Limited Scrutiny limits assessment scope unless properly converted to Complete Scrutiny; addition beyond scope was unsustainable.

Where a return is selected for Limited Scrutiny, the Assessing Officer must confine enquiry to the specified issues under the CBDT instructions. Any expansion beyond that scope requires conversion to Complete Scrutiny in accordance with the prescribed procedure and approval. As the addition was made on matters outside the Limited Scrutiny mandate and no valid conversion to Complete Scrutiny was shown, the assessment action could not be sustained. The addition was therefore held unsustainable, and the assessee succeeded.

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Issues: Whether the addition made in a case selected for Limited Scrutiny could be sustained when the Assessing Officer travelled beyond the specific issues for which the case was selected without conversion to Complete Scrutiny.

Analysis: The return was selected for Limited Scrutiny on specified issues, and the governing CBDT instructions restricted enquiry to those issues alone. Any expansion of inquiry beyond the permitted scope required conversion to Complete Scrutiny in accordance with the prescribed procedure and necessary approval. Since the addition was made beyond the purview of Limited Scrutiny and no valid conversion was shown, the assessment action could not be sustained on that basis.

Conclusion: The addition beyond the scope of Limited Scrutiny was not sustainable, and the assessee succeeded.

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