Case Law Details
Sukhdham Infrastructures LLP Vs ITO (ITAT Kolkata)
ITAT Kolkata held that enquiring on issues other than limited scrutiny issue, before conversion of limited scrutiny to complete scrutiny, is against the procedure laid down in Instruction No. 5/2016 of CBDT dated 14.07.2016. Accordingly, assessment order is quashed as nullity and bad-in-law.
Facts- The case of the assessee was selected for scrutiny under the CASS under the category of limited scrutiny. The statutory notices were duly issued and served upon the assessee. In the notice issued u/s 143(2) for limited scrutiny, there were four issues stated/covered namely i) Interest expenses, ii) Income from Real Estate Business, iii) Sales Turnover mismatch and iv) Other expenses claimed in the profit and loss a/c. However, the AO issued notice u/s 142(1) of the Act dated 20.02.2017 calling for information and details as required for secured & unsecured loans/deposits beside calling for the details. The assessee duly complied with the notices issued by the AO by filing the details/ evidences , complete books of accounts, audited accounts etc as desired by the AO. The AO converted the limited scrutiny into complete scrutiny on 14.12.2017 whereas the notices were issued by the AO on the issues beyond the scope of limited scrutiny priority on 14.12.2017 and finally the assessment was framed vide order dated 28.12.2017 u/s 143(3) of the Act just two days before the assessment was getting time barred.
Conclusion- We are of the considered view that the AO has exceeded his jurisdiction in enquiring into those issues beyond the scope of limited scrutiny even prior to the date of conversion which is in clear violation of mandate given by CBDT in the said Circular and has been held by the Co-ordinate Bench of Delhi in the case of Dev Milk Foods Pvt. Ltd. (supra) to be bad in law.
We note that CBDT has in para 4 of the said instruction clarified that in a limited scrutiny, the scrutiny assessment proceedings would initially be confined only to issues and questionnaire, enquiry, investigation etc. would be restricted to such issues in the limited scrutiny. Only upon conversion of such case to complete scrutiny after following the procedure laid down as stated , the AO may examine the issues other than the issues involved in the limited scrutiny but in the present case the procedures were not followed and assessment was conducted in violation of this Instruction. In our opinion, the order passed by the AO is bad in law and cannot be sustained for the said reason. Accordingly we quash the assessment order as nullity and bad in law.
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