Appeal details
Counselvise Citation
[2025] 140 COUNSELVISE.COM (IT) 313950 (ITAT-BANGALORE)
Assessee PAN
Bench
Appeal Number
Appellant
Respondent
Appeal Type
Miscellaneous Application
Pronouncement Date
09-05-2025
Appeal Filed By
Assessee
Order Result
Partly Allowed
Bench Allotted
A
Assessment Year
2015-2016
Judgement Text
"MP No.5/Bang/2025 Smt. Bridget Anthony, Bangalore IN THE INCOME TAX APPELLATE TRIBUNAL “A’’ BENCH: BANGALORE BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI KESHAV DUBEY, JUDICIAL MEMBER MP No.5/Bang/2025 (Arising out of ITA No.509/Bang/2024) Assessment Year: 2015-16 Smt. Bridget Anthony (Legal Heir of Late Mr. Elevanthingal Joseph Anthony) No.99, 9th Cross, 2nd Main, Udayanagara Bangalore 560 016 PAN NO : AQDPA9236H Vs. ITO Ward 4(2)(1) Bangalore APPELLANT RESPONDENT Assessee by : Sri Sandeep C., A.R. Revenue by : Smt. Mathangi R., D.R. Date of Hearing : 25.04.2025 Date of Pronouncement : 09.05.2025 O R D E R PER KESHAV DUBEY, JUDICIAL MEMBER: This miscellaneous petition u/s 254(2) of the Income Tax Act, 1961 (in short “The Act”) is filed by the assessee seeking rectification of the order of Tribunal dated 05.08.2024 in ITA No.509/Bang/2024 for the assessment year 2015-16 on the following issue narrated by the ld. A.R. for the assessee as follows: “The prayer in this application is to decide the legal ground raised before this Hon'ble Tribunal on the issue of validity of assessment for Raking an addition which is not as per the reasons provided in the notice u/s. 143(2) of the Act since the case of the appellant has been selected for \"Limited Scrutiny\" and no approval has been taken from Principal Commissioner of Income Tax before deviating from Limited Scrutiny. All the facts and material to decide the case are available on record and therefore, there is no requirement to remand the matter to the files of assessing officer. However, the Hon'ble Tribunal remanded the matter to the files of the assessing officer for examination of the assessing officer MP No.5/Bang/2025 Smt. Bridget Anthony, Bangalore Page 2 of 10 as the lower authorities have not produced concerned records for consideration of the Tribunal. It may be stated here that the all the documents area already available on record in the form of RTI application and its response from the jurisdictional assessing officer.” 2. Facts and Background of the case 2.1. The appellant is the legal representative of Late Sri. Elavanthingal Joseph Anthony (\"Late E J Anthony\", for short). Mr. E J Anthony had filed his return of income for the Assessment Year 2015-16. He died on 07.10.2016. A notice u/s. 143(2) of the Income Tax Act, 1961 (\"Act\") was issued on .09.2016. The notice stated that it is a limited scrutiny assessment and the case has been selected to verify the deduction claimed under the hear Capital Gains. After hearing the appellant, the learned Assessing Officer made an addition of Rs. 1,42,25,000/- u/s. 69 of the Act. The brief facts in respect of the above addition are given below: 2.2. During the lifetime, Mr. Anthony had entered into an Agreement for Sale on 26.03.2014 for sale of a residential property at 1 18/4, 1st Main Road, 1st Cross, Bazaar Street, Udayanagar, Bangalore — 560016 with one Mr. S. Parasmal Lodha. As per Agreement for Sale, the property was agreed to be sold for a sum of Rs. 2,00,00,000/-. The agreement itself recorded that a sum of Rs. 11,00,000/- was paid in cash on execution of the agreement. There is an endorsement in the agreement that a further sum of Rs. 60,00,000/- was paid in cash on 14th July 2014. The endorsement also states that the balance of Rs.1,29,00,000/- will be paid before execution. 2.3. A Deed of Absolute Sale was executed on 02.08.2014. The consideration mentioned in the Absolute Sale Deed was only Rs. 57,75,000/- being the guidance value. 