Shri Narendrakumar Rameshbhai Patel, Mehsana V. The DCIT, Mehsana Circle., Mehsana

ITA 981/AHD/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 2313 (ITAT-AHMEDABAD)
• Duration Of Justice: 9 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 10-01-2020
• Assessment Year: 2015-2016
• Appeal Filed On: 06-06-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Business income; Depreciation; Competent authority; Capital receipt; Set aside; FORM 26AS
• Section: 54; 143(3); 54F; 142(1); 143(2)

Judgement Text

, B IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMEBR AND SHRI WASEEM AHMED, ACCOUNTANT MEMB ER ./ I.T.A. NO. 981/AHD/2019 ( ASSESSMENT YEARS : 2015-16) SHRI NARENDRAKUMAR RAMESHBHAI PATEL 21, SILICON HOMES, B/H. KALAPINAGAR, RADHANPUR ROAD, MEHSANA / VS. DY. COMMISSIONER OF INCOME TAX MEHSANA CIRCLE, MEHSANA ./ ./ PAN/GIR NO. : AJCPP7450L ( APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI MEHUL THAKKAR, A.R. / RESPONDENT BY : SHRI SAMIR TEKRIWAL, CIT.D.R. DATE OF HEARING 28/01/2020 !'# / DATE OF PRONOUNCEMENT 20/03/2020 / O R D E R PER BENCH: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), GANDHINAGAR (CIT(A) IN SHORT) DATED 11/04/2019 RELEVANT TO ASSE SSMENT YEAR (AY) 2015-16. 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APP EAL: 1. THE LD. AO HAS ERRED IN LAW IN EXPANDING THE LIMITED SCRUTINY TO A COMPLETE SCRUTINY BY GOING BEYOND THE ISSUES OF VERIFICATION WHICH WERE MERE TECHNICAL ITA NO. 981/AHD/19 [SHRI NARENDRAKUMAR R. PATEL VS. DCIT] A.Y. 2015-16 - 2 - ISSUES OF MISMATCH AND EXPANDING THE SCOPE TO CHANG ING THE HEAD OF INCOME WITHOUT TAKING NECESSARY APPROVALS OF HIGHER AUTHOR ITY AS REQUIRED BY THE INSTRUCTIONS GIVEN BY CBDT. THE LD. CIT(A) GANDHINA GAR HAS ALSO ERRED IN CONFIRMING THE ACTION OF THE A.O., WITHOUT PROPERLY APPRECIATING THE TOTALITY OF THE FACTS OF THE CASE. 2. THE LD. AO HAS ERRED IN LAW AND ON FACTS O F THE CASE IN NOT CONSIDERING ALL THE FACTS OF THE CASE CUMULATIVELY AS IS REQUIRED BY TH E LAW AND TESTS LAID DOWN BY - ' VARIOUS JUDICIARIES, TO COME TO THE CONCLUSION OF THE TRANSACTION BEING AN ADVENTURE IN THE NATURE OF TRADE AND CONSEQUENTLY E RRED IN ASSESSING THE TOTAL INCOME AT RS. 3,57,65,52Q/- AGAINST THE RETURN INCO ME OF RS. 1,50,G4,250/-. THE LD. CIT(A) GANDHINAGAR HAS ALSO ERRED IN CONFIR MING THE ACTION OF THE A.O. WITHOUT PROPERLY APPRECIATING THE TOTALITY OF THE FACTS OF THE CASE. 3. THE LD.AO HAS ERRED IN LAW AND FACTS OF TH E CASE IN CONSIDERING CAPITAL GAIN INCOME OF RS.1,48,86,543/- EARNED AS INCOME UNDER H EAD BUSINESS INCOME BY CONSIDERING TRANSACTION OF SALE OF LAND PLOT AS ADV ENTURE IN NATURE OF BUSINESS AND RECALCULATE AT RS. 3,54,87,S13/-. LD. CIT(A) GA NDHINAGAR HAS ALSO ERRED IN CONFIRMING THE ACTION OF THE A.O. WITHOUT PROPERLY APPRECIATING THE TOTALITY OF THE FACTS OF THE