"Income other than business/Profession Mismatch" falls within Scope of Limited Scrutiny: ITAT Sets aside Assessment Order [Read Order]

The Kolkata bench of the Income Tax Appellate Tribunal (ITAT) set aside the impugned assessment order and held that income other than business/professional mismatch falls within scope of limited scrutiny.

The assessee has filed his return of income electronically declaring a total income of Rs.1,04,68,750/-. The case of the assessee was selected for limited scrutiny as discernible from the copy of the notice issued under Section 143(2) of the Income Tax Act, 1961. The Assessing Officer thereafter passed the scrutiny assessment under Section 143(3) of the Income Tax Act.

The Principal Commissioner perused the record and formed an opinion that the assessment order was erroneous as well as prejudicial to the interest of revenue.

The assessee did not respond to the notice of CIT. In the absence of any explanation at the end of the assessee, the Commissioner set aside the assessment order being erroneous and prejudicial to the interest of revenue and remitted them back to the Assessing Officer. He set aside for fresh enquiry and passing of the fresh assessment order on these two issues. 

The counsel contended that the case of the assessee was selected for limited scrutiny and it cannot be converted to a complete scrutiny. These items could have not been examined by the CIT. He made a reference to the CBDT Circular No. 20 of 2015 dated 29.12.2015 and also put reliance upon the ITAT, Indore in the case of M/s. Sahita Construction Company –vs. PCIT in ITA No. 119/Ind./2021.

The Two-member bench comprising of Rajpal Yadav (Vice-President) and Rajesh Kumar (Accountant member) held that the counsel for the assessee was misplaced and that the two items could not be looked into by the Commissioner because it is a case for limited scrutiny.

It was a patently erroneous claim at the end of the assessee, which has been accepted by the Assessing Officer, therefore, the CBDT Circular was not attracted in the present case. The scrutiny of the income of the assessee was not being converted from limited scrutiny to complete scrutiny. These items duly fall within the first issue provided in the limited scrutiny itself, therefore, neither the decision of the ITAT Indore Bench nor CBDT Circular.

The assessee has not appeared before the Commissioner or filed any explanation qua the proposed errors. Therefore, considering the stand of both sides as well as perusal of the impugned order of the Principal Commissioner, the bench do not find any error in it. The appeal of the assessee was devoid of any merit and accordingly dismissed.

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