The Income Tax Appellate Tribunal (ITAT), Delhi Bench ruled that the Provision related to Revision of orders prejudicial to revenue under Section 263 of the Income Tax Act, 1961 can not be invoked for computational error.
The assessee, Manoj Singhal has been receiving rental income from as many as seven properties. But the assessee has not mentioned the full address and description of these properties. Therefore, it cannot be ascertained from the assessment record, whether the assessee satisfies the conditions for claiming deduction u/s 54F of the Act, or not, particularly, when the receipts on account of sale proceeds of shares are shown from Kolkata based company M/s Shreyan Vyapar Pvt. Ltd. for shares of M/s SMS IT Solutions Pvt. Ltd., again a Kolkata based company doing no business. Further, no evidence has been placed on record to substantiate the market value of the said investment.
Mr. Amit Goel, the counsel for the assessee urged that the case of the assessee has been selected for limited scrutiny on two grounds viz. verification of Purchase of property and verification of deduction claimed under the head capital gain and expanding the scope of scrutiny by the way of order u/s 263 is legally not valid.
On the other hand, Ms. Pramita Biswas, the counsel on behalf of the department argued that the PCIT has got wider powers to examine the entire case to plug the loopholes and leakage of revenue.
The coram of Judicial Member, Bhavnesh Saini and Accountant Member, Dr. B. R. R. Kumar found that the complete details pertaining to both the issues have been examined by the AO and the replies of the assessee dated 22.09.2017, 16.10.2017, 30.11.2017 along with the details of sale of shares, confirmation of the parties, bank statements, purchase of property, registration document and deduction under section 54F claimed. The entire details of the said two transactions which are the subject matter of scrutiny have been duly provided and examined by the AO and duly accepted after examination and verification.
“The deduction claimed u/s 54F was Rs.6,12,10,100/- whereas the deduction eligible was Rs.6,11,19,500/-. Thus, there is a computational difference of Rs.90,600/- in the claim of deduction u/s 54F which could have been rectified u/s.154. The provisions of section 263 need not be invoked for computational error for which other provisions of the Act are fairly sufficient. The directions of the PCIT which are beyond the selection criteria of scope of scrutiny for the instant year cannot be held to be legally valid,” the ITAT said.
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