INCOME TAX ACT, 1961

Section 143(3)

Assessment - Scope - Limited scrutiny converted into complete scrutiny - No approval taken from higher aothority

Assessee's case was selected for scrutiny to examine the issue of commodity transaction/derivative (futures) transaction. AO noted that assessee received consultancy charges in cash from various persons and each amount was below Rs. 20,000. Accordingly, he made addition of the same under section 68 as unexplained cash deposits. Assessee contended that AO made addition under section 68 in respect of the issue, which was not the part of limited scrutiny; therefore, the same would not be sustainable. Held: In instant case, AO converted the limited scrutiny to a full-fledged scrutiny. The CBDT vide Instruction No. 5/2016, dated 14-7-2016 and Instruction No. 225/402/2018, dated 28-11-2018 clearly mentioned that in a limited scrutiny case, AO cannot travel beyond the issues for which the case was selected and in case the AO wants to expand its scope of enquiry/investigation other than the issues on which the case was selected for scrutiny, then in that case mandatory approval from the PCIT or CIT or PDIT or DIT has to be obtained. A perusal of assessment order showed that no such approval was taken, therefore, the matter was remanded to AO with a direction to verify as to whether such approval was taken or not and in case no such approval was taken then the addition so made by the AO stood deleted.

REFERRED :

FAVOUR : In assessee's favour by way of remand

A.Y. :

INCOME TAX ACT, 1961

Section 139(5)

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