Devendra Kumar Vs ITO (ITAT Delhi)
Factual Background
The case involves an appeal filed by the assessee, Devendra Kumar, against the order of the Additional/Joint Commissioner of Income Tax (Appeals) [Addl./JCIT(A)] for the Assessment Year (AY) 2017-18. The original assessment was framed under Section 143(3) of the Income Tax Act, 1961 (the Act).
The core dispute was the addition made by the Assessing Officer (AO) of Rs. 8,68,799/- under the presumptive taxation provisions of Section 44AD of the Act. This addition was subsequently upheld by the lower appellate authority, the Addl./JCIT(A).
Crucially, the assessment was initially selected for “limited” scrutiny specifically to examine the assessee’s cash deposits. Despite this restricted scope, the AO ultimately proceeded to estimate the assessee’s business profits by invoking Section 44AD, an issue that did not form part of the original limited scrutiny mandate.
Issue Before the Tribunal
The sole substantive grievance raised by the assessee before the Income Tax Appellate Tribunal (ITAT), Delhi, was whether the lower authorities were correct in making the addition of presumptive business income under Section 44AD when the assessment was selected only for limited scrutiny concerning cash deposits.
ITAT’s Analysis and Holding
The ITAT considered the assessee’s grievance and the Revenue’s contentions. The Tribunal concluded that the addition relating to presumptive business income was unwarranted because it fell outside the scope of the limited scrutiny.
