Loading judgment…
Facts
The assessee filed a return of 'Nil' income, which was processed under Section 143(1). The case was selected for limited scrutiny regarding business loss. However, the Assessing Officer (AO) made an addition under Section 14A for disallowance of exempt income, which was not the original issue for scrutiny.
Held
The Tribunal held that the AO exceeded his jurisdiction by making an addition on an issue not covered by the limited scrutiny without converting it to a complete scrutiny. The assessment order was quashed as bad in law and without jurisdiction.
Key Issues
Whether the Assessing Officer exceeded jurisdiction by making additions on issues outside the scope of limited scrutiny?
Sections Cited
143(1), 143(2), 142(1), 144, 144B, 14A, 250
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “A” BENCH,KOLKATA
Appearances by: Assessee represented by : Sunil Surana, FCA Department represented by : Ruchika Sharma, Sr. DR Date of concluding the hearing : 03.12.2025 Date of pronouncing the order : 18.12.2025 O R D E R
Per Rajesh Kumar, AM
The present appeal filed by the assessee arises from order dated 02.09.2025 passed u/s 250 of the Income Tax Act, 1961 (hereafter “the Act”) by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereafter “the Ld. CIT(A)].
The assessee has raised the Additional Ground vide letter dated 27.11.2025 which is extracted below:
“For that the addition made on item which was not the issue for which the case was selected for limited scrutiny is bad in law and the entire addition is liable to be deleted.”
Concord Trexim Private Limited 3. The facts in brief are that the assessee filed its return of income on 29.10.2018 declaring total income at Rs. “Nil” which was processed u/s 143(1) of the Act on 11.04.2019 accepting the returned income. Thereafter, the case of the assessee was selected for scrutiny under CASS and consequently notice u/s 143(2) and 142(1) along with questionnaire were served upon the assessee on 28.09.2019. There was no compliance by the assessee to the said notices and finally the assessment was framed u/s 144 read with section 144B of the Act vide order dated 23.04.2021 making an addition of Rs. 1,93,43,567/- on account of disallowance u/s 14A in respect of exempt income . In the appellate proceedings, the appeal of the assessee was dismissed by upholding the order of AO.
4. After hearing the rival contention and perusing the material on record, we find that undisputedly, the case of the assessee was selected for limited scrutiny vide notice dated 28.09.2019 issued u/s 143(2) by National E-Assessment Centre (NEAC) for examination of business loss. The assessee has not represented its case in the assessment proceedings and the AO made disallowance u/s 14A of the Act of Rs. 1,93,43,657/- which is obviously not an issue mentioned in the notice u/s 143(2) of the Act qua which the limited scrutiny was selected. In our opinion, the AO has exceeded his jurisdiction in making addition in respect of disallowance u/s 14A without converting the limited scrutiny into the complete scrutiny with the approval of competent authority. Therefore, the assessment framed by making an addition of Rs. 1,93,43,657/- by the AO is without jurisdiction and cannot be sustained. The case of the assessee find support from the decision of the coordinate bench in the case of Shri Vijay Kumar for AY 2014-15 dated 12.09.2019 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 Concord Trexim Private Limited 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 decision, we hold that the order passed by the AO is bad in law and cannot be sustained for exceeding jurisdiction in the assessment. Accordingly we quash the assessment order as nullity and bad in law. Issue raised by the assessee in additional ground is allowed.
Since, we have allowed the appeal of the assessee on additional ground therefore, other ground raised in the memorandum of appeal are not being adjudicated and are left upon to be decided at the later stage if need arises for the same.
In result, appeal of the assessee is allowed.
Order pronounced on 18.12.2025