenue’’ has to be read in conjunction with an erroneous order passed by the Assessing Officer. Their Lordship held that it has to be remembered that every loss of revenue as a consequence of an order of Assessing Officer cannot be treated as prejudicial to the interest of the revenue. When the Assessing Officer adopted one of the courses permissible in law and it has resulted in loss to the revenue, or where two views are possible and the Assessing Officer has taken one view with which the CIT does not agree, it cannot be treated as an erroneous order prejudicial to the interest of the Page | 8 ITA 96/SRT/2022/AY.2017-18 Shri Vijay Haribhai Patel revenue “unless the view taken by the Assessing Officer is unsustainable in law”. 13. Taking note of the aforesaid dictum of law laid down by the Hon’ble Apex Court, let us examine whether in assessee`s case the order passed by the assessing officer is erroneous as well as prejudicial to the interest of Revenue. We note that assessee has filed his return of income on 29.12.2017, declaring total income at Rs.69,57,570/-. Later on, the assessee`s case was selected for limited scrutiny to examine the share capital/sale turnover. However, Ld. PCIT has exercised his jurisdiction on following two different issues: (i) Non-deduction of TDS on Rs.13,12,836/- and (ii) Amount declared by assessee during the survey proceedings to the tune of Rs.40,00,000/- The above noted two issues were not the subject matter of limited scrutiny, that is during the assessment proceedings before the Assessing Officer, the TDS was not the subject matter of limited scrutiny and amount declared by assessee during the survey proceedings to the tune of Rs.40,00,000/-, was also not the subject matter of limited scrutiny. Since these matters were not the subject matter of limited scrutiny, therefore the Assessing Officer cannot ask questions from the assessee to explain these two items and assessee do not suppose to furnish its reply to the assessing officer, hence assessing officer can not express his opinion on these issues. We also note that assessing officer has not converted his limited scrutiny case into full scrutiny case, therefore assessing officer does not have power to examine these items, therefore order passed by the assessing officer should not be erroneous. For that reliance can be placed on the judgment of the Co-ordinate Bench of ITAT, Indore in the case of Sahita construction Company vs PCIT, in ITA No. 119/Ind/2021, order dated 07.02.2022, wherein it was held as follows: “5. At the outset, Ld. counsel for the assessee submitted that the case of the assessee was selected for limited scrutiny for verification of limited issues and the same were examined in detail by the ld. AO. The issue of verification of payment to contractors and application of provision of section 194C of the Act was not part of the limited scrutiny notice nor the case of the assessee was Page | 9 ITA 96/SRT/2022/AY.2017-18 Shri Vijay Haribhai Patel controverted into compulsory scrutiny and therefore there was no occasion for the Ld. AO to examine the issue of payment to contractors in light of provisions of section 194C of the Act. It was also stated by the Ld. Counsel for the assessee it has been consistently held by Coordinate Benches of Hon'ble I.T.A.T., that if assessee’s case is of limited scrutiny to examine particulars issues then the assessment order cannot be held to be erroneous and prejudicial to the interest of revenue u/s 263 of the Act for those issues for which Ld. AO is not empowered to conduct any verification/examination. To support this contention reliance placed on the following decisions: i. Agrawal Promoters vs. Pr. CIT in ITANo.1708/CHD/2017 (I.T.A.T., Chandigarh) ii. Mrs. Sonali Bhavsar vs. PCIT ITANo.742/Mum/2019 (I.T.A.T., Mumbai) iii. Rakesh Kumar vs. CIT ITANo.6187/Del/2015 (I.T.A.T., Delhi) iv. Baby Memorial Hospital vs. ACIT ITANo.420/Coch/2019 (I.T.A.T., Cochin) 6. Per contra ld. DR supported the order of Ld. Pr. CIT. 7. We have heard rival contentions, perused the records placed before us. Through this appeal assessee has challenged the revisionary power assumed by Ld. Pr. CIT u/s 263 of the Act. In the show cause notice u/s 263 of the Act it is stated that Ld. AO has not verified the issue of tax deducted at source on the payments made to contractors in light of the provisions of section 194C of the Act. 8. Now first we need to examine that “whether the ld. AO was required to examine the issue for payment to contractors and tax deducted thereon” Perusal of records shows that assessee’s case was selected for limited scrutiny through CASS for verification of “contract receipts/fees mismatch, sales turnover mismatch and tax credit mismatch”. The issue of payment to contractors and tax deducted thereon was never a part of reasons for the limited scrutiny. Therefore, there was no occasion for the Ld. AO to examine this issue for payment to contractors. It is well settled that in case of limited scrutiny matter Ld. AO has to work within the parameters observed by the Central Board of Direct Taxes; instruction dated 29.12.2015 and various other circular issued in this behalf. Since the assessee’s case was selected for limited scrutiny on certain issues and Ld. AO has examined these issues and framed the assessments and the issue of examination of payment to contractors was not a part of the limited scrutiny reasons, in our considered view, Ld. Pr. CIT erred in assuming jurisdiction u/s 263 of the Act and also erred in holding that assessment order is erroneous and prejudicial to the interest of revenue. 