Even in a limited scrutiny case there is no bar on the AO as regards adjudication of issues raised by the assessee

11. (2019) 69 ITR (Trib) 79 (Amritsar) Thakur Raj Kumar vs. DCIT ITA No.: 766/Asr/2017 A.Y.: 2014-2015 Dated: 29^th November, 2018

Even in a limited scrutiny case there is no
bar on the AO as regards adjudication of issues raised by the assessee

FACTS

The assessee’s case was selected for complete scrutiny under
Computer-Assisted Scrutiny Selection. However, later, it was converted to
limited scrutiny to examine an issue pertaining to capital gains on securities.
The assessee had sold an agricultural land and offered relevant capital gains
to tax. However, in the course of assessment proceedings, the assessee made a
fresh claim to substitute the cost of acquisition of the land claimed by him in
return of income, for another value. The AO denied his claim citing that the
scrutiny being a limited one, he had no jurisdiction to discuss and pass
judgment on issues not covered within the reasons of scrutiny and the only
recourse available to the assessee was to file a revised return. On appeal to
Commissioner (Appeals), the issue was decided against the assessee. The
assessee therefore preferred an appeal to the Tribunal.

HELD

The Tribunal held
that though the AO has no jurisdiction to touch upon issues which are not a
subject matter of limited scrutiny, however, there is no bar to adjudicate the
issues raised by the assessee. This is because an AO is obliged to make correct
assessment in accordance with provisions of the law. Further, in terms of
Circular No. 14 dated 11.04.1955, the department cannot take advantage of
ignorance of the assessee to collect more tax than what is legitimately due.

The matter was,
thus, remanded to the file of the Assessing Officer to adjudicate the
assessee’s claim. Though the decision in Goetz (India) Limited vs. CIT
(2006) 284 ITR 323(SC) was relied on by the D.R., the same does not seem to
be discussed by the Tribunal.