Srimanta Kumar Shit Vs ACIT (ITAT Kolkata)
In a significant ruling for taxpayers, the Income Tax Appellate Tribunal (ITAT) Kolkata has quashed an assessment order against Srimanta Kumar Shit, an individual engaged in the fish resale business. The Tribunal held that the Assessing Officer (AO) overstepped the bounds of a “limited scrutiny” assessment by making additions beyond the initially identified issue of “cash deposit during demonetization” without following the prescribed procedure for converting to a complete scrutiny.
The case, Srimanta Kumar Shit Vs ACIT (ITAT Kolkata), centered on the validity of the assessment proceedings for the Assessment Year 2017-18. The assessee’s return, declaring an income of ₹47,14,580/-, was selected for limited scrutiny solely for verifying cash deposits made during the demonetization period. However, the subsequent assessment order, passed under Section 143(3) read with Section 144 of the Income Tax Act, 1961, dramatically increased the taxable income to ₹14,49,57,740/-, incorporating additions related to trawler expenses, sundry creditors, fixed deposits, and Section 56(2)(vii)(b)(ii) of the Act.
The assessee raised an additional ground of appeal before the ITAT, arguing that the notice issued under Section 143(2) was invalid as it did not comply with CBDT Instruction F. No. 225/157/2017/ITA-II dated 23.06.2017, which mandates specific formats for limited, complete, or compulsory manual scrutiny notices. Furthermore, it was contended that since the case was selected for limited scrutiny on a specific issue, and no addition was made on that particular account (cash deposits), the AO lacked jurisdiction to make other additions without duly expanding the scope of scrutiny.
