ITAT KOLKATA: Considering the CBDT instruction no.20/2015, the PCIT cannot make revision u/s 263 on any other issues except the issues as selected for limited scrutiny assessment
Facts of the case
The Assessee Company filed its return of income which was selected for limited scrutiny assessment on the issue of business expenses. The AO made certain disallowances of the claim of expenses for which the assessee was in appeal before the Commissioner (Appeals). Subsequently, Ld. Pr. CIT on examination of assessment order observed that revenue from operations for the period is only Rs. 1,12,93,000/- whereas total receipts as per Form 26AS is Rs.2,65,68,076/-. According to him, the assessee has suppressed its taxable income to the tune of Rs.1,52,75,076/- and the amount had not been taken into account while computing the total income. He thus, drew a conclusion that assessment order was erroneous in so far as it was prejudicial to the interest of revenue.
ITAT Ruling
The Tribunal took the note of CBDT Instruction NO.20/2015 dated 29.12.2015, in specific the clause (b) & (d), where the sub-clause (b) of Clause (3) categorically states that questionnaire issued under section 142(1), in a limited scrutiny case, shall remain confine only to the specific reasons/issues for which case has been picked up for scrutiny. Further, the scope of enquiry shall be restricted to the limited scrutiny issues. Sub clause (d) of Clause-3 further provides for the expansion of scope of scrutiny from limited scrutiny to complete scrutiny if during the course of assessment proceedings it comes to the notice of the AO that there is potential escapement of income exceeding Rs.5 lakhs for normal CIT charge and exceeding Rs.10 lakhs for metro CIT charge.
Considering the CBDT Instruction and judicial precedents relied by the assessee, and the uncontroverted facts that the case was selected for to limited scrutiny assessment on the sole issue of business expenses, it is viewed that once the Assessing Officer cannot examine any other issue except the issue as selected for limited scrutiny assessment, the Principal Commissioner can examine only that issue which was before the Assessing Officer during the course of scrutiny assessment and not any other issue which has not been subject matter of the assessment in a limited scrutiny assessment. Hence, the revisionary order is quashed and the appeal of the assessee is allowed.
Mind Sports League (P.) Ltd. IT APPEAL NO. 392 (KOL) OF 2023
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