2.4. Late Mr. Anthony received the balance consideration in cash. The total consideration of Rs.2,00,00,000/- was paid by Sri. S. Parasmal Lodha in the following manner: (a) Rs. 57,75,000/- by cheque. (b) Rs. 1,42,25,000/- by cash on various dates 2.5. Mr. Anthony died on 07.10.2016. After his death, the present appellant Smt. Bridget Anthony was brought on record as legal representative. The learned Assessing Officer, in order to verify the correctness of the declared sale consideration of Rs. 2,00,00,000/- summoned. Mr. Parasmal Lodha and examined him under oath. The appellant was present during the examination. The appellant was also examined on 16.11.2017. The appellant confirmed that the total consideration MP No.5/Bang/2025 Smt. Bridget Anthony, Bangalore Page 3 of 10 received was Rs. 2,00,00,000/-. But Sri Lodha denied that he has paid any amount in cash but accepted that he had entered into the Agreement for Sale on 26.03.2014. He stated that the sum of Rs. 2,00,00,000/- was mentioned only for the purpose of obtaining the bank loan. 2.6. Based on the statement of Mr. Lodha, the learned Assessing Officer held that the sum of Rs. 1,42,25,000/- invested in the construction of a new residential house was explained and added the same u/s. 69 of the Act to the returned total income of Rs. 10,62,390/-. It may be stated here that the learned assessing officer has not disputed about the value of investments of Rs. 1,42,25,000 in residential house and investment in Rural Electrification Corporation Bonds (REC Bonds) and National Highway Authorities of India (NHAI Bonds) amounting to Rs.50,00,000/- . ISSUE INVOLVED IN THE PRESENT APPLICATION 3.1. Conversion from limited scrutiny to complete scrutiny. 3.1.1.It is submitted that the reason for selecting the appellant's case for limited scrutiny and the issue considered in assessment proceedings are completely different. The issue involved in the assessment was \"deduction claimed under the head capital gains\". However, the assessment was completed not only disallowing the deduction but making addition u/s. 69 and 69A of the Act which is beyond the scope of limited scrutiny. The assessment proceedings are not made as per the issues which have to be examined under limited scrutiny. Therefore, the entire assessment proceedings are liable to be quashed. 3.1.2. It is further submitted that the learned assessing officer has not converted the limited scrutiny to complete scrutiny for completing the assessment as discussed above. The CBDT vide its Instruction no. 5/2016 has laid down the procedure for converting the limited scrutiny to complete scrutiny. (The Instruction is enclosed at page no. 33 to 40 of paper book). As per the above instruction, the learned assessing officer has to form a reasonable view based on certain materials. Further, the approval of the jurisdictional Pr. CIT / CIT / Pr. DIT / DIT is required for converting the 'limited scrutiny' case to 'Complete scrutiny'. The learned assessing officer ought to have follöwed the above procedure laid down by CBDT. In absence of such failure to follow the procedure as laid down in the above referred Instruction to convert the limited scrutiny to complete scrutiny, the entire assessment becomes null and void. Hence, it is prayed that the Hon'ble Tribunal be pleased to hold that the assessment order is liable to be quashed. 3.1.3. It is submitted that the appellant made an application under \"FORM A\" for seeking information under the Right to Information Act, 2005 seeking for any approval by the Principal Commissioner of Income Tax / Commissioner of Income tax for making scrutiny under section 69 of the MP No.5/Bang/2025 Smt. Bridget Anthony, Bangalore Page 4 of 10 Act. The appellant sought for this information for the reason that the learned assessing officer had selected the appellant's case for limited scrutiny, however, the learned assessing officer completed the assessment by making an addition under section 69 of the Act which is outside the jurisdiction of limited scrutiny. the copy of Order u/s. 7(1) dated 21.04.2022 of the Right to Information Act, 2005 is enclosed at page no. 72 and 73 of paper book which shows that the learned assessing officer has not taken approval to travel beyond the scope of limited scrutiny. 3.1.4. The provisions of section 69 and 69A are invoked. Section 69 of the Act is invoked for unexplained investment and section 69A of the Act is invoked for unexplained money. The provisions are reproduced below for ready reference; “Unexplained investments. 