CASE. 4. THE LD. AO HAS ERRED IN LAW AND ON FACTS I N NOT PROPERLY APPRECIATING AND CONSIDERING VARIOUS SUBMISSIONS, EVIDENCES AND SUPP ORTING PLACED ON RECORD DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS AND NOT PROPERLY APPRECIATING VARIOUS FACTS AND LAW IN ITS PERSPECTIVE. LD. CIT(A ) GANDHINAGAR HAS ALSO ERRED IN CONFIRMING THE ACTION OF THE A.O. WITHOUT PROPER LY APPRECIATING THE TOTALITY OF THE FACTS OF THE CASE. 5. THE LD. AO HAS ERRED IN FACTS AND LAW IN D ISALLOWING PARTIAL CLAIM OF DEDUCTION U/S 54F OF THE ACT AMOUNTING TO RS. 30,26,486/- BY CONSIDERING IT TO BE NOT A PART OF 'HOUSE'. LD. CIT(A) GANDHINAGAR HAS ALSO ER RED IN CONFIRMING THE ACTION OF THE A.O. WITHOUT PROPERLY APPRECIATING THE TOTAL ITY OF THE FACTS OF THE CASE. 3. THE FIRST ISSUE RAISED BY THE ASSESSEE IS THAT T HE LEARNED CIT-A ERRED IN CONFIRMING THE ORDER OF THE AO BY EXPANDING THE SCO PE OF LIMITED SCRUTINY ASSESSMENT WITHOUT NECESSARY APPROVAL. 4. BRIEF FACT IS THAT THE ASSESSEE IS AN INDIVIDUAL AND CLAIMED TO HAVE EARNED INCOME UNDER THE HEAD CAPITAL GAIN AND OTHER SOURCE S. THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION ALONG WITH 4 OTHER CO-OWNE RS SOLD A PIECE OF LAND ADMEASURING 4234 SQUARE METERS IN WHICH HE HELD HIS SHARE FOR 30%. THE ASSESSEE DECLARED CAPITAL OF RS. 1,48,86,543/- AFTE R CLAIMING DEDUCTION OF RS. 2,03,58,578/- UNDER SECTION 54 OF THE ACT. ITA NO. 981/AHD/19 [SHRI NARENDRAKUMAR R. PATEL VS. DCIT] A.Y. 2015-16 - 3 - 5. SUBSEQUENTLY, THE RETURN OF THE ASSESSEE WAS SEL ECTED FOR LIMITED SCRUTINY AND THE NOTICE WAS ISSUED UNDER SECTION 14 3(2) OF THE ACT FOR EXAMINING THE ISSUES AS DETAILED UNDER: (I) SALE OF PROPERTY MISMATCH (II) MISMATCH IN INCOME/CAPITAL GAIN ON SALE OF LAND OR BUILDING (III) DEDUCTION CLAIMED UNDER THE HEAD CAPITAL GAIN (IV) INCREASE IN CAPITAL DURING THE PROCEEDINGS THE AO OBSERVED FROM THE SUB MISSION OF THE ASSESSEE AND INFORMATION RECEIVED FROM THE REVENUE AUTHORITY THAT THE IMPUGNED LAND WAS PURCHASED BY THE ASSESSEE ALONG WITH CO-OWNER A S AGRICULTURAL LAND BEARING 3 DIFFERENT SURVEY NUMBERS. LATER ON SUCH L AND WAS CONVERTED AS NA AND DIFFERENT SURVEY NUMBERS MERGED AS SINGLE SURVE Y NO. THEREAFTER THE ASSESSEE AND CO-OWNER MADE APPLICATION FOR PLOTTING OF THE LAND WHICH WAS APPROVED. THE ASSESSEE WITH CO-OWNERS FURTHER INITI ATED RESIDENTIAL AS WELL AS COMMERCIAL BUILDING PROJECT ON THE IMPUGNED LAND. A CCORDINGLY THE AO HELD THAT THE ACTIVITY CARRIED OUT BY THE ASSESSEE ALONG WITH OTHER CO-OWNER AMOUNT TO BUSINESS ACTIVITY. THUS THE AO HELD THE IMPUGNED SA LE AS BUSINESS RECEIPT AND DISALLOWED THE DEDUCTION CLAIMED UNDER SECTION 54 O F THE ACT. 6. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE L EARNED CIT (A). 