‘Transfer of property’ not include ‘acquiring’ of property or ‘purchasing’ of property – ITAT

The word ‘transfer of property’ does not include ‘acquiring’ of property or ‘purchasing’ of property and only can be confined to ‘sale’ of property only – ITAT

In a recent judgment, ITAT Raipur has held that the word ‘transfer of property’ does not include ‘acquiring’ of property or ‘purchasing’ of property and only can be confined to ‘sale’ of property as per limited scrutiny mandate.

ABCAUS Case Law Citation:
5102(2026) (04) abacus.in ITAT

The case of the assessee was selected for limited scrutiny through CASS for the reasons: (i) Large cash deposit in Bank account; (ii) The assessee has also transferred one or more properties

However, the Assessing Officer (AO) made addition with regard to the purchase of the property by the assessee which did not form part of the limited scrutiny subject.

The CIT(A)/NFAC dismissed the appeal of the assessee.

Aggrieved, the assessee challenged it before ITAT questioning the validity of the addition made on a subject which was outside of the scope of limited scrutiny.

The Tribunal observed that in the present case, the scope of limited scrutiny was crystal clear that the AO shall enquire regarding viz. (i) large cash deposits in Bank account; and (ii) the assessee has also transferred one or more properties. In other words, the properties which were transferred by the assessee.

The Tribunal further observed that the inquiry was restricted to transfer of property by the assessee which meant sale of properties while additions on the other hand had been made regarding purchase of immovable property or acquiring of immovable property which was, therefore, outside the purview of limited scrutiny and violative of the CBDT Circular No. 20/2015, dated 29.12.2015.

The Tribunal also noted that in exactly similar facts and circumstances, the ITAT, Division Bench. In the said case, the limited scrutiny was inter alia made for sale of property mismatch and the AO had made an addition u/s 56(2)(vii)(b) of the Act with respect to difference in the Fair Market Value (FMV) which was not an issue for which the case of the assessee was selected for “limited scrutiny” u/s.143(2) of the Act. The Division Bench held that the A.O. could not have ventured into an issue that did not form the basis for taking up the case for such scrutiny assessment without getting the said limited scrutiny converted into complete scrutiny.

The Tribunal held that the case of the assessee was selected for limited scrutiny, wherein one of the parameters was to enquire regarding transfer of property by the assessee during the year which means the AO was to enquire regarding sale transactions, if any, by the assessee and when the word ‘transfer of property by the assessee’ is used in the limited scrutiny, it cannot therefore, include purchase of property or acquiring of property by the assessee, hence making addition in regard to purchase of property, is violative of CBDT Circular.

The Tribunal stated that the limited scrutiny cannot be converted to complete scrutiny without the permission of the competent authority and it was not open for the A.O to venture into the purchase transactions of property when specifically limited scrutiny pertained to the transfer of property by the assessee.

The Tribunal further observed that the word ‘transfer of property’ does not include ‘acquiring’ of property or ‘purchasing’ of property and only can be confined to ‘sale’ of property.

Accordingly, the Tribunal set-aside the order of the CIT(Appeals)/NFAC and directed the AO to delete the additions from the hands of the assessee.

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