Matter Which Is Not The Subject Matter Of Limited Scrutiny Cannot Be Raised In Revisionary Proceedings: ITAT
The Chandigarh Bench of the Income Tax Appellate Tribunal (ITAT) has held that matters that were not subject to limited scrutiny cannot be raised in revisionary proceedings.The two-member bench of Diva Singh (Judicial Member) and Vikram Singh Yadav (Accountant Member) has observed that the matter relating to wages and labor expenses, which was not subject to limited scrutiny, cannot be raised...
The Chandigarh Bench of the Income Tax Appellate Tribunal (ITAT) has held that matters that were not subject to limited scrutiny cannot be raised in revisionary proceedings.
The two-member bench of Diva Singh (Judicial Member) and Vikram Singh Yadav (Accountant Member) has observed that the matter relating to wages and labor expenses, which was not subject to limited scrutiny, cannot be raised in revisionary proceedings under Section 263 of the Income Tax Act for the first time.
The appellant/assessee has filed his return of income, declaring a total income of Rs. 4,71,510, which was selected for limited scrutiny. The matter relating to wages and labor expenses was not subject to limited scrutiny, and it was raised in revisionary proceedings for the first time.
The assessee contended that the matter relating to wages and labor expenses was not subject to limited scrutiny. Hence, it cannot be raised in revisionary proceedings for the first time, as held by the various benches of the Tribunal, and that too without confronting it with the assessee either as part of the show-cause notice or even during the revisionary proceedings. There is no basis for the invocation of Section 263 by the PCIT, as the order passed by the AO is neither erroneous nor prejudicial to the interests of the revenue.
The department contended that it is a matter relating to the reconciliation of receipts as per Form No. 26AS and the receipt declared by the assessee in the VAT return and in the income tax return. Therefore, it would be appropriate that the matter be examined by the AO. The order passed by the Pr. CIT was justified as the AO has failed to carry out necessary and proper inquiries either from the assessee or from the third parties in respect of receipts shown by the assessee during the financial year relevant to the Assessment Year and the matter has been set aside to the file of the AO.
The ITAT held that there is no justifiable basis to invoke the provisions of Section 263 as the order passed by the AO cannot be held to be erroneous in so far as it is prejudicial to the interest of the Revenue.
Case Title: M/s Longia Engineers Versus Pr. CIT
Citation: ITA NO. 30/Chd/2021
Date: 06/12/2022
Counsel For Appellant: Advocate Tejmohan Singh
Counsel For Respondent: CIT DR Sandip Dahiya