9. We find that our view is supported by the decision of Coordinate Bench Delhi in the case of Rakesh Kumar vs. CIT ITANo.6187/Del/2015 dated 20.12.2018 which has adjudicated the similar issue observing as follows: On the 2nd Issue the learned CIT has held that the AO has failed to verify the cash payment made for purchase of goods which are not in conformity with the provisions of section 40A (3) of the income tax act. Page | 10 ITA 96/SRT/2022/AY.2017-18 Shri Vijay Haribhai Patel It is apparent from the audit objection filed before us at page number 30 of the paper book that the case of the assessee was selected for the scrutiny to verify only the cash deposit in the bank account of the assessee. The issue before us is whether assessing officer has made any enquiry with respect to the above purchases. Though, learned assessing officer has obtained the explanation of the assessee with respect to the purchases made by the assessee in cash, whether the learned assessing officer is required to make any such enquiry or not is also an issue. This because of the reason that the learned assessing officer was only required to verify the cash deposit in the bank account of the assessee. In this respect instruction dated 29/12/2015 issued by the central board of direct taxes is very relevant. Apparently, the selection of the scrutiny in case of the assessee was also only on the parameters of AIR information. According to para number 2 (iii) the scope of enquiry should be limited only on that aspect only. In such cases, the assessing officer are also directed to confine themselves by questionnaire only to the specific issues pertaining to AIR data and further the wider scrutiny in those cases can only be conducted as per the guidelines and procedures stated in instruction number 7/2014. Therefore according to us when the learned assessing officer was not required to enquire on those issues such as purchases in cash more than specified sum, the learned CIT was not correct in holding that the learned assessing officer has not made due inquiries on that ground as the verification of the purchases exceeding specified limit in cash was not an issue before the assessing officer. Naturally, he should not have made any enquiry on that aspect. Even though the learned assessing officer has raised the specific questions on that aspect and verified the requisite detail. Therefore, it cannot be said that the order of the learned assessing officer is erroneous and prejudicial to the interest of the revenue on this ground also. 10. In view of this, according to us the order of the learned CIT in assuming jurisdiction under section 263 of the income tax act holding that the order of the learned assessing officer passed under section 143 (3) of the act is erroneous and prejudicial to the interest of the revenue is not correct. Accordingly, the order passed by the learned CIT is unsustainable. 10. In the above referred decision Tribunal has held that when the assessment is taken up for limited scrutiny, Ld. Pr. CIT/CIT cannot hold the assessment order as erroneous and prejudicial to the interest of revenue in respect of issue which was not a reason for selection of the case for limited scrutiny. Similar view also taken in the following decision: (i) The Deccan Paper Mills Co. Ltd. v. CIT [1013 & 1035/Pun/2014 - order dated 10.10.2017], ITAT Pune Benches. (ii) M/s.Aggarwal Promoters v. Pr.CIT [1708/Chd/2017 - order dated 16.04.2019] ITA Chandigarh Benches. (iii) Sanjeev Kr. Khemka v. Pr.CIT [1361/Kol/2016 - order dated 02.06.2017] ITAT Kolkata Benches. (iv) M/s. R & H Property Developer Pvt.Ltd. v. Pr.CIT [1906/Mum/2019 - order dated 30.07.2019] ITAT Mumbai Benches. Page | 11 ITA 96/SRT/2022/AY.2017-18 Shri Vijay Haribhai Patel (v) Mrs.Sonali Hemant Bhavsar v. Pr.CIT [742/Mum/2019 - order dated 17.05.2019] ITAT Mumbai Benches. 11. We, therefore, respectfully following the judicial precedents and the finding of Coordinate Bench Delhi in the case of Rakesh Kumar (supra) hold that Ld. Pr. CIT erred in assuming revisionary powers u/s 263 of the Act. The impugned order of Ld. Pr. CIT is quashed. Thus in our considered view assessment order dated 11.09.2017 u/s 143(3) of the Act is neither erroneous nor prejudicial to the interest of revenue and the same is restored. All the grounds raised by the assessee are allowed.12. In the result, Assessee’s appeal ITANo.119/Ind/2021 is allowed.” 