Limited scrutiny assessment cannot sustain additions beyond the approved scope without valid conversion to complete scrutiny.

In a limited scrutiny assessment, an addition on an issue outside the identified reasons for scrutiny cannot be sustained unless the case is validly converted to complete scrutiny with the requisite approval. Where the assessment was selected for limited scrutiny on specified grounds and there was no record of approval for conversion, a disallowance under section 14A read with Rule 8D fell outside the permissible scope of the proceedings and was deleted. The operative principle is that the scope of limited scrutiny must be respected, and additions beyond that scope are unsustainable without proper authorisation.

---

---

Issues: Whether a disallowance under section 14A read with Rule 8D could be sustained where the assessment was selected for limited scrutiny for a different purpose and there was no approval for conversion to complete scrutiny.

Analysis: The case was selected under section 143(2) for limited scrutiny on specified reasons that did not include disallowance under section 14A. The record did not show any approval or conversion of the proceedings from limited scrutiny to complete scrutiny. On these facts, the disallowance travelled beyond the permissible scope of the scrutiny proceedings and could not be upheld.

Conclusion: The disallowance under section 14A read with Rule 8D was unsustainable and was directed to be deleted, in favour of the assessee.

Final Conclusion: The appeal succeeded because the addition was held to be beyond the scope of the limited scrutiny assessment.

Ratio Decidendi: In a limited scrutiny assessment, an addition on an issue outside the identified scope cannot be sustained unless the case is validly converted to complete scrutiny with the requisite approval.

---