DCIT Vs Rakesh Arora (ITAT Delhi)
ITAT Delhi Quashes Additions Made Beyond Limited Scrutiny Scope – CBDT Instructions Held Mandatory
In a significant ruling on the sanctity of Limited Scrutiny, the ITAT Delhi dismissed the Revenue’s appeal and upheld the deletion of additions of Rs. 1.69 crore u/s 2(22)(e) and Rs. 4.65 crore u/s 69A. The Tribunal noted that the case was selected only to verify disclosure of securities and derivative transactions, yet the AO proceeded to examine unrelated issues and made substantive additions without converting the case into Complete Scrutiny. ITAT held that CBDT Instructions 7/2014, 20/2015, 5/2016 and the 30.11.2017 directive are binding under Section 119, and any expansion of scope requires the AO to form a reasonable view and obtain prior written approval of the Pr. CIT—a condition entirely absent here. Citing Shivalik Educational and Placement Services, the Tribunal reiterated that non-compliance with CBDT’s mandated procedure is a jurisdictional defect, rendering such additions void. Since the legal infirmity struck at the root of the assessment, the additions were quashed without delving into merits, and the Revenue’s appeal was dismissed in full.
FULL TEXT OF THE ORDER OF ITAT DELHI
The captioned appeal has been preferred by the Revenue against order dated 06.02.2025 of the Commissioner of Income Tax (Appeals)-25, Delhi [hereinafter referred to as ‘ld. CIT(A)’] arising out of assessment order dated 30.12.2018 passed u/s 143(3) of the Income Tax Act, 1961pertaining to Assessment Year 2016-17. The word ‘Act’ herein in this order would mean Income Tax Act, 1961.
