MARSHAL SECURITY SERVICES,AGRA vs. ASSISTANT COMMISSIONER OF INCOME TAX, AGRA

ITA 131/AGR/2025Status: DisposedITAT Agra28 October 2025AY 2016-1726 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the Assessing Officer was not justified in examining the expenses when the case was selected for limited scrutiny only to verify contract receipts/fees. The Tribunal respectfully agreed with the finding of the co-ordinate Bench of the Jaipur Tribunal in the case of Suchita Bhatia (supra). The Tribunal noted that the AO is duty-bound to follow instructions regarding limited scrutiny assessments and that examining issues outside the limited scope requires conversion to complete scrutiny with necessary approvals, which was not done. The Tribunal found that the issue of expenditure was not part of the reasons for which the case was selected for limited scrutiny and was not remotely connected. Therefore, the approach of the revenue authorities in including the issue of expenses was incorrect. The addition made by the AO and confirmed by the CIT(Appeals) was quashed. The other grounds challenging the addition on merit were rendered academic and not adjudicated. The appeal was allowed.

What were the facts?

The assessee, Marshal Security Services, filed its return for AY 2016-17 declaring an income of Rs. 21,55,530/-. The case was selected for limited scrutiny to examine whether contract receipts/fees were correctly offered to tax. The Assessing Officer (AO) issued notices under sections 143(2) and 142(1). The assessee failed to respond to statutory notices and final show cause notices. Consequently, the AO completed the assessment under section 144, adding Rs. 1,53,70,347/- by disallowing 25% of various expenses amounting to Rs. 6,14,81,388/-. The assessee appealed to the CIT(Appeals), who called for a remand report. The assessee did not provide any response during remand proceedings. The CIT(Appeals) dismissed the appeal, confirming the ad-hoc disallowance.

What were the issues?

1. Whether the Assessing Officer exceeded his jurisdiction by examining expenses when the case was selected for limited scrutiny solely on the issue of contract receipts/fees, and not on expenses. Assessee's Contention: The assessee argued that the AO's jurisdiction was limited to verifying contract receipts/fees, and examining expenses went beyond the scope of limited scrutiny. The AO issued further show cause notices on issues other than those selected for limited scrutiny. The assessee relied on the case of Suchita Bhatia V. DCIT (Jaipur Bench) and other judicial pronouncements regarding the AO's powers in limited scrutiny cases. Revenue's Contention: The revenue argued that the assessee failed to submit any documentary evidence before the AO or during remand proceedings. The learned DR supported the impugned order and prayed for the dismissal of the appeal.

Which sections of the Income-tax Act were involved?

Section 143(1),Section 143(2),Section 142(1),Section 144,Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, AGRA BENCH, AGRA

Before: SHRI M. BALAGANESH & SHRI SUNIL KUMAR SINGH

Hearing: 19.08.2025Pronounced: 28.10.2025

PER : SUNIL KUMAR SINGH, JUDICIAL MEMBER:

This appeal has been preferred by assessee against the impugned order dated 15.01.2025 passed in Appeal No. ClT(Appeals) 2, Agra/10445/2018-19 by the Ld. Commissioner of Income-tax (Appeals), NFAC, Delhi u/s. 250 of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) for the assessment year 2016-17, wherein learned CIT(Appeals) has dismissed assessee’s first appeal.

2.

Brief facts state that the assessee e-filed return of income on 27.09.2016, declaring total income of Rs.21,55,530/-. Return was processed

u/s. 143(1) of the Act. Thereafter, case was selected through CASS for limited scrutiny. Statutory notices u/

The order continues below.

Read the full judgment

A free account opens 10 full judgments a month. Re-reading one you have already opened does not count again.

Create a free accountSign in

See plans and prices

The summary, the parties, the sections and the citations above are open to everyone and always will be. Only the text of the order and the PDF are metered.

More judgments on Section 142(1)

All 17,244 judgments and leading authorities on Section 142(1) →

Recent GST High Court judgments

Search GST case law →