Approval of PCIT mandatory to convert Limited Scrutiny to a Complete Scrutiny

Approval of PCIT mandatory to convert Limited Scrutiny to a Complete Scrutiny Relevant Extract of Order is given for reference 17. As is evi

Pratibha Goyal

Dec 17, 2019

Last update on Dec 17, 2019

Approval of PCIT mandatory to convert Limited Scrutiny to a Complete Scrutiny Relevant Extract of Order is given for reference 17. As is evident from the assessment order, in the present case, we find that the same is beyond the intent purpose and scope of the jurisdiction of the Assessing Officer, as the assessment has been made, exceeding his jurisdiction, because the case has been selected for limited scrutiny only on two issues, i.e. (i) Large deduction under section 54B, 54C, 54D etc., and (ii) Large cash deposits in savings account of the assessee; whereas the additions have been made on the indexed cost of acquisition at Rs.17,59,545/- and indexed cost of improvement at Rs.20,90,319/-, which is covered under section 48 of the Act, and is outside the scope and purview of the reasons of limited scrutiny. Moreover, the approval of the PCIT is mandatorily required for converting the Limited Scrutiny to a Complete Scrutiny. So, the proper course for the AO before making these additional enquiries would have been to take approval from the administrative Commissioner to widen the scrutiny. This, however, was not done and therefore, the action of the AO is violative of the CBDT Instruction. Thus, the addition so made by the Assessing Officer, in gross violation of the CBDT Instruction, is liable to be deleted.