Tribunal sets aside AO's order for exceeding jurisdiction in tax assessment

The Tribunal allowed the appeal of the assessee, setting aside the order passed by the AO under Section 143(3) due to lack of jurisdiction in making additions beyond the limited scrutiny scope without necessary approval. The AO's addition of Rs. 10,00,000 under Section 69 was deemed beyond jurisdiction and quashed. The challenge against the invocation of Section 115BBE was not addressed due to the jurisdictional issue. The appeal was allowed in favor of the assessee.

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Issues Involved:
1. Jurisdiction of the Assessing Officer (AO) in limited scrutiny cases.
2. Addition of Rs. 10,00,000 as unexplained investment under Section 69.
3. Invocation of Section 115BBE by the AO.

Detailed Analysis:

1. Jurisdiction of the Assessing Officer in Limited Scrutiny Cases:
The primary issue raised by the assessee was the challenge to the jurisdiction of the AO in making additions beyond the scope of limited scrutiny. The assessee argued that the case was selected for limited scrutiny to examine capital gains/loss on the sale of property. However, the AO made an addition regarding the unexplained investment in the purchase of property under Section 69 without converting the limited scrutiny into complete scrutiny and without obtaining the necessary approval from the competent authority. The Tribunal noted that the AO had accepted the assessee's explanation that there was no sale of immovable property during the year, thus no capital gains were involved. Despite this, the AO proceeded to make an addition related to the purchase of property, which was beyond the scope of the limited scrutiny. The Tribunal emphasized that as per CBDT Instruction No. 5 of 2016, the AO must seek approval from the competent authority to convert a limited scrutiny into a complete scrutiny. Since no such approval was obtained, the Tribunal concluded that the AO exceeded his jurisdiction, rendering the addition under Section 69 invalid.

2. Addition of Rs. 10,00,000 as Unexplained Investment under Section 69:
The AO made an addition of Rs. 10,00,000 under Section 69, treating it as unexplained investment in the property. The Tribunal found that this addition was not related to the issue for which the case was selected for limited scrutiny (i.e., capital gains/loss on the sale of property). Since the AO did not obtain the necessary approval to expand the scope of the scrutiny, the addition under Section 69 was deemed beyond his jurisdiction and was quashed.

3. Invocation of Section 115BBE by the AO:
The assessee also challenged the invocation of Section 115BBE by the AO. However, since the Tribunal set aside the entire order passed by the AO due to the jurisdictional issue, the question of invoking Section 115BBE became academic and was not adjudicated upon. The Tribunal dismissed this ground as infructuous.

Conclusion:
The Tribunal allowed the appeal of the assessee, setting aside and quashing the order passed by the AO under Section 143(3) due to the lack of jurisdiction in making additions beyond the scope of limited scrutiny without obtaining the necessary approval. The Tribunal did not adjudicate on the merits of the addition under Section 69 and the invocation of Section 115BBE, as these issues became academic following the jurisdictional finding. The appeal was thus allowed in favor of the assessee.

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