TMI Blog2020 (5) TMI 46X X X X Extracts X X X X X X X X Extracts X X X X ..... ate authority. AO has taken up the fresh issue of unexplained investment for purchase of immovable property, which has no connection with the issue of sale of immovable property for which the matter was selected for limited scrutiny, without seeking prior approval of the competent authority. The addition so made u/s 69 is liable to be quashed as the order passed by the AO would be nullity as beyond his jurisdiction in absence of requisite approval from the competent authority. The instructions issued by CBDT from time to time are clear on this point. AO can thus widen the scope of scrutiny where the matter was initially selected for scrutiny assessment. However, the condition precedent for such action of the AO is that he has to follow the procedure so laid down and seek prior approval of the competent authorities. In the instant case, it is an admitted fact that no such approval has been taken by the Assessing officer. It is therefore, a case where the CBDT Instructions which are binding on the Assessing officer have not been followed by him. It is a consistent position taken by various Benches of the Tribunal including Jaipur Benches that where the Assessing officer has tak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loss on sale of property has been correctly shown in the return of income by assessee and in this regard, our reference was drawn to the order sheet entry dated 20.09.2017. It was submitted that the assessee did not sell any property during the year, hence question of earning any capital gains and showing in his return of income did not arise at all and submission was accordingly filed with the Assessing Officer along with the copy of ITR/computation and copy of bank statement which was taken on record and admitted by the Assessing Officer. It was further submitted that on 19.12.2017, the assessee was asked whether any immovable property was purchased by him and ultimately, addition was made u/s 69 of the Act. In this regard, it was submitted that if a case was selected for limited scrutiny under CASS, the Assessing Officer cannot exceed his jurisdiction beyond the one which has been carved out by himself in the notice issued for limited scrutiny. It was submitted that CBDT has issued various instructions on this issue and in the instant year also, the CBDT issued Instruction No. 5 of 2016 dated 14.07.2016 as per which, for converting a limited scrutiny into complete scrutiny, app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficient opportunity have been provided by the ld. CIT(A). However, the assessee through its AR has sought adjournment from time to time and therefore, the ld. CIT(A) has passed the order ex-parte qua the assessee basis material available on record. She accordingly supported the findings of the lower authorities. 6. We have heard the rival submissions and perused the material available on record. 7. In Ground no. 1, the assessee has challenged the jurisdiction of Assessing officer by passing the impugned order u/s 143(3) for the reason that case was initially selected for limited scrutiny and without seeking permission from the competent authority to convert limited scrutiny into complete scrutiny, the addition has been made by the Assessing officer in respect of another transaction towards unexplained investment in purchase of property whereas no addition has been made towards the transaction pertaining to sale of immovable property for which the matter was initially selected for limited scrutiny. 8. In this regard, the undisputed facts which are emerging from the records are that the matter was selected for limited scrutiny to examine capital gain on sale of property as i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of property is not emanating from the same issue for which the matter was selected for limited scrutiny as the assessee has not sold any immoveable property during the year and therefore, the question of making the investment in the purchase of property from the sale consideration so received doesn t arise and there is nothing on record which support such contention as so advanced by the ld DR. Therefore, it is an independent transaction of purchase of property for which addition has been made u/s 69 of the Act. 11. The question that arise for consideration is where the Assessing Officer wishes to expand the scope of enquiry beyond the matter for which the case of the assessee was selected for limited scrutiny, whether he has taken the requisite permission from the competent authority for converting a limited scrutiny into complete scrutiny or proceeding beyond the matter for which the case of the assessee was selected for limited scrutiny. In the instant case, we find that the Assessing Officer neither in the assessment order nor in the assessment proceedings (as apparent from the notings in the order sheet place on record) has stated that he has sought and has been granted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m a reasonable view that there is possibility of under assessment of income if the case is not examined under Complete Scrutiny . In this regard, the monetary limits and requirement of administrative approval from Pr. CIT/CIT/Pr. DIT/DIT, as prescribed in Para 3(d) of earlier Instruction dated 29.12.2015, shall continue to remain applicable. 