7. THE ASSESSEE BEFORE LEARNED CIT (A) SUBMITTED TH AT THE AO HAS TRAVELLED BEYOND THE JURISDICTION PROVIDED UNDER THE LIMITED SCRUTINY. THE NOTICE UNDER SECTION 143(2) WAS ISSUED ONLY FOR THE PURPOSE OF I NVESTIGATION OF MISMATCH OF INCOME WITH FORM 26AS. BUT THE AO CONVERTED THE LIM ITED SCRUTINY INTO COMPLETE SCRUTINY AND HELD THE CAPITAL RECEIPT AS BUSINESS R ECEIPT WITHOUT OBTAINING ANY APPROVAL FROM THE HIGHER AUTHORITY. THE AO IN THIS PROCESS VIOLATED THE NOTIFICATION ISSUED BY THE CBDT BEARING NO. 7/2014 DATED 26 TH SEPT, 2014 AND NOTIFICATION NO 20/2015 DATED 29 TH DEC, 2015. ACCORDINGLY THE ASSESSEE PRAYED TO THE LEANED CIT (A) TO HOLD THE ASSESSMENT AS VOI D AND BAD IN LAW. ITA NO. 981/AHD/19 [SHRI NARENDRAKUMAR R. PATEL VS. DCIT] A.Y. 2015-16 - 4 - 8. THE LD. CIT-A CALLED FOR THE REMAND REPORT FROM THE AO WHO IN TURN SUBMITTED THAT THE CONTENTION OF THE ASSESSEE IS UN ACCEPTABLE AS THE NOTICE WAS ISSUED WITH RESPECT SALE OF PROPERTY AND ALL THE IN VESTIGATION WAS CARRIED OUT DURING THE PROCEEDINGS ONLY RELATED TO SUCH SALE OF PROPERTY. THEREFORE HE/SHE DID NOT TRAVEL BEYOND THE JURISDICTION. 8.1 THE LEARNED CIT (A) AFTER CONSIDERING THE SUBMI SSION OF THE ASSESSEE AND REMAND REPORT CONFIRMED THE ACTION OF THE ASSES SEE BY HOLDING AS UNDER: 5.2 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE C ASE, SUBMISSIONS MADE BY THE APPELLANT, REMAND REPORT AND THE ORDER OF THE AO. S O FAR AS THE GROUND NO, 1 OF THE APPEAL IS CONCERNED, IT DOES NOT RELATE TO THE ASSE SSMENT ORDER WHICH HAS BEEN APPEALED AGAINST BUT RAISED FOR POINTING OUT THE PR OCEDURAL LAPSES AND NOT ARISING OUT OF THE ISSUES DETERMINED BY THE ASSESSING OFFICER IN T HE ASSESSMENT ORDER. THE APPELLANT HAS CONTENDED THAT THE CASE WAS SELECTED FOR LIMITE D PURPOSE SCRUTINY AND THE A.O. DID NOT OBTAIN THE PRIOR APPROVAL OF THE PR. CIT FOR CO NVERTING THE SAME INTO COMPLETE SCRUTINY AS PER THE EXISTING INSTRUCTIONS OF THE CB DT. VIDE LETTER DATED 24.08.2017, THE APPELLANT HAS REQUESTED TO EXAMINE THE MISMATCHED F IGURES OF SALES, CAPITAL GAIN INCOME FOR THE SOLD PROPERTY AND CAPITAL GAIN INCOM E SHOWN IN THE RETURN OF INCOME. IT HAS BEEN NOTICED THAT THE CASE WAS SELECTED FOR LIM ITED PURPOSE FOR SALE OF PROPERTY AND CONSEQUENT CAPITAL GAIN AND DEDUCTION FORM CAPITAL GAIN. THEREFORE, THE A.O. HAS EXAMINED THESE ISSUES REVOLVING AROUND THE CHARGING OF CAPITAL GAIN, CLAIM DEDUCTION THERE FROM U/S.54F OF THE ACT AND THE A.O. DID NOT EVEN TOUCH THE ISSUES BEYOND THESE ISSUES SUCH AS INCOME FROM HOUSE PROPERTY, PROFIT O F THE BUSINESS ETC. THUS, HE HAS NOT TRAVELLED BEYOND THE LIMITED JURISDICTION AND NOT C ONTRAVENED THE INSTRUCTIONS OF THE BOARD ISSUED FROM TIME TO TIME AND QUOTED BY THE AP PELLANT THROUGH PAPER BOOK. THE APPELLANT'S CONTENTION THAT THE AO HAS TREATED THE LAND TRANSACTION AS AN ADVENTURE IN THE NATURE OF TRADE INSTEAD OF ALLOWING THE CAPITAL GAIN WITHOUT OBTAINING THE APPROVAL OF THE