Swabhumi Vintrade Pvt. Ltd. Vs DCIT (ITAT Kolkata)
AO Crossed the Red Line—Addition Beyond Limited Scrutiny Held Void – Limited Scrutiny Means Limited Power: Kolkata ITAT Quashes ₹90 Lakh 68 Addition & Entire Assessment
Kolkata ITAT ‘D’ Bench in M/s Swabhumi Vintrade Pvt Ltd vs DCIT (ITA No.1839/Kol/2025, AY 2017-18, order dated 23-12-2025) allowed the assessee’s appeal in full and quashed the entire assessment, holding that the AO exceeded the scope of limited scrutiny and also lacked jurisdiction to frame the assessment.
The assessee had filed ROI declaring nominal income of ₹520. The case was selected for limited scrutiny only on the issue of share premium. However, during assessment, the AO made an addition of ₹90 lakh u/s 68 on account of share application money, which was outside the specific issue for which limited scrutiny was approved. CIT(A), NFAC confirmed the addition.
Before ITAT, the assessee raised an additional legal ground contending that the addition was beyond the scope of limited scrutiny. ITAT admitted the additional ground, relying on Jute Corporation of India (SC), NTPC (SC) and PCIT vs Britannia Industries Ltd (Cal HC), holding that a pure legal issue going to the root of jurisdiction can be raised at any stage.
On merits of jurisdiction, ITAT held that limited scrutiny restricts the AO strictly to the issues for which the case is selected, unless the case is properly converted into complete scrutiny following prescribed procedure. Since the scrutiny was for share premium, but the addition was made on share application money, the AO had clearly travelled beyond jurisdiction, rendering the assessment bad in law. The Tribunal followed the Chandigarh ITAT ruling in Shri Vijay Kumar and held that the entire assessment itself becomes a nullity.
Independently, ITAT also accepted the assessee’s ground on jurisdiction of AO, noting that the notice u/s 143(2) was issued by ITO Ward-1, NALG, whereas the assessment was framed by ACIT, Circle-9(1), Kolkata, without issuance of a fresh valid notice by the jurisdictional AO. Relying on Raghvendra Mohta (ITAT Kolkata) as affirmed by the Calcutta High Court, the Tribunal held that the assessment was without jurisdiction and void ab initio.
Since the assessment itself was quashed, ITAT held that no adjudication on merits was required.
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