69. Where in the financial year immediately preceding the assessment year the assessee has made investments which are not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of the investments or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the value of the investments may be deemed to be the income of the assessee of such financial year. Unexplained money, etc. 69A. Where in any financial year the assessee is found to be the owner of any money, bullion, jewel\" or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year.” 3.1.5. The above provisions clearly states that if the assessee does not explain the source of income or the explanation are not satisfied to the assessing officer, the provisions are invoked. Therefore, the requirements of provision have to be satisfied for making addition. It is submitted that mere denial of exemption under capital gains will not lead to addition u/s. 69 or 69A of the Act or it will not automatic. Therefore, for invoking such provisions, the learned assessing officer has to record his satisfaction, and such process should begin with after obtaining approval for complete scrutiny as per the instructions referred above. In the present case, the MP No.5/Bang/2025 Smt. Bridget Anthony, Bangalore Page 5 of 10 learned assessing officer has not sought for any approval from the PCIT and therefore, the entire proceedings are liable to be quashed. 3.1.6. The appellant relies on the decision of Hon'ble Delhi Tribunal in Balvinder Kumar v. PCIT 187 ITD 454 wherein it was held that the assessing officer cannot go beyond the reason for which the matter was selected for scrutiny. The facts of this case are that the assessee filed an appeal before the Income Tax Appellate Tribunal challenging the order passed u/s. 263 of the Act wherein it was held that the assessing officer has accepted the computation of capital gains without considering the details of indexed cost of acquisition. The assessee's case was selected for limited scrutiny for the verification of increase in capital. The order u/s. 263 of the Act was passed on the ground that assessing officer has not verified the claim u/s. 54 of the Act made by the assessee. The Hon'ble Tribunal held that the assessing officer cannot go beyond the reason for which the matter was selected for scrutiny. Therefore, it would not be open to Principal Commissioner of Income Tax to pass order u/s. 263 of the Act holding that there is a failure of the assessing officer to verify other aspects by rendering the assessment order as erroneous and prejudicial to the interests of the revenue. (Page No. 41 to 48 of paper book). 3.1.7. The appellant relies on the decision of Hon'ble Jaipur Tribunal in Smt. Manju Kaushik v. DCIT 78 ITR (Trib) 564 wherein it has upheld the above proposition. The relevant portion of the judgment is as under; (Para 4 of page 57(9 [Page No. 49 to 63 of paper book] “The Assessing Officer is duty bound to follow the instructions in case limited scrutiny assessment proceeding are proposed to be converted into complete scrutiny and without following said procedure and necessary approval of the competent authority conducting an enquiry on the issue which is outside the limited scrutiny would be beyond the jurisdiction 'f the Assessing Officer. This Tribunal has taken the consistent view on this issue in the series of decisions that if the Assessing Officer has taken up the issue of scrutiny without converting the limited scrutiny to complete scrutiny by taking a prior approval from the competent authority, then the said order passed by the Assessing Officer will be in nullity and beyond his jurisdiction.” 3.1.8. The facts of the above case are that the assessee's case was selected for limited scrutiny under CASS. A notice u/s. 143(2) of the Act was issued with respect to examination of deduction claimed under the head 'Capital Gains'. After satisfying himself on the above issue, the assessing officer issued another notice u/s. 142(1) dated 25.11.2016 seeking details of deduction claimed u/s. 54B of the Act. The assessing officer has requested for approval of the Pr. CIT for converting the case from limited to complete scrutiny. The approval was communicated to assessing officer on 29.11.2016. However, the assessing officer has issued notice u/s. 142(1) of the Act seeking details of deduction u/s. 54B of the Act on 25.11.2016 which is before the approval is granted. In this connection, the Hon'ble MP No.5/Bang/2025 Smt. Bridget Anthony, Bangalore Page 6 of 10 Tribunal held that without the necessary approval, the assessing officer has taken up the other issues for scrutiny and further the assessee was not communicated about the conversion of limited scrutiny to complete scrutiny. Hence, the disallowance u/s. 54B of the Act has to be deleted. The relevant portion of the judgment is reproduced below; “Hence, we find that the Assessing Officer has taken up the issue and initiated proceedings for complete scrutiny without necessary with him. Therefore, the issue taken up by the Assessing Officer regarding disallowance of deduction under section 54B is prior to the necessary approval communicated to the Assessing Officer and therefore, in the absence of communication in writing to the Assessing Officer about the approval, the assumption of jurisdiction by the Assessing Officer is invalid. Consequently, the addition made by the Assessing Officer by denying the deduction under section 54B is not sustainable and the same is deleted.” 