COMPETENT AUTHORITY AND THUS EXPANDED THE SC OPE OF SCRUTINY IS ALSO NOT LEGALLY TENABLE AS THE AO HAS EVERY RIGHT TO LOOK INTO THE NATURE OF TRANSACTION WITHIN THE LIMITED SPACE GIVEN FOR SCRUTINY. JUST BECAUSE THE AO HAS TREATED THE LAND TRANSACTION AS ADVENTURE IN THE NATURE OF TRADE, HE HAS STEPPED OUT OF THE SCOPE OF LIMITED SCRUTINY IS NOT ACCEPTABLE. I HAVE PERUSED THE RELEVANT INST RUCTIONS IN THIS REGARD AND FOUND THAT THE INSTRUCTIONS ARE WITH REGARD TO THE ISSUES IDEN TIFIED THROUGH CASS. THIS CASE WAS ALSO SELECTED FOR LIMITED SCRUTINY THROUGH CASS IN F.Y. 2016-17 AND ACCORDINGLY NOTICE U/S.143(2) WAS ISSUED AS IS EVIDENT FROM THE FIRST PARA OF THE ASSESSMENT ORDER. FURTHER, THE APPELLANT HAS ALSO FILED COPIES OF NOT ICES ISSUED U/S. 143(2) ON PAGES 6 & 7 OF THE PAPER BOOK WHEREIN FOUR ISSUES HAVE SPECIFIC ALLY BEEN MENTIONED ON WHICH THE LIMITED SCRUTINY IS PROPOSED TO BE CONDUCTED. ITEM NO.3 OF THE ISSUE IS - 'DEDUCTION CLAIMED UNDER THE HEAD CAPITAL GAIN'. THUS THE AO H AS CONFINED HIMSELF TO THE LIMITED ISSUE OF CLAIM MADE UNDER THE HEAD CAPITAL GAIN. HO WEVER, ON FURTHER SCRUTINY, WHEN HE FOUND THAT THE CAPITAL GAIN CLAIMED IS NOT CORRECT AS THE TRANSACTION IS FOUND TO BE AN ADVENTURE IN THE NATURE OF TRADE, HE HAS DENIED THI S CLAIM. THUS, THIS CONTENTION OF THE APPELLANT IS REJECTED AS THE AO HAS NOT GONE BEYOND THE MANDATE GIVEN, YES HE MADE AN INTENSE ENQUIRY BY DELVING DEEP IN THE ISSUE. TH E SCRUTINY CARRIED OUT IS NOT HORIZONTAL BUT VERTICAL ON WHICH THERE IS NO CENSOR . QUESTION OF SEEKING PERMISSION FOR CONVERSION FROM 'LIMITED SCRUTINY' TO THE 'COMPLETE SCRUTINY' WOULD HAVE ARISEN WHEN THE AO WOULD HAVE NOTICED ANY OTHER ISSUE APART FRO M THOSE FOUR ISSUES IDENTIFIED IN CASS. AS THERE IS NO SUCH ISSUE, THERE WAS NO NEED TO SEEK PERMISSION OF PCIT. THE APPELLANT HAS RELIED ON THE DECISION OF ITAT, MUMBA I IN THE CASE OF ITO VS. PERICLES ITA NO. 981/AHD/19 [SHRI NARENDRAKUMAR R. PATEL VS. DCIT] A.Y. 2015-16 - 5 - FOODS (P) LTD. DECIDED ON 31,07.2007 AND IN RELATIO N TO THE AY 2001-02. AT THE RELEVANT TIME, THE SCRUTINY ASSESSMENTS WERE GOVERNED UNDER TWO DISTINCT PROVISIONS OF SECTION 143(2)0) AND 143(2)(II) OF THE ACT AND THE SCOPE OF SCRUTINY ASSESSMENT WAS CONFINED TO THE ISSUES AS PROVIDED IN SECTION 143(2)([) OF T HE ACT, I.E. LOSS, EXEMPTION, DEDUCTION OR RELIEF CLAIMED IN THE RETURN WAS FOUND INADMISSI BLE, THE A.O. WAS EMPOWERED TO ISSUE THE NOTICE U/S.143(2)(I) OF THE ACT SO AS TO VERIFY THE LIMITED ISSUE. THEREFORE, THE CITATION RELIED ON IN RESPECT OF A.Y.2001-02 WHEREI N THE SCOPE OF POWERS OF THE A.O. U/S 143(2)(I) WERE EXAMINED IN THE GIVEN SET OF FACTS I N THAT CASE. SINCE IN THE PRESENT CASE OF THE APPELLANT, THE FACTS ARE QUITE DIFFERENT AND CANNOT BE COMPARED WITH THE FACTS OF THE RELIED UPON CASE. SIMILARLY, THE RELIANCE PLACE D ON THE CASE OF RAJESH JAIN V/S ITO [2007] 162 TAXMAN 212 (CHANDIGARH) IS ALSO NOT OF A NY HELP TO THE APPELLANT AS THE FACTS ARE CLEARLY DISTINGUISHABLE. CONSIDERING THE FACTUAL AND LEGAL ASPECTS OF THE ISSUE OF LIMITED SCRUTINY ASSESSMENT, THE GROUND NO.1 IS REJECTED. 9. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) T HE ASSESSEE IS IN APPEAL BEFORE US. 10. THE LD.AR BEFORE US FILED 3 PAPER BOOKS NAMELY PAPER BOOK-I, II AND III RUNNING FROM PAGES 1 TO 74, PAGES 1 TO 94 AND PAGES 1 TO 130 AND DREW OUR ATTENTION ON PAGE 1 TO 2 OF THE PAPER BOOK-I WHERE THE NOTICE FOR LIMITED SCRUTINY ISSUED U/S 143(3) OF THE ACT WAS PLACED. THE LD. AR FURTHER CLAIMED THAT THE ASSESSING OFFICER HAS CONVERTED THE LIMIT ED SCRUTINY TO THE NORMAL/REGULAR SCRUTINY U/S.143(3) OF THE ACT, ON T HE BASIS OF DOCUMENT RECEIVED FROM REVENUE AUTHORITY WITHOUT TAKING NECE SSARY APPROVAL FROM THE APPROPRIATE AUTHORITY. 11. ON THE OTHER HAND THE LD. DR SUBMITTED THAT THE AO HAS EXAMINED THE PROPERTY SOLD DURING THE YEAR AND ARRIVED AT THE CO NCLUSION THAT THE ASSESSEE IS CARRYING OUT THE BUSINESS OF PROPERTY DEVELOPMENT. HENCE HE HAS NOT TRAVELED BEYOND THE SCOPE OF LIMITED SCRUTINY. THE LEARNED D R VEHEMENTLY SUPPORTED THE ORDER OF THE AUTHORITIES BELOW. 12. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE RELEVANT MATERIALS AVAILABLE ON RECORD BEFORE US. A DMITTEDLY, THE CASE OF THE ASSESSEE WAS SELECTED UNDER LIMITED SCRUTINY SCHE ME AS EVIDENT FROM THE NOTICE U/S 143(2) OF THE ACT, PLACED ON PAGE 1 OF T HE PAPER BOOK-I. AS PER THE CBDT INSTRUCTION NO.20/2015 DATED 29/12/2015 AND IN STRUCTION NO 05/2016 DATED 14-07-2016 THE ASSESSING OFFICER IN CASE OF LIMITED SCRUTINY CAN ONLY ITA NO. 981/AHD/19 [SHRI NARENDRAKUMAR R. PATEL VS. DCIT] A.Y. 2015-16 - 6 - EXAMINE THOSE ISSUES FOR WHICH THE CASE HAS BEEN SE LECTED OR THE ISSUE MENTIONED THEREIN. IF THE AO OF THE VIEW THAT THERE IS A POTENTIAL ESCAPEMENT OF INCOME, HE MAY CONVERT THE LIMITED SCRUTINY INTO COMPLETE SCRUTINY BUT SUCH VIEW SHOULD BE REASONABLE VIEW BASED ON CREDIB LE INFORMATION OR MATERIAL AVAILABLE ON RECORD. FURTHERMORE, THERE SHOULD BE D IRECT NEXUS BETWEEN SUCH VIEW AND INFORMATION/MATERIAL. THE RELEVANT PORTIO N OF THE INSTRUCTION STANDS AS UNDER: 3. AS FAR AS THE RETURNS SELECTED FOR SCRUTINY THR OUGH CASS-2015 ARE CONCERNED, TWO TYPE OF CASES HAVE BEEN SELECTED FOR SCRUTINY I N THE CURRENT FINANCIAL YEAR-ONE IS 'LIMITED SCRUTINY' AND OTHER IS 'COMPLETE SCRUTINY' . THE ASSESSEES CONCERNED HAVE DULY BEEN INTIMATED ABOUT THEIR CASES FALLING EITHER IN 'LIMITED SCRUTINY' OR 'COMPLETE SCRUTINY' THROUGH NOTICES ISSUED UNDER SECTION 143( 2) OF THE INCOME-TAX ACT, 1961 (ACT). THE PROCEDURE FOR HANDLING 'LIMITED SCRUTI NY' CASES SHALL BE AS UNDER: A. IN 'LIMITED SCRUTINY' CASES, THE REASONS/ISSUES SHALL BE FORTHWITH COMMUNICATED TO THE ASSESSEE CONCERNED. B. THE QUESTIONNAIRE UNDER SECTION 142(1) OF THE A CT IN LIMITED SCRUTINY' CASES SHALL REMAIN CONFINED ONLY TO THE SPECIFIC RE ASONS/ISSUES FOR WHICH CASE HAS BEEN PICKED UP FOR SCRUTINY. FURTHE R, THE SCOPE OF ENQUIRY SHALL BE RESTRICTED TO THE 'LIMITED SCRUTIN Y' ISSUES? ' C. THESE CASES SHALL BE COMPLETED EXPEDITIOUSLY IN A LIMITED NUMBER OF HEARINGS. D. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN 'LIMITED SCRUTINY' CASES, IF IT COMES TO THE NOTICE OF THE ASSESSING OFFICER THAT THERE IS POTENTIAL ESCAPEMENT OF INCOME EXCEEDING RS. FIVE LAKHS (FOR METRO CHARGES, THE MONETARY LIMIT SHALL BE RS. TEN LAKHS) REQUIRING SU BSTANTIAL VERIFICATION ON ANY OTHER ISSUE(S), THEN, THE CASE MAY BE TAKEN UP FOR 'COMPLETE SCRUTINY' WITH THE APPROVAL OF THE PR.CIT/CIT CONCE RNED. HOWEVER, SUCH AN APPROVAL SHALL BE ACCORDED BY THE PR.CIT/CIT IN WRITING AFTER BEING SATISFIED ABOUT MERITS OF THE ISSUE(S) NECESSITATIN G 'COMPLETE SCRUTINY' IN THAT PARTICULAR CASE. SUCH CASES SHALL BE MONITO RED BY THE RANGE HEAD CONCERNED. XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXX 2. IN ORDER TO ENSURE THAT MAXIMUM OBJECTIVITY IS MAINTAINED IN CONVERTING A CASE FALLING UNDER 'LIMITED SCRUTINY' INTO A 'COMPLETE S CRUTINY' CASE, THE MATTER HAS BEEN FURTHER EXAMINED AND IN PARTIAL MODIFICATION TO PAR A 3(D) OF THE EARLIER ORDER DATED 29.12.2015, BOARD HEREBY LAYS DOWN THAT WHILE PROPO SING TO TAKE UP 'COMPLETE SCRUTINY' IN A CASE WHICH WAS ORIGINALLY EARMARKED FOR 'LIMITED SCRUTINY', THE ASSESSING OFFICER ('AO') SHALL BE REQUIRED TO FORM A REASONAB LE VIEW THAT THERE IS POSSIBILITY OF UNDER ASSESSMENT OF INCOME IF THE CASE IS NOT EXAMI NED UNDER 'COMPLETE SCRUTINY'. IN THIS REGARD, THE MONETARY LIMITS AND REQUIREMENT OF ADMINISTRATIVE APPROVAL FROM PR. CIT/CIT/PR. DIT/DIT, AS PRESCRIBED IN PARA ?(D) OF EARLIER INSTRUCTION DATED 29.12.2015, SHALL CONTINUE TO REMAIN APPLICABLE. 3. FURTHER, WHILE FORMING THE REASONABLE VIEW, THE ASSESSING OFFICER WOULD ENSURE THAT: ITA NO. 981/AHD/19 [SHRI NARENDRAKUMAR R. PATEL VS. DCIT] A.Y. 2015-16 - 7 - A. THERE EXISTS CREDIBLE MATERIAL OR INFORMATION AV AILABLE ON RECORD FOR FORMING SUCH VIEW; B. THIS REASONABLE VIEW SHOULD NOT BE BASED ON MERE SUSPICION, CONJECTURE OR UNRELIABLE SOURCE; AND C. THERE MUST BE A DIRECT NEXUS BETWEEN THE AVAILAB LE MATERIAL AND FORMATION OF SUCH VIEW. 13. HOWEVER, ON PERUSAL OF THE NOTICE FOR LIMITED SCRUTINY WE FIND THAT THERE WAS NO MENTIONING/WHISPER ABOUT EXAMINATION O F THE FACT WHETHER THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF PROPERTY DE VELOPMENT. ACCORDINGLY, WE HOLD THAT THE ASSESSING OFFICER HAS EXCEEDED HIS JURISDICTION BY DENYING THE DEDUCTION CLAIMED UNDER SECTION 54 OF THE ACT ON TH E REASONING THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF PROPERTY DEV