PCIT Vs Weilburger Coatings (India) Pvt. Ltd. (Calcutta High Court)
The case involved an appeal by the Income Tax Department against the ITAT Kolkata’s order favoring Weilburger Coatings (India) Pvt. Ltd. The primary issue was whether the Assessing Officer (AO) exceeded his jurisdiction by making additions on matters not covered under limited scrutiny. The AO had assessed the company’s carry-forward losses, which were beyond the scope of limited scrutiny. The Commissioner of Income Tax (Appeals) [CIT(A)] partly allowed the appeal, but the ITAT overruled the AO’s action, holding that the jurisdictional issue could be raised at any stage. The Tribunal also cited CBDT Instruction No. 5 of 2016, stating that the AO had acted beyond his authority without obtaining proper approvals.
The Calcutta High Court upheld ITAT’s decision, reiterating that the AO must adhere to the prescribed scope of limited scrutiny. The court referred to previous CBDT instructions warning against such jurisdictional overreach, emphasizing that deviations require proper documentation and approvals. A similar stance was taken in PCIT-1 Kolkata vs. Sukhdham Infrastructures LLP, where a comparable overreach was deemed impermissible. The court dismissed the revenue’s appeal, ruling that no legal grounds justified interference with the ITAT’s order. Consequently, the substantial questions of law were answered against the revenue, and the appeal, along with the stay application, was dismissed.
