TMI Blog2019 (7) TMI 861X X X X Extracts X X X X X X X X Extracts X X X X ..... ent order suffers the same fate. Accordingly, we hold that the assessment order passed in the case of the assessee without any prior written approval from the Administrative Commissioner makes the assessment order void-ab-initio. We direct to quash the assessment order. The legal issue raised in the additional ground of appeal by the assessee is answered in his favour. - ITA No. 670/PUN/2016 - - - Dated:- 28-6-2019 - SHRI ANIL CHATURVEDI, AM AND SHRI PARTHA SARATHI CHAUDHURY, JM For The Assessee : Shri Neelesh Khandelwal For The Revenue : Shri Vishwas Mundhe ORDER PER PARTHA SARATHI CHAUDHURY, JM : This appeal preferred by the assessee emanates from the order of the Ld . Commissioner of Income Tax (Appeals)-12, Pune dated 04 . 01 . 2016 for the assessment year 2009-10 as per the grounds of appeal on record . 2 . The Ld . AR of the assessee has also raised additional ground and sought permission to address this additional ground at the very outset of the hearing . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is specifically mentioned that the case has been selected through CASS . The copy of notice is made part of this order as Annexure-1 and the same is reproduced herein below: Annexure-1 Notice under section 143(2) of the Income Tax Act, 1961 Office of the DCIT/ACITCEN Circle 2(1), Pune/167 PAN No : ANXPS3098L Dated : 28/09/2010 To, SHRI NILESH VASANT SHENDE 11 5 Sarathi Construction 501 EDEH HALL, NEAR OM SUPAR MARKET, MODEL COLONY, PUNE MAHARASHTRA 411 016 Sir/Madam There are certain points in connection with the return of income submitted by you on 04th February, 2010 for the assessment year 2009-10 on which I would like some further information . 2 . You are hereby required to attend my office on 21st October, 2010 at 11 . 00AM either in person or by a representative duly authorized in writing in this behal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AIR returns . 2 . The above mentioned guidelines have been reconsidered by the Board and it has been decided that the scrutiny of such cases would be limited only to the aspects of information received through AIR . However, a case may be taken up for wider scrutiny with the approval of the administrative Commissioner, where it is felt that apart from the AIR information there is a potential escapement of income more than Rs . 10 Lacs . 3 . It has also been decided that in all the cases which are picked for scrutiny only on the basis of AIR information, the notice u/s 143(2) of Income Tax Act 1961 should clearly be stamped with AIR Case . This should be immediately brought to the notice of all the officers working in your region . Yours faithfully, ( Ajay Goyal) Director (ITA . II) Telefax :23092151 Copy to : 1 . Chairman and all Mem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ysis of such orders indicates that many times the core issues, which formed the basis of selection of the case for scrutiny were not examined properly . Such instances primarily occurred in cases selected for scrutiny under Computer Aided Scrutiny Selection ('CASS') for verification of specific information obtained from third party sources which apparently did not match with the details submitted by the tax payer in the return of income . 2 . Therefore, for proper administration of the Income-tax Act, 1961 ('Act'), Central Board of Direct Taxes, by virtue of its powers under section 119 of the Act, in supersession of earlier instructions/ guidelines on this subject, ere by directs that the cases selected for scrutiny during the Financial Year 2014-20 5 under CASS, on the basis of either AIR data or CIB information or for non re-conciliation with 26AS data, the scope of enquiry should be limited to verification these particular aspects only . Therefore, in such cases, an Assessing Officer s hall confine the questionnaire and subsequent enquiry or verification only to the specific po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Secretary to the Government of India ( F . No . 225/229/2014-ITA . II) Copy to : 1 . Chairman and all Members of CBDT 2 . All officers and Technical Sections of CBDT 3 . Director of Income Tax (inv . ) Audit/Vigilance/Inv . / RSP PR/Recovery 4 . Director of Income Tax (O MS), New Delhi 5 . ITCC Division of CBDT ( 3 copies) 6 . Datebase cell for uploading on IRS Officers website 7 . Guard file . Sd/- ( Rohit Garg) Deputy Secretary to the Government of India . Having demonstrated these documents, the Ld . AR vehemently argued that no such written approval from the concerned Commissioner of Income Tax / Pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dministrative Commissioner as directed by the Board s instruction in respect of CASS assessment . Therefore, assessment order passed in violation of Board s instructions, which are binding upon the A . O . is certainly bad in law and void ab-initio, may please be squashed and addition may please be deleted . That with regard to this issue, arguments advanced by the parties herein are reproduced herein below: 5 . Before us, at the outset, Ld . Counsel for the assessee referring to the said legal issue raised vide Ground No . 1, submitted that making addition on account of interest disallowance and denial of deduction u/s . 54 of the Act are not the issues for which the case was taken up for limited scrutiny under CASS . Therefore, the additions made by the AO are not sustainable . In support of the above, assessee filed a letter written by the AO to the assessee dated 17-11-2015 and letter dated 14-08-2012 and bring out giving reasons for scru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd ITA No . 605/PN/2012, dated 21-12-2016 6 . On the other land, Ld . DR for the Revenue submitted that circular No . 225/26/2006-ITA . II(PL), dated 08-09-2010 issued by the CBDT does not override the provisions of the statute . Elaborating the same, Ld . DR submitted that if the AO is authorised to scrutinise the accounts of the assessee and claims in the returns as per the provisions of section 143(2) of the Act and the CBDT Circular should not create any hurdles on the AO in matters of scrutiny assessment once notice u/s . 143(2) of the Act is issued . Therefore, it is the case of the Ld . DR that AO has all powers to examine any issue which he deems fit despite the restrictions imposed by the Board on the AOs . For this proposition, he relied on the judgment of Hon ble Bombay High Court in the case of Banque Nationale De Paris Vs . CIT 237 ITR 518 . 