3. Further, while forming the reasonable view, the Assessing Officer would ensure that: a. there exists credible material or information available on record for forming such view; b. this reasonable view should not be based on mere suspicion, conjecture or unreliable source; and c. there must be a direct nexus between the available material and formation of such view. 4. It is further clarified that in cases under Limited Scrutiny , the scrutiny assessment proceedings would initially be confined only to issues under Limited Scrutiny and questionnaires, enquiry, investigation etc. would be restricted to such issues. Only upon conversion of case to Complete Scrutiny after following the procedure outlined above, the AO may examine the additional issues besides the issue(s) involved in Limited Scrutiny . The AO shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... crutiny to complete scrutiny by taking prior approval of the competent authority, then the said order passed by the Assessing officer will be nullity as beyond his jurisdiction. In this regard, we refer to recent decision of this Bench in the case of Late Smt. Gurbachan Kaur vs. DCIT (supra) wherein the relevant findings read as under:- 7. Once the issue taken up by the A.O. was beyond the scope of limited scrutiny under CASS then until and unless the limited scrutiny is converted into comprehensive scrutiny by taking an approval of the competent authority, the said issue of determination of fair market value of the property as on 01/04/1081 is beyond the jurisdiction of the A.O. under the limited scrutiny. Since this issue was not raised by the assessee before the lower authorities and it requires verification of the assessment record to ascertain whether the A.O. obtained the approval of the competent authority for conversion of the limited scrutiny to the comprehensive scrutiny. If the issue of determination of fair market value as on 01/04/1981 is taken up by the A.O. without expansion or conversion of the limited scrutiny to comprehensive scrutiny then such act of the A.O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tiny to the assessee concerned. 3. As far as the returns selected for scrutiny through CASS-2015 are concerned, two type of cases have been selected for scrutiny in the current Financial Year-- one is Limited Scrutiny and other is Complete Scrutiny . The assessees concerned have duly been intimated about their cases falling either in Limited Scrutiny or Complete Scrutiny through notices issued under section 143(2) of the Income-tax Act, 1961 ( Act ). The procedure for handling Limited Scrutiny cases shall be as under: a. In Limited Scrutiny cases, the reasons/issues shall be forthwith communicated to the assessee concerned. b. The Questionnaire under section 142 (1) of the Act in Limited Scrutiny cases shall remain confined only to the specific reasons/issues for which case has been picked up for scrutiny. Further, the scope of enquiry shall be restricted to the Limited Scrutiny issues. c. These cases shall be completed expeditiously in a limited number of hearings. d. During the course of assessment proceedings in Limited Scrutiny cases, if it comes to the notice of the Assessing Officer that there is potential escapement of income ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral of Income-tax Sir/Madam, Subject: - Scope of enquiry in cases selected for scrutiny during the Financial Year 2014-2015 on basis of AIR/C1B /26AS mismatch regarding It has come to the notice of the Board that during the scrutiny assessment proceedings some of the AOs are routinely calling for information which is not relevant, for enquiry into the issues to be considered. This has been causing undue harassment to the taxpayers and has also drawn adverse criticism from several quarters. Further, feedback and analysis 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 aver 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 sect on 119 of the Act, in supersession of earlier instructions/guidel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. A perusal of the aforesaid instruction shows that the Assessing Officer can widen the scope of scrutiny even if it is selected for scrutiny assessment under CASS. However, the condition precedent for such action of the Assessing Officer is that he has to seek prior approval of the higher authorities. A perusal of the assessment order shows that the Assessing Officer has not mentioned as to when the permission from the PCIT was sought to make further enquiries in the case of the assessee. Considering the facts of the case in totality, in the light of the CBDT Instructions mentioned hereinabove, qua notice u/s 143(2) of the Act, we are of the considered opinion that the 15 assessment order so framed by the Assessing Officer is not in consonance with Instruction of the CBDT and, therefore deserves to be quashed. The order of the ld. CIT(A) is accordingly set aside. Thus, if the A.O. has taken up the issue of determining fair market value of the property in question as on 01/4/1981 without converting the limited scrutiny to comprehensive scrutiny by taking the prior approval of the competent authority then the said order passed by the A.O. will be nullity as beyond his jurisdi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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