14. From the above judgment of the Coordinate Bench of ITAT Indore in case of Sahita construction Company (supra), it is vivid that case of the assessee was selected for limited scrutiny for verification of limited issues (Share capital and Turnover) and the same were examined in detail by the assessing officer. The issue of TDS and amount disclosed during survey were never a part of reasons for the limited scrutiny. Therefore, assessing officer does not have any occasion to examine the same, hence order passed by the assessing officer is neither erroneous nor prejudicial to the interest of Revenue. 15. So far alternative argument of ld Counsel is concerned, we note that in the Tax Audit Report, the amount of Rs.13,12,836/- has been shown wrongly and during the assessment proceedings, the Assessing Officer has raised this issue, vide paper book page no.59, wherein Assessing Officer has issued show- cause notice under section 142(1) of the Act requiring the following details. The same is reproduced below to the extent useful for our analysis: “37. In form 3CD point no.34(a), there is a Note stating “Interest on Seri. TDS NOT deducted Rs.13,12,836/- amount Disallowed.” 16. In response to the notice under section 142(1) of the Act (supra), the assessee has submitted its reply to the assessing officer, which is placed in paper book page no. 67. The relevant portion of the reply is reproduced below: “37) During the year the Interest on Seri. TDS not Deducted of Rs.13,12,836/- was wrongly shown at our end in the paper book submitted by us. This mismatch of figure occurred as there was a system error. The audit report uploaded by us does not contain any such figure. Hence, we request you to consider this as mistake on our end and nullify the same. Page | 12 ITA 96/SRT/2022/AY.2017-18 Shri Vijay Haribhai Patel 38) Dering the year under assessment my assessees paid Rs.7,442/- Interest on TDS, we accept such as a definition.” Therefore, we note that during the assessment stage, the assessing officer has raised the question relating to TDS and assessee has replied and then after Assessing Officer has examined the same and applied his mind and passed the assessment order. 17. About the amount declared during the survey proceedings to the tune of Rs.40,00,000/-, the assessee has shown in its profit and loss account and paid the taxes thereon. The assessee claimed the indirect expenses against other regular business income and not against the amount declared in survey. The profit and loss accounts were submitted before the assessing officer. The Assessing Officer has examined the profit and loss account and applied his mind and took the possible view and then after framed the assessment order, hence such order passed by the Assessing Officer, after making detained inquiry, should not be erroneous. 18. We do not agree with the stand taken by Ld. DR for the Revenue to the effect that Ld. PCIT has unlimited power under section 263 of the Act to revise the order passed by the Assessing Officer, in case of limited scrutiny cases. In limited scrutiny cases, the assessing officer does not get the opportunity to examine other issues which are not part of limited scrutiny. Moreover, the Assessing Officer has not converted the limited scrutiny into full scrutiny by taking permission from the higher Income Tax Authorities. The ld PCIT can exercise the supervisory power under section 263 only on the issues examined by the assessing officer and therefore the definition of the term “record” in clause (b) of Explanation 1 of section 263, means the “record” on which assessing officer has expressed his opinion. Hence, the plea taken by the ld DR for the Revenue, is not acceptable. 19. In view of the facts of the case and judicial pronouncements relied upon, it is well established that the impugned order passed u/s. 143(3) of the Act dated 21.12.2019, was passed by assessing officer, after calling for relevant Page | 13 ITA 96/SRT/2022/AY.2017-18 Shri Vijay Haribhai Patel information and after detailed examination of the same. The Assessing Officer has passed the assessment order after calling for details on the issue and after considering the reply and documents and after verification of the same and after due application of mind passed the assessment order, so it cannot be termed as erroneous and prejudicial to the interest of the revenue. So, the Ld. PCIT’s finding fault, with the order of the Assessing Officer is erroneous as well as prejudicial to the interest of revenue, on account of lack of inquiry, has to fail. Based on these facts and circumstances, we quash the order dated 27.03.2022 passed by the ld PCIT under section 263 of the Act. 20. In the result, the appeal filed by the assessee is allowed. Order is pronounced in the open court on 18/10/2022 by placing the result on the Notice Board. Sd/- Sd/- (PAWAN SINGH) (Dr. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER lwjr /Surat Ǒदनांक/ Date: 18/10/2022 SAMANTA Copy of the Order forwarded to 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // TRUE COPY // Assistant Registrar/Sr. PS/PS ITAT, Surat