7 . During the rebuttal time, on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is also an undisputed fact that the AO did not obtain the written approval of the concerned Commissioner before extending the scope of scrutiny to the interest disallowed and denial of claim of deduction u/s . 54 of the Act . Further, it is on record that the Board did not permit the Assessing Officers to extend the scope of scrutiny to the issues other than the ones which are authorised the Board in this regard under CASS . It is also a fact that judgment cited by the Ld . DR for the Revenue in the case of Banque Nationale De Paris Vs . CIT 237 ITR 518 (Bom . ) was not issued in connection with the jurisdiction of the AO in matters relating to extension of areas of scrutiny to the ones than the authorised ones by the Board . In this connection, we perused the CBDT Instruction No . 7/2014, dated 26-09-2014 and find it relevant to extract the relevant lines . The same reads as under : 4 . In case, during the course of assessment proceedings, it is found ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings given by the Tribunal here as under : 10 . The learned Authorized Representative for the assessee pointed out that the assessee was engaged in road construction and building of projects . He pointed out that during the course of Survey on 30 . 01 . 2008, the assessee had made a declaration of Rs . 33,18,000/- + Rs . 12 lakhs + Rs . 13,467/- which was included in the return of income filed by the assessee . He further stated that the case of assessee was picked up for scrutiny . The learned Authorized Representative for the assessee brought to our attention, the application made under the Right to Information Act, as to the basis for selection of case of the assessee for the relevant year under scrutiny . It was specifically asked whether the case was selected for scrutiny under CASS . In reply, the Central Public Information Officer stated that the case of assessee was not selected for scrutiny under CASS . Further, the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Hon ble High Court of Andhra Pradesh in CIT Vs . Smt . Nayana P . Dedhia (2004) 270 ITR 572 (AP) . Further, he referred to the ratio laid down by the Hon ble High Court of Delhi in CIT Vs . Best Plastics (P) Ltd . ( 2007) 295 ITR 256 (Del) for the proposition that where the guidelines are laid down for selection of cases for scrutiny and if the case of the assessee was taken up for scrutiny in violation of CBDT Instructions, then the assessment order has to be set aside . He further referred to the decision of Hon ble Bombay High Court in Bombay Cloth Syndicate Vs . CIT (1995) 214 ITR 210 (Bom) for the proposition that the CBDT Instructions were binding . 11 . The learned Departmental Representative for the Revenue on the other hand, pointed out that as per the guidelines of CBDT, the cases could be selected, may be not through CASS . Our attention was drawn to the order of Assessing Officer, wherein he has elaborately dealt with the issue that income incr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 01 . 2008 . During the course of Survey, the assessee made declaration of additional income of Rs . 45,93,467/- which was offered as additional income over and above the income to be returned for the year under consideration . The assessee claims that it had disclosed the said additional income in its return of income wherein the return was filed declaring income of Rs . 81,64,598/- . However, the perusal of computation of income reflected that net profit shown in Profit Loss Account was Rs . 11,62,084/- and certain disallowances were made on account of personal expenses, capital expenses and disallowances under section 40(a)(ia) of the Act at Rs . 68,31,574/- and other disallowances and the income was aggregately shown at Rs . 85,69,672/- The Assessing Officer and CIT(A) thus, were of the view that the assessee had not included the additional income of Rs . 45,93,467/-, where it had declared the business income at only Rs . 11,62,084/-, though it had filed the return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 . The said application under the RTI Act and the order under the RTI Act are placed at pages 20 to 22 of the Paper Book . The assessee has also placed the copy of guidelines issued for scrutiny, copy of which is placed at page 23 of Paper Book . The said guidelines were for use of Income Tax Department, wherein selection criteria was provided which was applicable to all Income Tax returns at all stations . The guidelines vis- -vis survey cases are provided therein and vide clause (g), it is provided that the Assessing Officer may select any return for scrutiny after recording reasons and after obtaining the approval of CCIT / DGIT . The cases under this category should be selected, if there are compelling reasons and cases not selected under CASS . These cases are watched by the CCIT / CIT for the quality of assessment . The said guidelines are as per F . No . 225/93/2009/ITA . II . The reply under RTI also refers to the said guidelines and admittedly, these guidelines w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e High Court of Andhra Pradesh in CIT Vs . Smt . Nayana P . Dedhia (supra) and the Hon ble High Court of Delhi in CIT Vs . Best Plastics (P) Ltd . ( supra) . In view thereof, we hold that where the Assessing Officer has failed to follow the guidelines issued for selecting the cases for scrutiny and in the facts of the present case, where the case was selected manually for scrutiny, but no previous approval of CCIT was obtained, then the Assessing Officer lacks jurisdiction to carry out the scrutiny assessment in the present case and accordingly, assessment order passed by the Assessing Officer is bad in law . Hence, we hold so . Since the assessment order is held to be bad in law, the issue on merits becomes academic and the grounds of appeal raised by both the assessee and the Revenue in their respective appeals are infructuous . The appeal of assessee is thus, allowed and the appeal of Revenue is dismissed . Therefore, the Board circular do not permit the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X
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