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1. For that the order of the Principal Commissioner of Income Tax is without jurisdiction, contrary to law, facts and circumstances of the case and at any rate is opposed to the principles of equity, natural justice and fair play.

2. For that the Principal Commissioner of Income Tax failed to appreciate that there was no error or prejudice much less both to warrant the invocation of the powers conferred u/s.263.

3. For that the provisions of section 263 are not invocable in the facts and circumstances of the case.

4. For that the Principal Commissioner of Income Tax failed to appreciate that the case of the appellant was taken up for limited scrutiny for examination as to whether the Capital Gain/Loss is genuine and correctly shown in return of income.

5. For that the Principal Commissioner of Income Tax failed to appreciate that considering that the case was one of limited scrutiny, the Assessing Officer could only have examined the specific issues taken up for scrutiny.

6. For that without prejudice to the above, the Principal Commissioner of Income Tax failed to consider the explanations and submissions filed by the appellant during the course of revisionary proceedings.

2. The Registry has noted delay of 212 days in the appeal, the condonation of which has been sought by Ld. AR. Considering the fact that the impugned order was passed during lockdown situation arising out of Covid-19 pandemic, we condone the delay and admit the appeal for adjudication on merits.

3. The Ld. AR, Shri T.Banusekar, relied on various decision of the Tribunal and submitted that the case was selected for 'limited scrutiny' under CASS cycle 2017 to examine the issue of capital gains / loss as reflected in the return of income. Since the same was duly examined as required and additions were made in that respect in the assessment order, further revision of the order on other issues could not be sustained under law. The Ld. AR submitted that in the revisional order, Ld. Pr. CIT directed Ld. AO to examine the issue of cash deposit and agricultural income earned by the assessee which could not have been, otherwise, examined by Ld. AO under 'limited scrutiny'. The Ld. AR filed written submissions which have duly been considered while

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adjudicating the appeal. In the written submissions, Ld. AR has drawn attention to CBDT Instruction No. F.No.225/402/2018/ITA.II dated 28.11.2018 to support the submission that 'credible material' or 'information' being provided by any law enforcement / intelligence / regularity authority / agency was a pre-condition for going beyond the scope of 'limited scrutiny'. The issues flagged by Ld. Pr. CIT were not within the scope of 'limited scrutiny' before Ld. AO. The phrase 'credible material' has to be read in conjunction with the word 'information' and not to be treated as a separate limb. The 'credible material' as well as 'information' has to be an input from any external agency to enlarge the scope of 'limited scrutiny'. The Ld. CIT-DR, Shri M.Rajan, on the other hand, submitted that the issue of cash deposit was connected with the capital gains earned by the assessee during the year and therefore, the revision was justified. Having heard rival submissions, our adjudication would be as under.

4. Upon perusal of case records, it could be seen that the assessee was subjected to 'limited scrutiny' under CASS to verify 'Whether capital gains / loss is genuine and has been correctly shown in the return of income?' During the course of assessment proceedings, Ld. AO called for requisite details and information from the assessee in that respect and chose to make certain additions as enumerated in the assessment order. Thus, the issues for which 'limited scrutiny' was undertaken was duly examined and verified by Ld. AO.

5. Subsequently, Ld. Pr. CIT, upon perusal of case records, termed the order as erroneous and prejudicial to the interest of the revenue for the reasons that the assessee made cash deposits of Rs.36.47 Lacs. The Ld. AO failed to verify the source of cash deposit. Further, the

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assessee claimed exempt agricultural income of Rs.11 Lacs, the genuineness of which was not verified by Ld. AO while passing the order. Though the assessee filed certain details and submission on these issues before revisional authority, however, rejecting the same, Ld. Pr. CIT directed Ld. AO to pass appropriate order after considering these issues. Aggrieved as aforesaid, the assessee is in further appeal before us.

Our findings and Adjudication

6. The undisputed facts that emerge are that the issues which have been flagged by Ld. Pr. CIT to seek revision could not have been, otherwise, examined by Ld. AO since the case was selected under 'limited scrutiny' to verify the genuineness of capital gains / losses. The issues lagged for 'limited scrutiny' was duly examined and verified by Ld. AO. To examine other issues, Ld. AO was bound by CBDT Instruction No. F.No.225/402/2018/ITA.II dated 28.11.2018 which, inter-alia, provide as under: -

Under CASS cycles 2017 and 2018, some of the cases were selected for scrutiny as a 'Limited Scrutiny' case. In limited Scrutiny' cases, Assessing Officer cannot travel beyond the issue(s) for which the case was selected. The idea behind such a stipulation is to enforce checks and balances upon powers of an Assessing Officer to do fishing and roving enquiries in cases under 'Limited Scrutiny'.

2. In this regard, several representations have been received in the Board from the field authorities that in several cases under 'Limited Scrutiny', information pointing out specific tax-evasion for the relevant year, given by any law- enforcement/intelligence/regulatory authority or agency is available with the concerned Assessing Officer, however, in view of the restrictive nature of enquiry/investigation which can be made in 'Limited Scrutiny' cases, the same presently cannot be acted upon.

3. The matter has been considered by the Board. In order to enable proper enquiry/investigation in pending 'Limited Scrutiny' cases which were selected through CASS cycles of 2017 and 2018, where credible material or information has been/is provided by any law-enforcement/intelligence/regulatory authority or agency regarding tax-evasion by an assessee, it has been decided by the Board that issues arising from such information can also be examined during the course of conduct of assessment proceedings in such 'Limited Scrutiny' cases with prior administrative approval of the concerned Pr. CIT/CIT.

