TMI Blog2020 (6) TMI 673X X X X Extracts X X X X X X X X Extracts X X X X ..... irly conceded this fact after perusal of the order sheet that no approval in writing was taken by the AO for expanding the scope of assessment so as to make the addition u/s. 68 of the Act. Since the CBDT Circular issued u/s. 119 of the Act is binding on the department/AO as held by the Hon ble Apex court and High Courts, the AO was bound by it and without taking approval in writing from Pr CIT/CIT could not have enquired into other issues other than the issue for which the assessment was selected for Limited Scrutiny. Here, the AO without following the procedure has expanded his jurisdiction without approval which action of AO is held to be without jurisdiction - Addition is null in the eyes of law and, therefore, it has to be deleted - De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rrectly or not ? According to the Ld. AR, the AO erred in expanding the jurisdiction to make addition of ₹ 59,19,907/- u/s. 68 of the Act which was not specified in the Limited Scrutiny notice issued u/s. 143(2) of the Act dated 20.09.2017. According to the Ld. AR, the CBDT circular/Instruction No. 20/2015 dated 29.12.2015 has clearly laid down the procedure to be followed in case if the AO wishes to expand the scrutiny from the Limited Scrutiny to Complete Scrutiny which is given in para 3, which reads 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... crutiny and it has been made very clear that the scope of enquiry shall be restricted to the Limited Scrutiny issue. It has been further clarified by the CBDT that if the AO comes to know that there is potential escapement of income exceeding ₹ 5 lacs (for metropolitan cities ₹ 10 lacs) requiring substantial verification on any other issues, then the case should be taken up for Complete Scrutiny with the approval of the Pr. CIT/CIT concerned and, thereafter, the approval shall be accorded by the Pr. CIT/CIT in writing after being satisfied about the merits of the issues necessitating Complete Scrutiny in that particular case. Further, it is also stated that such cases shall be monitored by the Range Head concerned. So, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee s case was selected for scrutiny under CASS for Limited Scrutiny , later on it had come to the notice of the AO that the survey was conducted on 04.09.2017 in the case of M/s. Assam Textiles and M/s. Mahavir Textiles (third parties) and it was found that there were transfer of funds to the tune of ₹ 41,78,299/- (from M/s. Assam Textiles) and ₹ 16,85,030/- (from M/s. Mahavir Textiles) to the assessee. Armed with this information, the AO sought queries from the assessee and since the assessee failed to respond properly to the queries and failed to establish the genuineness of the transaction, the AO drew adverse inference against the assessee and made the addition of ₹ 59,19,909/- (though the correct total is ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n without taking approval from the Pr. CIT/CIT in writing and, therefore, he wants us to delete the addition made u/s. 68 of the Act of ₹ 59,19,907/-. 6. Having heard both the parties and after carefully going through the contents of the three (3) CBDT Circulars and case laws relied upon , we note that the assessee had filed return of income on 15.12.2016 reflecting an income of ₹ 8,17,530/-. Later the case of the assessee was selected for Limited Scrutiny which fact was conveyed to the assessee by notice dated 20.09.2017 issued u/s. 143(2) of the Act. In this notice u/s. 143(2) of the Act, it was clearly stated that the assessee s case was selected by CASS only for Limited Scrutiny regarding one issue only i.e. whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment from Limited Scrutiny to Complete Scrutiny. The Ld. DR fairly conceded this fact after perusal of the order sheet that no approval in writing was taken by the AO for expanding the scope of assessment so as to make the addition u/s. 68 of the Act. Since the CBDT Circular issued u/s. 119 of the Act is binding on the department/AO as held by the Hon ble Apex court and High Courts, the AO was bound by it and without taking approval in writing from Pr CIT/CIT could not have enquired into other issues other than the issue for which the assessment was selected for Limited Scrutiny. Here, the AO without following the procedure as stated, supra has expanded his jurisdiction without approval which action of AO is held to be without jurisdiction ..... X X X X Extracts X X X X X X X X Extracts X X X X
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