ELOPMENT AS THE SAME WAS NOT MANDATED UNDER THE LIMITED SCRUTINY NOTICE I SSUED UNDER SECTION 143(2) OF THE ACT. 14. WE ARE ALSO CONSCIOUS ABOUT THE FACT THAT THIS TRIBUNAL IN THE CASE OF THE CO-OWNER NAMELY SHRI HARSHADKUMAR AMRUTLAL PATEL IN ITA NO. 361/AHD/2019 HAS DECIDED THE ISSUE AGAINST THE ASSESSEE ON MERIT . ACCORDINGLY, THE QUESTION ARISES ONCE THE ISSUE INVOLVED IN THE CASE OF THE C O-OWNER HAS BEEN DECIDED AGAINST THE ASSESSEE, THEN CAN THE BENCH TAKE OF CO NTRARY VIEW FROM THE CASE OF OTHER CO-OWNERS. HOWEVER, WE FIND THAT THE TECHN ICAL ISSUE RAISED BY THE ASSESSEE IN THE CASE ON HAND WAS NOT THERE IN THE C ASE OF CO-OWNER NAMELY SHRI HARSHADKUMAR AMRUTLAL PATEL. THUS WE ARE ADJUD ICATING THE PRESENT APPEAL FROM ALTOGETHER A DIFFERENT PERSPECTIVE. THUS, THE QUESTION OF TAKING THE CONTRARY VIEW DOES NOT ARISE. 15. IN THE CASE OF THE OTHER CO-OWNER NAMELY SHRI H ARSHADKUMAR AMRUTLAL PATEL THERE WAS THE REGULAR ASSESSMENT UNDER SECTIO N 143(3) OF THE ACT, WHEREAS IN THE PRESENT CASE, IT IS THE CASE OF THE LIMITED SCRUTINY. ACCORDINGLY, WE HOLD THAT THE FACTS OF THE CASE ON HAND ARE DIFF ERENT WITH THE FACTS OF THE CASE IN THE CASE OF SHRI HARSHADKUMAR AMRUTLAL PATE L. AS THE ISSUE INVOLVED IS DIFFERENT, THEN THE BENCH IS NOT BOUND TO FOLLOW TH E DECISION OF THE COORDINATE BENCH TAKEN IN THE CASE OF THE CO-OWNER. ITA NO. 981/AHD/19 [SHRI NARENDRAKUMAR R. PATEL VS. DCIT] A.Y. 2015-16 - 8 - 16. THE LD.DR BEFORE US HAS NOT BROUGHT ANYTHING ON RECORD JUSTIFYING THAT THE LIMITED SCRUTINY WAS CONVERTED BY THE ASSESSI NG OFFICER UNDER NORMAL SCRUTINY AFTER OBTAINING NECESSARY APPROVAL FROM TH E APPROPRIATE AUTHORITY. 17. WE ARE ALSO NOT CONVINCED WITH THE ARGUMENT OF THE LEARNED DR THAT THE ISSUE RAISED BY THE AO IS LIMITED TO THE ACTIVITY O F THE SALE OF THE PROPERTY ONLY. IT IS BECAUSE IF WE ADMIT THE CONTENTION OF THE LEA RNED DR THEN THE HEAD OF INCOME FROM CAPITAL GAIN WILL ALSO GET CHANGE TO TH E BUSINESS INCOME DESPITE THE FACT THAT THERE WAS NO QUESTION RAISED IN THE N OTICE ISSUED FOR THE LIMITED SCRUTINY UNDER SECTION 143(2) OF THE ACT. THE RIGHT COURSE OF ACTION FOR THE AO WAS TO TAKE THE APPROVAL FROM THE COMPETENT AUTHORI TY FOR EXPANDING THE SCOPE OF LIMITED SCRUTINY TO THE REGULAR ASSESSMENT BUT H E FAILED TO DO SO. THUS, IN OUR CONSIDERED VIEW INACTION OF THE AO SHOULD NOT C AUSE ANY HARASSMENT TO THE ASSESSEE. 18. IN HOLDING SO WE DRAW SUPPORT AND GUIDANCE FROM THE ORDER OF THE HONBLE CHANDIGARH TRIBUNAL IN CASE OF RAJESH JAIN VS. ITO REPORTED IN 162 TAXMAN 212 WHERE IT WAS HELD AS UNDER: THE JURISDICTION OF THE ASSESSING OFFICER IN SUCH C ASES WHERE THE NOTICES ARE ISSUED FOR LIMITED SCRUTINY IS CONFINED TO THE CLAIMS HE HAS S ET OUT IN THE NOTICE FOR VERIFICATION. THIS POSITION OF LAW WAS FURTHER ELABORATED BY THE CBDT IN ITS CIRCULAR NO. 8/2002, DATED 