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Facts
The assessee filed its return of income and the case was selected for limited scrutiny. The Assessing Officer (AO) made an addition of Rs. 90,00,000/- on account of unexplained cash credit, which was confirmed by the CIT(A). The assessee raised an additional ground that the addition was made outside the scope of limited scrutiny.
Held
The Tribunal held that the AO exceeded his jurisdiction by making additions beyond the scope of limited scrutiny. The assessment order was quashed as bad in law. The Tribunal also found that the notice u/s. 143(2) was issued by one authority and the assessment was framed by another, making the assessment without jurisdiction.
Key Issues
Whether additions made by the AO are beyond the scope of limited scrutiny? Whether the assessment framed by the AO is without jurisdiction due to issuance of notice by a different authority?
Sections Cited
139(1), 143(2), 142(1), 68
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “D” BENCH, KOLKATA
Before: SHRI RAJESH KUMAR & SHRI PRADIP KUMAR CHOUBEY
O R D E R
Per Rajesh Kumar, AM:
This is an appeal filed by the assessee against the order passed by the ld. National Faceless Appeal Centre (NFAC), Delhi, dated 28.07.2025for the assessment year2017-2018.
At the time of hearing, the assessee raised additional ground which is extracted below: In this connection it is submitted that the addition has been made outside the issues for which the case was selected for limited scrutiny which is bad in law and therefore the entire addition is liable to be deleted. Therefore, the assessee is filing herewith an additional ground which goes to the root of the issue and no fresh investigation of facts is required. In view of the Judgment of the Hon'ble Supreme Court in the case of Jute Corporation of India reported in 187 ITR page 688 and National Thermal Power Corporation reported in 229 ITR 383 the additional ground may be admitted. It is requested to kindly admit the additional grounds which are enclosed herewith.
2 Additional Ground : “For that the addition made outside the issues for which the case was selected for limited scrutiny is bad in law and therefore the entire addition is liable to be deleted.”
After hearing the rival contentions and perusing the material on record, we find that the assessee has raised an additional ground of appeal challenging the jurisdiction of the AO to make addition. In our opinion the issued raised in the additional ground is a purely a legal issue qua which all the facts are available in the appeal folder and no further verification of facts are required from any quarter whatsoever. In our considered view the assessee is at liberty to raise any legal issue before any appellate authority for the first time even when the same has not been raised before the lower authorities. The case of the assessee is squarely coverd by the decisions of the Apex court in the case of i) Jute Corporation of India Ltd. Vs CIT in 187 ITR 688 , ii) National Thermal Power Co. Ltd v. CIT [1998] 229 ITR 383 and also by the decision of Hon’ble Calcutta High Court in PCIT vs. Britannia Industries Ltd. [2017] 396 ITR 677 (Cal). Therefore, we are inclined to admit the same for adjudication.
4. In regard to the additional ground, ld.AR submitted that the assessee has filed its return of income u/s.139(1) of the Act on 15.10.2017 declaring total income at Rs.520/- The case of the assessee was selected for limited scrutiny and accordingly statutory notices were issued u/s.143(2) & 142(1) of the Act along with questionnaire which was 3 duly replied by the assessee. Finally, the AO made an addition of Rs.90,00,000/- u/s.68 of the Act on account of unexplained cash credit in respect of share application money received by the assessee during the year under consideration and added the same to the total income of the assessee. In appeal, ld. CIT(A) confirmed the order of the AO.
5. After hearing the rival contentions of the parties and perusing the material available on record, we find that the limited scrutiny was selected for examination of share premium, however, we note that during the assessment proceedings the AO made the addition in respect of share application money received by the assessee. Therefore, the addition made by the AO is in violation of the scope of limited scrutiny and accordingly the addition cannot be sustained. The case of the assessee is squarely covered by the decision of coordinate bench of Chandigarh in the case of Shri Vijay Kumar (ITA No. 434/Chad/2019 for AY 2014-15 dated 12.09.20) wherein it has been held as under:
“3. The main contention of the Ld. Counsel for the assessee is that the Assessing Officer while making the impugned additions has exceeded his jurisdiction. That the case of the assessee was selected for limited scrutiny issue i.e. regarding security transaction. The Assessing Officer could not find any reason to make any addition in respect of issue for which the limited scrutiny was done. However, the Assessing officer made the certain other additions for which the Assessing Officer did not have any jurisdiction.
The Ld. D.R has been fair enough to admit that the impugned additions have been made by the Assessing Officer on certain other issues, whereas, the case of the assessee was selected for the purpose of limited scrutiny relating to security transactions.” Considering the facts of the assessee’s case and also the ratio laid down drawn in the above, we are of the considered view that the AO has exceeded his jurisdiction by going beyond the scope of limited scrutiny. 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. Thus, the additional ground raised by the assessee is allowed.
With regard to ground No.1 of the appeal, the assessee has agitated that the statutory notice issued for scrutiny as well as order 4 passed by the AO was without jurisdiction and therefore, the entire assessment is liable to be quashed. We note that in this case, the return of income has been declared by the assessee is only at Rs.520/-. The notice u/s.143(2) of the Act was issued by the ITO Ward-1, NALG, wherein the assessment was framed in this case by the ACIT, Circle-9(1), Kolkata. Therefore, the ACIT Circle-9(1), Kolkata framing the assessment dehors the issuance of notice u/s.143(2) of the Act and, therefore, the assessment framed by the ACIT, Circle-9(1), Kolkata is without jurisdiction and nullity in the eyes of law and the same is hereby quashed.. The case of the assessee finds support from the decision of the coordinate bench of the Tribunal in the case of Raghvendra Mohta, passed in dated 08.04.2024, which has been upheld by the Hon’ble Jurisdictional High Court passed in ITAT/51/2025 IA No.GA/1/2025, GA/2/2025, dated 05.05.2025. Thus, the ground No.1 is allowed.
Since, we have quashed the assessment framed without jurisdiction, therefore, the other issues raised by the assessee on merits are not required any further adjudication.
In the result, appeal of the assessee is allowed. Order pronounced in the open court on 23.12.2025 (RAJESH KUMAR) (PRADIP KUMAR CHOUBEY) न्यधनयकसदस्य / JUDICIAL MEMBER लेखा सदस्य/ACCOUNTANT MEMBER कोलकाताKolkata; ददनाांक Dated 23.12.2025 Prakash Kumar Mishra, Sr.P.S.