CIT Couldn’t Revise Order on Issues Which Were Not Covered by Limited Scrutiny Assessment | ITAT

Case Details: Mind Sports League (P.) Ltd. v. PCIT - [2023] 157 taxmann.com 815 (Kolkata-Trib.)

Judiciary and Counsel Details

• • Rajpal Yadav, Vice President & Girish Agrawal, Accountant Member
  • Miraj D. Shah, FCA for the Appellant.
  • Abhijit Kundu, CIT, DR for the Respondent.

Facts of the Case

The assessee filed its return of income, claiming certain expenses. Assessee’s case was selected through CASS for limited scrutiny assessment on the issue of ‘business expenses’. Assessing Officer (AO) made certain disallowances of expenses for which the assessee was in appeal before the Commissioner (Appeals).

Later, the Principal Commissioner found discrepancies in the assessment order, noting that the assessee failed to declare professional charges and contractual income from multiple parties. It was concluded that the assessment was erroneous and prejudicial to revenue interests.

The matter reached before the Tribunal.

ITAT Held

The Tribunal held that the assessee’s argument was it was not open to the Principal Commissioner while exercising suo motu revisional power under section 263 to find fault with the assessment order on grounds which were not covered by limited scrutiny assessment when the Assessing Officer could not have possibly examined such issues.

It was noted that there was no whisper in said order to expand the scope of limited scrutiny after obtaining permission from the competent authority. Whether once the Assessing Officer could not examine any other issue except the issue as selected for limited scrutiny assessment, the Principal Commissioner could examine only that issue which was before the Assessing Officer during scrutiny assessment and not any other issue which had not been the subject matter of assessment in a limited scrutiny assessment.

Therefore, the impugned revision invoked by the Principal Commissioner on two new issues was to be quashed.

List of Cases Referred to

• • Pr. CIT v. Naga Dhunseri Group Ltd. [2023] 146 taxmann.com 424/291 Taxman 278 (Cal.) (para 4.1)
  • Pr. CIT v. Shark Mines & Minerals (P.) Ltd. [2023] 151 taxmann.com 71 (Orissa) (para 4.2).