27-8-2002. THE CBDT CIRCULAR CLARIFIES THAT THE ASSESSING OFFI CER DOES NOT HAVE THE POWERS TO MAKE THE ENTIRE ASSESSMENT OF INCOME IN LIMITED SCR UTINY CASES. NOW QUESTION HAD TO BE DECIDED WHEN THE ASSESSING OFFICER DOES NOT HAVE THE POWERS WHILE MAKING LIMITED SCRUTINY ASSESSMENT TO DECIDE SUCH ISSUES WHICH ARE NOT COVERED BY THE LIMITED SCRUTINY NOTICE, THE COMMISSIONER (APPEALS) ON APPEAL AGAINS T LIMITED SCRUTINY ASSESSMENT CAN EXERCISE THE POWERS IN EXCESS OF THE POWER VESTED W ITH THE ASSESSING OFFICER. THERE IS NO DOUBT THAT THE POWER OF THE COMMISSIONER (APPEAL S) IS CO-TERMINUS WITH THE POWER OF THE ASSESSING OFFICER. SO, HOWEVER, IN THE INSTA NT CASE, WHEN THE ASSESSING OFFICER DID NOT HAVE THE POWER TO MAKE A FULL-FLEDGED ASSES SMENT IN LIMITED SCRUTINY CASES, THE COMMISSIONER (APPEALS)S POWER COULD NOT BE ENLARGE D BEYOND THE POWER OF THE ASSESSING OFFICER IN LIMITED SCRUTINY CASES. SO, IT WAS CONSIDERED APPROPRIATE TO REMIT THE ISSUE RELATING TO ALLOWANCE OF DEPRECIATION IN RESPECT OF THE PLINTH TO THE FILE OF THE ASSESSING OFFICER FOR THE PURPOSE OF FRESH DECISION IN ACCORDANCE WITH LAW. SINCE THE NOTICE UNDER SECTION 143(2)(I ) WAS ISSUED FOR LIMI TED SCRUTINY, THE ASSESSING OFFICER WAS PRECLUDED FROM CONSIDERING ANY OTHER ISSUE WHIL E MAKING THE ASSESSMENT UNDER SECTION 143(3) UNDER LIMITED SCRUTINY. THE DECISION OF THE COMMISSIONER (APPEALS) IN CONSIDERING THE OTHER CLAIM OF THE ASSESSEE NOT COV ERED IN THE NOTICE ISSUED UNDER SECTION 143(2)(I) FOR LIMITED SCRUTINY WAS CONTRARY TO THE PROVISIONS OF THE ACT AND, ACCORDINGLY, WAS SET ASIDE. ITA NO. 981/AHD/19 [SHRI NARENDRAKUMAR R. PATEL VS. DCIT] A.Y. 2015-16 - 9 - IN VIEW OF THE ABOVE AND AFTER CONSIDERING THE FACT S IN TOTALITY AS DISCUSSED ABOVE, WE ARE NOT CONVINCED WITH THE FINDING OF THE AUTHORITIES BELOW. AS SUCH THE ENTIRE ISSUE SHOULD HAVE BEEN LIMITED TO THE EX TENT OF THE DISPUTE RAISED IN THE NOTICE UNDER SECTION 143(2) OF THE ACT FOR THE LIMITED SCRUTINY BUT THE AO IN THE PRESENT CASE HAS EXCEEDED HIS JURISDICTION AS D ISCUSSED ABOVE. THUS THE GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 19. AS THE ASSESSEE IS SUCCEEDED ON THE TECHNICAL I SSUE RAISED BY HIM, WE REFRAIN OURSELVES FROM ADJUDICATING THE OTHER ISSUE S RAISED ON MERIT. ACCORDINGLY, THE ISSUES RAISED BY THE ASSESSEE ON M ERIT BECOME INFRUCTUOUS. HENCE WE DISMISS THE SAME AS INFRUCTUOUS. 20. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. SD/- SD/- (WASEEM AHMED) (MAHAVIR PRASAD ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD: DATED 20/03/2020 TRUE COPY S. K. SINHA !'#' / COPY OF ORDER FORWARDED TO:- &. / REVENUE 2. / ASSESSEE (. )*+ , / CONCERNED CIT 4. ,- / CIT (A) /. 012 33*+4 *+#4 56) / DR, ITAT, AHMEDABAD 7. 289 : / GUARD FILE. BY ORDER / 4 /5 *+#4 56) THIS ORDER PRONOUNCED IN OPEN COURT 20/03/2020