Limited scrutiny cannot be expanded beyond the permitted issue without prior approval; assessment becomes jurisdictionally invalid.

A limited scrutiny assessment confined to verification of international transactions reported in Form 3CEB could not be expanded to examine whether a receipt was fee for technical services without prior approval to convert the matter into complete scrutiny. The transfer pricing reference had already accepted the value of the transactions, so the original scrutiny issue stood verified. Proceeding beyond that limited scope breached binding CBDT instructions and amounted to a jurisdictional defect. The assessment made on the enlarged basis was therefore void and liable to be quashed.

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Issues: Whether the Assessing Officer could enlarge the scope of a limited scrutiny assessment without prior approval and whether such assessment was void for want of jurisdiction.

Analysis: The assessee's case was selected for limited scrutiny only to verify whether international transactions were correctly reported in Form 3CEB. The transfer pricing reference resulted in acceptance of the value of the transactions, which showed that the reporting issue for which scrutiny was selected stood verified. The Assessing Officer nevertheless proceeded to recharacterise one receipt as fee for technical services, which was beyond the limited scrutiny issue. Under the CBDT instructions governing limited scrutiny, any examination of issues beyond the specified scope required prior approval for conversion to complete scrutiny. No such approval was taken. The binding nature of the CBDT instructions made the departure from the prescribed procedure a jurisdictional lapse.

Conclusion: The expansion of scrutiny beyond the permitted issue was jurisdiction and the assessment order was void and liable to be quashed.

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