NCLAT: Cannot Withhold Income Tax Refund Received by Bank During CIRP In CD's Account  ||  All. HC: With S. 111 of BNS Covering 'Organised Crime' It Appears Gangsters Act has become Redundant  ||  P&H HC: Cannot Allow Changes in Admission Form after Submission  ||  Bom. HC: Findings in Criminal Proceedings Cannot Be Relied Upon While Adjudicating Civil Proceedings  ||  P&H HC Directs Jail Authorities to Decide Parole Applications within Four Months  ||  Allahabad HC: Merely Supporting Pakistan Will Not Prima Facie Attract Section 152 of BNS  ||  HP HC Upholds Wife’s Claim of Adverse Possession after Husband’s Death  ||  Patna HC: Maintenance may be Allowed in Disputed Marriages if Relationship Was Socially Accepted  ||  Karnataka HC: State to Respond in 3 Weeks regarding Mandatory Teaching of Kannada  ||  Delhi HC: Husband Unhappy in Marriage is No Proof of Abetment of Suicide    

Rajnikanth S Bhalavat, Ahmedabad vs. ACIT - (Income Tax Appellate Tribunal) (23 Dec 2022)

In limited scrutiny, AO cannot go beyond dispute raised in notice

MANU/IB/0753/2022

Direct Taxation

Present is an appeal filed by the assessee against the order of the learned Commissioner of Income Tax (Appeals). The assessee submitted that, the learned CIT(A) has erred in law and facts in upholding disallowance of commission of Rs. 6,36,492 made by Learned A.O. The Learned CIT(A) has erred in law and facts in upholding disallowance of purchases of Rs. 1,40,767 made by Learned A.O. invoking Section 40A (2)(b) of the Income Tax Act, 1961 (IT Act).

The assessee has also taken the additional Grounds of Appeal that, the order passed by Learned AO is bad, illegal and without jurisdiction as the learned AO has made additions which were not covered under scope of Limited Scrutiny assessment.

The additional ground of appeal which is being pressed for the first time is a purely legal issue and the assessee can be permitted to press any legal issue which goes to the root of the matter or challenge legality of the jurisdiction of the assessment itself, at the appellate stage as well. It is settled law that, unless the limited scrutiny assessment is converted into full scrutiny assessment, after taking due approval as mandated under the Act, such assessment order has to be restricted in scope to the issues on which the notice was issued/assessment was initiated.

Further, the commission payment in the instant facts were disallowed on the ground that the same were "bogus" in nature and not on account of "related party mismatch" as mentioned in the notice under section 143(2) of the Act. Accordingly, the assessment order has been passed in respect of issues which were not the subject matter of "limited scrutiny assessment" notice section 143(2) of the Act.

In the case of Chaitanya Bansibhai Nagori Vs Principal Commissioner of Income Tax, the Ahmedabad ITAT held that in limited scrutiny, AO cannot go beyond dispute raised in section 143(2) notice. In the case of Dharmin N. Thakkar v. ITO, ITAT quashed the assessment order on the ground that the order was passed beyond the scope of limited scrutiny as there was no question the said notice for the limited scrutiny under section 143(2) of the Act, for the cash balance. In the case of Rajesh Jain v. ITO, the ITAT held that the jurisdiction of the Assessing Officer in such cases where the notices are issued for limited scrutiny is confined to the claims he has set out in the notice for verification. Since the assessment order has travelled beyond the scope of notice issued under Section 143(2) of the Act, the additional Grounds of Appeal of the assessee is allowed and the assessment is set aside.

Tags : LIMITED SCRUTINY ASSESSMENT   NOTICE FOR VERIFICATION   DISPUTE RAISED  

Share :        

Disclaimer | Copyright 2025 - All Rights Reserved