The ITAT, Kolkata bench has recently held that the Commissioner, while invoking his jurisdiction under section 263 of the Income Tax Act, 1961 cannot point out the issues other than the issue taken up by the Assessing Officer in scrutiny assessment proceedings.
The Assessing Officer has completed assessment u/s.143(3) of the Income Tax Act, 1961 on 09.12.2016 and determined total income of Rs.6,56,968/- by making additions towards cash deposits made into savings bank account maintained with Federal Bank at Rs.3,17,348/-. The said case has been subsequently taken up for revision proceedings u/s.263 of the Income Tax Act.
The assessee contended that the order of the Assessing Officer was held as erroneous and prejudicial to the interests of revenue on other issues which was not subject matter of limited scrutiny assessment proceedings u/s.143(3) of the Act.
The Tribunal bench comprising Shri G. Manjunatha, Accountant Member and Shri Anikesh Banerjee, Judicial Member observed 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.
Quashing the order, the Tribunal held that “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 aserroneous, 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.”
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