3.1.9. We further rely on the decision of Delhi Tribunal in CBS International Projects Pvt. Ltd. v. Asst. CIT (ITA No. 144/Delhi/2019 dated 28.02.2019) wherein it was held as under; (Page 64 to 71 of paper book) “A perusal of the aforesaid instruction shows that the Assessing Officer can widen the scope of scrutiny even if it is selected for scrutiny assessment under computer aided scrutiny selection. However, the condition precedent for such action of the Assessing Officer is that he has to seek prior approval of the higher authorities. A perusal of the assessment order shows that the Assessing Officer has not mentioned as to when the permission from the Principal Commissioner of Income-tax was sought to make further enquiries in the case of the assessee. Considering the facts of the case in totality, in the light of the Central Board of Direct Taxes Instructions mentioned hereinabove, qua notice under section 143(2) of the Act, we are of the considered opinion that the assessment order so framed by the Assessing Officer is not in consonance with Instruction of the Central Board of Direct Taxes and, therefore deserves to be quashed.” In view of the above submissions, it is prayed that the Hon’ble Tribunal be pleased to hold that the assessment is null and void.” 2. Before us, the ld. A.R. of the assessee vehemently submitted that the Hon’ble ITAT erred in remanding the case back to AO rather than quashing the assessment order passed by the AO, since the case of the assessee has been selected for “Limited Scrutiny” and no approval has been taken from ld. PCIT before deviating from “Limited Scrutiny” and hence, prayed that the assessment order passed by the AO may be quashed rather not remitting the file to MP No.5/Bang/2025 Smt. Bridget Anthony, Bangalore Page 7 of 10 the AO to decide the same in the light of order of the Tribunal as the lower authorities have not produced concerned records for consideration of the Tribunal. 3. The ld. D.R. on the other hand strongly contended that the issue under consideration is already considered and decided by this Tribunal and therefore, the Tribunal has no jurisdiction to review its earlier order and go into the details and merits of the case already decided and further submitted that through this MA, the ld. A.R. is seeking to review the impugned order passed by the Tribunal dated 05.08.2024 after due application of mind. 4. We have heard the rival submissions and perused the materials available on record. On going through the Order of this Tribunal dated 08/05/2025, we find that this Tribunal after considering all the grounds including the additional legal grounds as raised by the assessee as well as taking into consideration all the submissions of the assessee including the paper book, passed a detailed reasoned order by remitting both the legal issues in dispute as well as on the merits of the case to the file of AO. Further with regard to the specific legal ground as raised by the assessee, the Tribunal in paragraph 7.2 of the Order (Page 16 of 28) had categorically summarized the crux of the CBDT instructions. In paragraph 7.3 of the said Order, the Tribunal by relying on the decision of the coordinate bench of ITAT, Jurisdictional High Court as well as the Apex Court hold that the AO can widen the scope of scrutiny even the case is selected for limited scrutiny under CASS, however, the condition precedent for such widening of the scope is that the AO has to seek prior approval of the authorities mentioned. Finally in para 7.5 of the Order (Page-18 of 28) dated 05/08/2024, the Tribunal observed that as there was no prior approval & permission of the ld. PCIT/CIT, and as such there was no reason to MP No.5/Bang/2025 Smt. Bridget Anthony, Bangalore Page 8 of 10 convert the limited scrutiny in complete scrutiny and accordingly the Tribunal had opined that these facts required to be examined at the end of ld. AO as the lower Authorities have not produced concerned records for our consideration. The Tribunal remitted the legal issue to the file of ld. AO to decide the same in the light of the order of the coordinate bench of the Tribunal cited (supra). 