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TMI Blog2020 (11) TMI 772X X X X Extracts X X X X X X X X Extracts X X X X ..... iness of Civil Construction, Highway, Airport, Real Estate share Trading etc,. Assessee electronically filed its return of income for Assessment Year 2015-16 on 21.09.2015 declaring income of Rs. 44,42,609/-. The case was selected for scrutiny through CASS and thereafter assessment was framed under section 143(3) vide order dated 01.08.2016 and the total income before adjustment of brought forward losses was determined at Rs. 55,48,011/-. 4. Aggrieved by the order of the AO, assessee carried the matter before the CIT(A) who vide order dated 14.03.2019 in Appeal No. 10115/17-18/99/18-19 dismissed the appeal of the assessee. 5. Aggrieved by the order of CIT(A), assessee is now in appeal before us and has raised the following grounds:- "1. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 143(3) and pointing to para 2 of the order submitted that the case was selected for limited scrutiny for examining the following things namely (i) Low income in comparison to high loans/ advances/ investments in shares. (ii) To examine the large increase in investment in listed equities during the year. He submitted that AO thereafter in the assessment order passed under section 143(3) has made addition by disallowing expenditure under section 14A of the Act which was not part for which the case initially selected for scrutiny under CASS. He submitted that when the case which is initially selected for "limited scrutiny" and is thereafter converted into "complete scrutiny", the AO is required to take administrative approval from PCIT/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the AO mechanically applied the format of Rule 8D without identifying any expenses incurred for earning exempt income. He submitted that in the absence of identification of such expenses, no disallowance can be made and for this proposition he relied on the decisions in the case of CIT vs. Hero Cycles Ltd., 233 CTR PH 74 and CIT vs. Torent Power Ltd., 363 ITR 474 Gujarat. He thereafter submitted that calculation made by the AO for working out the disallowance under section 14A was also wrong in view of the fact that the AO considered all the investments whether such investments earned exempt income or not and also the shares of unlisted companies which did not declared any dividend at all. He submitted that if the correct calculation by e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isputed fact that no administrative approval from the competent authority was obtained by the AO for converting the case of the assessee from "limited scrutiny" into "complete scrutiny" case. We find that instruction no. 5 of 2016 dated 14.07.2016 issued by CBDT has inter alia laid down the procedure which is required to be followed by the AO to consider the case which are originally earmarked for "limited scrutiny" to "complete scrutiny" and also requires the administrative approval from PCIT / CIT. 13. We find that on identical issue, the Coordinate Bench of the Tribunal in the case of Urban Improvement Cooperative Pvt. Ltd., (supra) after considering the instructions issued by CBDT has noted as under:- "12. The crux of the instruction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of Hon'ble Supreme Court in the case of UCO Bank Vs CIT: 237 ITR 889. Hence, we hold that the Assessing Officer can widen the scope of scrutiny even the case is selected for limited scrutiny under CASS, however, the condition precedent for such widening of the scope is that the Assessing Officer has to seek prior approval of the authorities mentioned. Such prior approval and the permission of the PCIT is lacking in the instant case. There was no satisfaction about the merits of the issue which necessitated complete scrutiny in the instant case. Hence, the assessment framed by the assessee on the issues which are not inconsonance of the instruction of CBDT are liable to be quashed. The addition u/s 43CA, since beyond the scope of the l ..... X X X X Extracts X X X X X X X X Extracts X X X X
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