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Ajanta Financial Services Pvt. Ltd. Versus Income-tax Officer, Ward-4 (3) , Kolkata

2012 (5) TMI 754 - ITAT KOLKATA

Process of selection of cases for scrutiny for corporate assessee - issuance of notice u/s. 143(2) - Held that:- The selection of scrutiny in this case is also completed beyond the prescribed period as prescribed in Instruction No. 9/2004 dated 20.09.2004. The assessee’s case was selected for scrutiny first time on 18.10.2004, as per copy of order sheet entry, and notice was issued fixing the hearing on 18.10.2004 itself. As per Instruction No. 9/2004 dated 20.09.2004, the process of selection o .....

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only from the assessment order wherein it is mentioned that notice u/s. 143(2) is dated 10.10.2004 and the same was served on the assessee on 19.10.2004 fixing the date of hearing on 16.12.2004. When going through the order sheet entry, which is taken by assessee from the assessment records clearly reveals that factually notice u/s. 143(2) was first time issued on 18.10.2004 and not on 10.10./2004. Thus we quash the issuance of notice u/s. 143(2) of the Act and subsequent assessment framed u/s. .....

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(hereinafter referred to as the Act ) for Assessment Year 2003-04 vide his order dated 31.03.2006. 2. The first legal issue raised by assessee in this appeal is against the order of CIT(A) in upholding the selection of his case under scrutiny against norms set out vide CBDT Instruction no.9/2004 dated 18.10.2004. For this, assessee has raised following three effective grounds i.e. ground nos. 1, 2 and 3: 1. That the Ld. AO has selected the case under scrutiny as per vide para 3 of CBDT Instruct .....

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mpany filed its return of income on 01.12.2003 declaring total loss at ₹ 1,72,647/- for the relevant assessment year 2003-04. The assessee s case was selected for scrutiny by issuing notice u/s. 143(2) of the Act on 18.10.2004 and the relevant order sheet entry of that date reads as under: 18.10.04: The case is selected for scrutiny vide para 3 of CBDT s Instruction No. 9/2004 Dt. 20.09.04. Issue notice u/s. 143(2) fix for hearing on 18.10.04. Ld. Counsel for the assessee in the above give .....

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ases is referred in para 3. The relevant Instruction No. 9/2004 dated 20.9.2004 for selection of cases for scrutiny assessment during FY 2004-05 for corporate assessees reads as under: Scrutiny assessment : Financial Year 2004-05: Corporate assessees - In supersession of earlier instructions on the above subject, the Board hereby lays down the following procedure for selection of returns/cases of Corporate Assessees for Scrutiny during the current financial year i.e. 2004-05. The following categ .....

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ing and with prior approval of CCIT concerned. The process of selection of cases for scrutiny for returns filed up to 31-3-2004 must be completed by 15-10-2004. For returns filed during the current financial year 2004-05, the selection of cases for scrutiny will have to be completed within 3 months of the date of filing of the return. All returns filed in response to notice issued under section 148 will be selected for scrutiny. In addition to the above, returns processed on AST will be selected .....

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et entry from assessment records, which is available in assessee s paper book at pages 7 to 14 and the relevant entry is reproduced above. 4. According to Ld. Counsel for the assessee the process of selection of cases for scrutiny for corporate assessees for returns filed up to 31.03.2004 must be completed by 15.10.2004. For the returns filed during current FY 2004-05 the selection of cases for scrutiny will have to be completed within three months of the date of filing of return of income. But, .....

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d 18.10.2004 the notice was issued on 18.10.2004 u/s. 143(2) of the Act which is beyond the prescribed time as per Instruction No. 9/2004 dated 20.09.2004. We find that the CIT(A) has noted that the violation of Instruction, Circular or Notification is an administrative matter for which administrative action can be taken against officer by the competent authority. The relevant portion of para 7 of CIT(A) s order reads as under: 7. I have carefully considered the submissions of the assessee. Ther .....

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lthough for administrative convenience the work may be required to be disposed off in a particular period and any violation of same is liable for administrative action. The assessee has not taken objection regarding the issuance of notice before the Assessing Officer and has submitted to his jurisdiction. There was no attendance by the assessee for hearing on 9th November, 2005, 28th November, 2005 and 6th December, 2005 while the case was getting time barred in March, 2006. It was only after is .....

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It is only the entry in the order sheet which was done on 18th October, 2004; there is a possibility that instead of issued notice the assessing officer may have written issue notice, it appears to be a mistake while writing the order-sheet. It is also not clear whether the order- sheet had been written by the Assessing Officer himself or was put up before him to be signed by his staff. During the selection of the cases large numbers of notices are issued at the fag end of the limitation period. .....

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dditional ground of appeal taken by the assessee. The assessee has taken first time this objection in its written submissions given vide its letter dated 8th April, 2011. Therefore, in the facts and circumstances as discussed above, notice u/s. 143(2) dated 10th October, 2004 entered in the order sheet on 18th October, 2004; facts distinguishable from the case law mentioned by the assessee; non objection before the Assessing Officer; no specific ground/additional ground of appeal etc it is held .....

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considered the same Instruction No. 9/2004 dated 20.09.2004 which are applicable in the present case also and quash the selection of scrutiny and completion of assessment by holding as invalid. Hon ble Chattishgarh High Court in Sunita Finlease Ltd. s case (supra) has considered section 119 of the Act by stating that Section 119 of the Act, empowers the Central Board of Direct Taxes to issue orders, instructions or directions for the proper administration of the Act or for such other purposes sp .....

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eted within three months of the date of filing of return by the assessee, which amounts to an assurance to the assessee that the return filed by him can be scrutinised by the Assessing Officer within three months of filing of the return. The Hon ble High Court, dismissing the appeal held that Instruction No. 9 of 2004 dated September 20, 2004, was applicable in the present case, in view of the specific stipulation in the circular that for returns filed during the current financial year 2004-05, .....

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e Court in the case of UCO Bank (1999) 237 ITR 889 and quoted from page 896 as under: Such instructions may be by way of relaxation of any of the provisions of the sections specified there or otherwise. The Board thus has power, iter alia, to tone down the rigour of the law and ensure a fair enforcement of its provisions, by issuing circulars in exercise of its statutory powers under section 119 of the Income-tax Act, which are binding on the authorities in the administration of the Act. Under s .....

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t is a beneficial power given to the Board for proper administration of fiscal law so that undue hardship may not be caused to the assessee and the fiscal laws may be correctly applied. Hard cases which can be properly categorized as belonging to a class, can thus be given the benefit of relaxation of law by issuing circulars binding on the taxing authorities. The facts and circumstances in the present case are that the selection of scrutiny in this case is also completed beyond the prescribed p .....

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