Limited-scrutiny assessments cannot be expanded to new issues without prior approval; additions beyond scope were deleted.

In a limited-scrutiny assessment, the Assessing Officer cannot make additions on issues outside the selected scope unless the case is validly converted to complete scrutiny with the required prior approval under binding CBDT instructions. Additions on deemed dividend and unexplained money, made without such approval, were therefore unsustainable and were deleted. Once the jurisdictional defect was ative, the first appellate authority was not required to adjudicate the merits of those additions, because that issue became academic. The Revenue's challenge consequently failed, and the deletion of the additions was upheld.

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Issues: (i) Whether additions made on issues beyond the scope of limited scrutiny were sustainable without prior approval for conversion to complete scrutiny. (ii) Whether the first appellate authority was required to decide the additions on merits after deleting them on the jurisdictional ground.

Issue (i): Whether additions made on issues beyond the scope of limited scrutiny were sustainable without prior approval for conversion to complete scrutiny.

Analysis: The case was selected only for limited scrutiny on specified securities-related issues. The additions under deemed dividend and unexplained money were made after enquiry into matters beyond those issues. CBDT instructions governing limited scrutiny required the Assessing Officer to confine enquiry to the selected issues unless the case was first converted to complete scrutiny with the prescribed prior approval. No such approval or recorded reasonable view for wider scrutiny was shown.

Conclusion: The additions made beyond the scope of limited scrutiny were unsustainable and were deleted, in favour of the assessee.

Issue (ii): Whether the first appellate authority was required to decide the additions on merits after deleting them on the jurisdictional ground.

Analysis: Once the additions were deleted on the legal ground that the assessment travelled beyond the permissible scope of limited scrutiny, the merits of the additions ceased to require adjudication and became academic.

Conclusion: The first appellate authority was in not deciding the additions on merits, and this view was affirmed.

Final Conclusion: The Revenue's challenge failed, and the deletion of additions made without following the limited-scrutiny conversion procedure was upheld.

Ratio Decidendi: In a limited-scrutiny assessment, the Assessing Officer cannot enlarge the enquiry or make additions on new issues unless the case is validly converted to complete scrutiny with the requisite prior approval in accordance with binding CBDT instructions.

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