Tribunal limits assessment scope, cites Natural Justice violation.

The tribunal modified the Ld. Pr. CIT's order and directed the Assessing Officer not to consider the additional issues for fresh assessment, emphasizing adherence to Natural Justice principles. The appeal of the assessee was partly allowed due to the violation of Natural Justice in directing fresh assessment on issues beyond the scope of the show cause notice.

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Issues:
Appeal against order of Ld. Pr. CIT-10, Kolkata dated 20/23.03.2018 for 2013-14 passed u/s. 263 of the Income Tax Act, 1961.
Violation of Natural Justice by Ld. Pr. CIT in directing fresh assessment on additional issues not mentioned in the show cause notice.

Analysis:
The appeal was filed by the assessee against the order of Ld. Pr. CIT-10, Kolkata dated 20/23.03.2018 under section 263 of the Income Tax Act, 1961. The Ld. Pr. CIT had issued a show cause notice dated 12.01.2018 raising an issue regarding the understatement of investment of Rs. 12 lakhs by the assessee in respect of an employee named Shri Angad Singh. The assessee responded to the notice denying the understatement and attributing it to an inadvertent mistake in the balance sheet. However, the Ld. Pr. CIT, in setting aside the assessment order, directed fresh assessment not only on the mentioned issue but also on additional issues related to payments made to Shri Angad Singh and various expenses claimed in the profit and loss account. The Ld. Pr. CIT's direction on these additional issues was challenged by the assessee, citing a violation of Natural Justice as the additional issues were not part of the show cause notice, depriving the assessee of a fair opportunity to respond.

The Ld. AR argued that the Ld. Pr. CIT's direction on the additional issues, beyond the scope of the show cause notice, was legally untenable and violated principles of Natural Justice. The Ld. CIT DR opposed this argument but admitted that no opportunity of hearing was granted to the assessee on the additional issues during the revisional proceedings. The Ld. Pr. CIT had initially raised a single issue in the show cause notice regarding the understatement of investment by the assessee, but later expanded the scope to include additional issues without providing the assessee with an opportunity to respond. This lack of opportunity to be heard on the additional issues was a clear violation of the principles of Natural Justice.

The ITAT Kolkata observed that the additional issues directed by the Ld. Pr. CIT for fresh assessment were not part of the show cause notice and the assessee was not given a chance to address these issues before the impugned order was passed. Therefore, the tribunal modified the Ld. Pr. CIT's order and directed the Assessing Officer not to consider the additional issues for fresh assessment. The tribunal emphasized the importance of adhering to Natural Justice principles and ensuring that parties are given a fair opportunity to present their case. The appeal of the assessee was partly allowed based on these grounds.

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