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4. It is pertinent to mention that unlike CASS 2015 and 2016 cycles, where consideration of any additional issue lead to the conversion of case to 'Complete Scrutiny' as laid down in Instruction No. 5/2016 dated 14.07.16, the pending 'Limited Scrutiny' cases of CASS 2017 and 2018 cycles would not be taken up for 'Complete Scrutiny' as the present directive is only to facilitate consideration of those issues wherein specific information of tax-evasion has been furnished by any law-enforcement/intelligence/regulatory authority or agency. Therefore, in such 'Limited Scrutiny' cases, Assessing Officer shall not expand the scope of enquiry/investigation beyond the issue(s) on which the case was flagged for 'Limited Scrutiny' & issue arising from nature of information mentioned in para 2 and 3, above.

5. The following procedure shall be adopted while examining the additional issue:

i. The Assessing Officer shall duly record the reasons for expanding the scope of 'Limited Scrutiny' to the extent mentioned in para 2 and 3, above;

ii. The same shall be placed before the Pr. CIT/CIT concerned and upon his approval, further issue can be considered during the assessment proceeding;

iii. The Assessing Officer shall issue an intimation to the assessee concerned that additional issue would also be considered during the course of pending assessment proceeding;

iv. To ensure proper monitoring in these cases, provisions of section 144A of the Income-tax Act, 1961 may be invoked in suitable cases. Further, to prevent fishing and roving enquiries in these cases, it is desirable that these cases are invariably picked up for Review/Inspection by the administrative authorities.

6. The above directive shall be applicable from the date of its issue and shall apply to the pending 'Limited Scrutiny' cases which were selected under the CASS 2017 and 2018 cycles. It is reiterated that the grounds mentioned in para 3 above are the only grounds on which a 'Limited Scrutiny' case of CASS 2017 and 2018 cycles can be expanded in its scope and that too only to the extent of the issues referred to by the law-enforcement/intelligence/regulatory authority or agency .

7. It may be brought to the notice of all for necessary compliance. Upon perusal of para-3 of above instructions, it could be seen that the scope of limited scrutiny for CASS cycles 2017 and 2018 could be widened only upon receipt of credible material or information from any law enforcement / intelligence / regulatory authority or agency regarding tax-evasion by an assessee. In such a case, the issues arising from such information could also be examined during the course of conduct of assessment proceedings in such 'limited scrutiny' cases with prior administrative approval of the concerned Pr. CIT/CIT.

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However, in the present case, we find that there is no such credible material or information which would justify widening the scope of limited scrutiny. Therefore, Ld. Pr. CIT, in our considered opinion, could not term the assessment order as erroneous or prejudicial to the revenue since the flagged issues, could otherwise be not examined by Ld. AO during the course of regular assessment proceedings.

7. Our view is duly supported by the recent decision of this Tribunal in Mr. Yuvaraj vs. ITO (ITA No.1722/Chny/2019 order dated 07.03.2022) wherein the bench held as under: -

6. We have heard both the parties, perused material available on record and gone through orders of the authorities below. We find that the assessment for the impugned assessment year has been taken up for limited scrutiny to verify large cash deposits into savings bank account and the Assessing Officer has completed assessment after verifying cash deposits in savings bank account and has made additions, when the assessee was unable to explain source for part of cash deposits. It is an admitted position of law that in limited scrutiny assessments, scope of verification is limited to the issues mentioned in the notice issued under CASS system. The Assessing Officer cannot travel beyond the issues on which assessment has been taken up for scrutiny. Therefore, once the Assessing Officer does not have power to go beyond the issues on which he has taken up case for scrutiny, then obviously, the learned PCIT cannot term the assessment order passed by the Assessing Officer as erroneous, insofar as it is prejudicial to the interests of revenue on issues other than the issue taken up by the Assessing Officer in scrutiny assessment proceedings. In this case, on perusal of materials available on record, we find that the learned PCIT has revised assessment order on the issues other than the issue considered by the Assessing Officer in assessment proceedings. Therefore, we are of the considered view that the learned PCIT has exceeded her jurisdiction in examining issues other than the issues which is subject matter of limited scrutiny assessment proceedings before the Assessing Officer. Hence, we are of the considered view that revision order passed by the learned PCIT u/s.263 of the Act is invalid and not sustainable. Hence, we quash order passed by the learned PCIT u/s.263 of the Act. Similar is the decision of Kolkata Tribunal in Binod Kumar Mahato vs. Pr. CIT (ITA No.2173/Kol.2018 dated 24.02.2021), a copy of which has been placed on record. Similar is the ratio of other decisions of other benches of Tribunal, the copies of which are on record.

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8. The decision of Chennai Tribunal in M/s Sahayamatha Salterns Pvt. Ltd. vs. DCIT (ITA No.1498/Chny/2019 dated 11.12.2019), as relied upon by revenue, is factually distinguishable. Upon perusal of para-4 of the order, it could be seen that Ld. AO failed to consider the information passed on to him by other Income Tax Authority regarding on-money consideration and therefore, the revision was held to be justified. The same is not the case here.

9. Therefore, on the facts and circumstances of the case, the revision of the order could not be upheld in the eyes of law. By quashing the same, we allow the appeal of the assessee.

10. The appeal stands allowed in terms of our above order. Order pronounced on 06^thDecember, 2022.

Sd/- Sd/-

(V. DURGA RAO) (MANOJ KUMAR AGGARWAL)

ाियक सद2 /JUDICIAL MEMBER लेखा सद2 / ACCOUNTANT MEMBER

चे*ई / Chennai; िदनांक / Dated : 06-12-2022 EDN/-

आदेश की Uितिलिप अ 7ेिषत/Copy of the Order forwarded to :

1. अपीलाथ/Appellant 2.  यथ/Respondent 3. आयकर आयु (अपील)/CIT(A) 4. आयकर आयु /CIT 5. िवभागीय ितिनिध/DR 6. गाड  फाईल/GF