4.1 Further, on going through the Order dated 05/08/2024, we also take a note of the fact that the Tribunal without prejudice to the findings on additional legal grounds as raised by the assessee, also adjudicated the grounds on merit also so as to complete the adjudication of the Appeal. On merits also the Tribunal deems appropriate to remit the issue to the file of ld. AO to carry out necessary enquiry and provide an opportunity of cross examining Parasmal Lodha to know what was the exact amount in respect of property bearing 118/4, 1st Main Road, 1st Cross, Bazaar Street, Udaynagar, Bangalore 560016. 4.2 Before us, the ld. AR of the assessee contended that on the legal issues, the Tribunal erred in remanding the case back to AO rather than quashing the assessment order passed by the AO. We do not find any mistake in remanding the legal issues back to the file of AO as the lower authorities have not produced concerned records for our consideration in spite of the fact that the assessee submitted a copy of the order u/s 7(1) of the Right to information Act, 2005 from CPIO & Income Tax Officer, ward-4(2)(1), Bangalore reproduced in paragraph 7.4 of the Order dated 05/08/2024. We are of the considered opinion that as rightly contended by the ld. DR, the Tribunal has no power to review his own order passed after due application of Mind. However, on going through the paragraph 7.5 of the Order dated 05/08/2025, we find that while remitting the matter back to the AO to decide the same in the light of order of the MP No.5/Bang/2025 Smt. Bridget Anthony, Bangalore Page 9 of 10 co-ordinate bench of the Tribunal cited therein, we have not categorically stated that if AO discover that there is no approval taken from the ld. PCIT/CIT for conversion of limited scrutiny to complete scrutiny, the assessment order is liable to be set-a-side & thereafter the question of adjudication on merits ceases there itself. Hence, we find that there is an error crept in the order of the Tribunal warranting rectification on this ground. 4.3 Hence, the paragraph 7.5 of the order (Pg 18 of 28) dated 05/08/2024 are hereby corrected & to be read as under- “7.5 According to him there was no prior approval and permission of the ld. PCIT/CIT. As such there was no reason to convert the limited scrutiny in complete scrutiny. In our opinion, these facts required to be examined at the end of ld. AO as the lower Authorities have not produced concerned records for our consideration. Hence, this issue is remitted to the file of AO for limited finding that if there is no approval taken from the ld. PCIT/CIT for conversion of limited scrutiny to complete scrutiny, the assessment order is liable to be quashed and thereafter the question of adjudication on merits ceases there itself.” 5. Accordingly, we partly allow the MA filed by the Assessee. However there is no change in the final result in ITA No.509/Bang/2024 dated 05/08/2024. MP No.5/Bang/2025 Smt. Bridget Anthony, Bangalore Page 10 of 10 6. In the result, miscellaneous petition filed by the assessee is partly allowed. Order pronounced in the open court on 9th May, 2025 Sd/- (Waseem Ahmed) Accountant Member Sd/- (Keshav Dubey) Judicial Member Bangalore, Dated 9th May, 2025. VG/SPS Copy to: 1. The Applicant 2. The Respondent 3. The CIT 4. The DR, ITAT, Bangalore. 5 Guard file By order Asst. Registrar, ITAT, Bangalore. "
AI Insights
The case involves Smt. Bridget Anthony, the legal heir of Late Mr. Elevanthingal Joseph Anthony, who filed a miscellaneous petition under section 254(2) of the Income Tax Act, 1961, seeking rectification of the Tribunal's order dated 05.08.2024. The original dispute centered on the validity of an assessment made under sections 69 and 69A of the Act, which were invoked for unexplained investments and money, respectively. The assessment was contested on grounds that it deviated from the 'Limited Scrutiny' parameters under which the case was selected, without the necessary approval for such a deviation. The Tribunal initially remanded the matter back to the Assessing Officer for further examination, which the assessee contested, leading to this rectification application.
