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2020 (9) TMI 763 - AT - Income TaxComplete Scrutiny v/s Limited scrutiny - Expansion of scope of limited scrutiny - speculation loss - mismatch between turnover reported in the audit report vis-à-vis turnover in the Income Tax Return - HELD THAT:- Assessee appeared before AO along with the books of accounts and has reconciled the mismatch between turnover reported in the audit report vis-à-vis turnover in the Income Tax Return and AO has not taken any adverse view in respect of this issue for which the CASS has selected the return of income of the assessee for scrutiny u/s 143(3). CBDT Circular issued u/s 119 of the Income Tax Act is binding on the Income Tax Authorities.The Assessing Officer’s jurisdiction is limited to the issue identified by the CASS in case of ‘Limited Scrutiny’ cases. In the assessee`s case under consideration the issue of mismatch of sales shown in the audit report vis-à-vis ITR was for ‘Limited Scrutiny’ but the assessing officer has expanded the scope of limited scrutiny without taking permission from the concerned Pr.CIT/CIT, since there is no whisper of any sanction or approval of the Pr.CIT/CIT therefore action of AO to assess the loss is beyond his jurisdiction and in violation of the CBDT circular which he was bound to obey. We find merit in the assessee’s grounds of appeal that the action of the AO to make addition on account of loss is beyond jurisdiction and therefore null in the eyes of law and hence we delete the addition. Reopening of cases for last preceding six years - CIT(A) does not have power to give directions to the assessing officer for reopening of cases for last preceding six years and subsequent years of the assessee. Therefore, according to ld Counsel it is illegal and beyond jurisdiction. CIT(A) who is the first appellate authority can do what the AO can do. The first appellate proceedings is an extension of the assessment proceedings. So, it means that what the Assessing Officer cannot do, the CIT(A) cannot do. As per the scheme of the Act when an assessee files a return of income the Assessing Officer accepts the return of income u/s 143(1) of the Act or scrutinize the assessment and pass the order u/s 143(3) of the Act and if the time limit to issue the notice 143(2) has lapsed then assessing officer cannot frame the assessment u/s 143(3) of the Act. The assessing officer can do the assessment for the year for which assessee filed the return of income. The assessing officer can not frame the assessment for preceding years and subsequent years. CIT(A) could not have given directions to the AO for which the AO was not empowered to do, as discussed above and for that we rely on the judgment in the case of B. Mohta [1964 (7) TMI 39 - BOMBAY HIGH COURT] - Appeal filed by the assessee is allowed.
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