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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: Whether, in a case selected for limited scrutiny through Computer Aided Scrutiny Selection, the Principal Commissioner could validly revise the assessment under section 263 of the Income-tax Act, 1961 on the ground that the Assessing Officer had not examined other capital-gain related aspects beyond the specific issue for which scrutiny was selected.
Analysis: The return was picked up for limited scrutiny on the specific issue of sale consideration of an immovable property being lower in the return than the amount reflected in AIR data. The applicable CBDT instructions confined enquiry in such cases to the specific reasons or issues for which the case was selected, and wider scrutiny could be undertaken only by following the prescribed procedure for conversion into complete scrutiny. As the case was selected on the AIR mismatch parameter, the Assessing Officer could legitimately examine matters connected with that specific discrepancy, but could not be expected to travel into broader capital-gain computations such as cost of construction and indexation unless the scrutiny was enlarged in the manner prescribed. The reference to sections 45 and 48 did not justify expansion of the limited scrutiny itself, because the statutory charge and computation provisions did not override the binding administrative instruction governing the scope of enquiry.
Conclusion: The revision under section 263 could not be sustained to the extent it proceeded beyond the permissible scope of limited scrutiny, and the assessee succeeded on the principal issue.
Final Conclusion: The assessment could be examined only within the confines of the limited scrutiny issue, subject to the minor upward adjustment in sale consideration conceded before the Tribunal.
Ratio Decidendi: In a limited scrutiny case, the Assessing Officer's enquiry is confined to the specific issue for which the case was selected, and revision cannot be founded on failure to examine matters outside that limited scope unless the scrutiny is lawfully expanded.
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