Mahendra Shambhulal Thakkar Vs ITO (ITAT Ahmedabad)
Limited Scrutiny Can’t Morph into Roving Enquiry Without PCIT Nod: ITAT Ahmedabad Curbs AO’s Overreach
Ahmedabad ITAT, Bench ‘D’, in Mahendra Shambhulal Thakkar Vs ITO (ITA No.1423/Ahd/2025; AY 2016-17; order dated 18-12-2025), allowed the assessee’s appeal for statistical purposes and laid down a clear restraint on the scope of assessment in limited scrutiny cases.
The Tribunal noted that the case was selected for limited scrutiny only to verify (i) correctness of turnover/receipts and (ii) disclosure of investment and income relating to properties. However, the Assessing Officer proceeded to make additions on disallowance of housing loan interest u/s 24(b) and unexplained cash credits u/s 68, thereby expanding the scope into a complete scrutiny without obtaining the mandatory approval of the PCIT.
The Tribunal held that such conversion of limited scrutiny into complete scrutiny without PCIT’s approval is impermissible. It further observed that the Ld. CIT(A) failed to adjudicate this jurisdictional objection and instead erroneously set aside the assessment for de novo consideration, despite lacking power to do so in a non-144 case.
Accordingly, while restoring the matter to the AO, the Tribunal issued a categorical direction that during de novo assessment the AO shall confine enquiries strictly to the original limited scrutiny issues and shall not enlarge the scope of assessment in the absence of PCIT approval. The appeal was thus allowed for statistical purposes, reinforcing that limited scrutiny is a statutory boundary, not a procedural formality.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
