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TMI Blog2024 (11) TMI 970X X X X Extracts X X X X X X X X Extracts X X X X ..... ited scrutiny on the issue "cash deposit during the demonetization" and so the additions made in the assessment order is without jurisdiction". 3. This ground was raised on the strength of the judgment of the Hon'ble Supreme Court in the case of National Thermal Power Co. Limited -vs.- CIT reported in 229 ITR 383 (SC). In this judgment, Hon'ble Supreme Court has propounded that if any jurisdictional issue is being raised for the first time, which is going to affect taxability of an assessee, then such an issue is allowed to be agitated by the appellant. A perusal of the application of the assessee and the above additional ground would indicate that it does not call for discovery of any new facts. It is purely a legal issue. Therefore, we allow this application of the assessee and entertain this additional ground for adjudication. 4. Brief facts of the case are that the assessee has filed his return of income on 07.11.2017 declaring total income of Rs. 47,14,580/-. The ld. Assessing Officer has issued a notice under section 143(2) and thereafter under section 142(1). The ld. Assessing Officer has passed the impugned assessment order on 30.12.2019 determining the taxable income of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g to the CBDT Instruction F.No. 225/157/2017/ITA-II dated 23-06-2017 and so the notice issued u/s 143(2) is not valid as per law". "That the assessment order u/s 143(3) passed 30.12.2019 provides that the return was selected for limited scrutiny on the issue "cash deposit during the demonetization" and so the additions made in the assessment order is without jurisdiction":. Submission on behalf of the Assessee: 1.A notice u/s 143(2) of the Act was issued on 24.09.2018 with the heading as under: "Notice under section 143(2) of the Income Tax Act, 1961 Scrutiny (Computer Aided Scrutiny Selection)" The aforesaid notice is not valid as per law. In this regards it is submitted that revised format of issue of notice u/s 143(2) of the Act was provided by the CBDT vide F.NO.225/157/2017/ITA-II dated 23.06.2017. The said circular is enclosed at page 4-8 of paper book. On perusal of said Circular, it shall be evident that the Notice u/s 143(2) of the Act was to be issued as per three formats that are: (i) Limited Scrutiny (Computer Aided Scrutiny System) (ii) Complete Scrutiny (Computer Aided Scrutiny System) (iii) Compulsory Manual Scrutiny The CBDT has also provided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The case of assessee was selected for limited scrutiny covering four items namely receipt of large values foreign remittance, mismatch in amount paid to related persons under section 40A(2)(b), unsecured loans from persons who have not filed their return of income and loss from currency fluctuations. The Assessing Officer issued notice under section 142(1) on assessee and thereafter, passed assessment under section 143(3) wherein he rejected set-off and carry forward of loss and made additions in income of assessee. On appeal, the Commissioner (Appeals) upheld the order of the Assessing Officer. On appeal, the Tribunal held that the issue which was decided by the Assessing Officer was not part of the limited scrutiny for which the assessment was directed to be scrutinised, thus, Tribunal taking note of the CBDT Instruction No. 5 of 2016 held that the Assessing Officer has exceeded his jurisdiction. On appeal to the High Court: Decision: 8.Learned senior Counsel for the respondent/assessee has placed before us another Instruction issued by the CBDT dated 30th November, 2017, being F. No. DGIT(Vig.)/HQ/SI/2017-18, wherein the CBDT has noted instances where some of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for which the assessee's case was selected for limited scrutiny under CASS to examine the deposits made during demonetization period and uphold the remaining addition of Rs. 3,30,000/- (8,30,000 - 5,00,000) as the assessee failed to establish the identity, genuineness and creditworthiness of the transactions during demonetization period, by filing proper evidences before me. Accordingly, the grounds raised by the assessee are partly allowed." In view of the above, the assessment order passed by the Ld.AO is bad in law and is liable to be quashed". 7. Ld. Counsel for the assessee on the strength of his written note drew our attention towards first page of the assessment order. He submitted that a perusal of the first paragraph would indicate that this case was selected for a limited scrutiny because the ld. Assessing officer has made the following observation:- "This return was selected for scrutiny in (CASH) on the issue of cash deposit during demonetization period". In order to demonstrate as to how this return was selected for a limited scrutiny, ld. Counsel for the assessee drew our attention towards CBDT Instruction No. 225/157/2017/ITA-II dated 23.06.2017. In this I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account in e-Filing website of Income-tax Department. Further proceedings shall also be conducted electronically (* *). A brief note on salient features of 'E-Proceeding' is enclosed. 4. In case you do not wish to produce any evidence/information, as mentioned in para 2, you are requested to intimate the same electronically on or before................. 5. Specific questionnaires/requisition of information or documents would be sent subsequently, if required. 6. Para(s) (2) to (4) are applicable if you have an account in e-Filing website of Income-tax Department. Till such an account is created by you, assessment proceedings shall be carried out either through your e-mail account or manually (if e-mail is not available). (*) Subject to exceptions as per the enclosed note Yours faithfully, Seal (Name of the Assessing Officer) (Designation) (Telephone No./Fax No.) (E-mail ID) Complete Scrutiny (Computer Aided Scrutiny Selection) Notice under Section 143(2) of the Income-tax Act, 1961 PAN No:.................. Dated:.................... To Sir/Madam Dated: This is for your kind information that the return of income for Assessment Year.......... file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .Specific questionnaires/requisition of information or documents would be sent subsequently, if required. 6.Para(s) (2) to (4) are applicable if you have an account in e-Filing website of Income-tax Department. Till such an account is created by you, assessment proceedings shall be carried out either through your e-mail account or manually (if e-mail is not available). 7.In cases where order has to be passed under section 153A/153C of the Income-tax Act, 1961 read with section 143(3), assessment proceedings would be conducted manually. (*) Subject to exceptions as per the enclosed note Yours faithfully, Seal (Name of the Assessing Officer) (Designation) (Telephone No./FAX No.) E-mail ID". 8. Ld. Counsel for the assessee further appraised us as to how notices under section 142(1)(ii) & (iii) of the Act are also required to be issued. Copy of the notice issued under section 143(2) dated 24.09.2018 is placed at pages no. 9 to 12 of the paper book. The heading of this notice do contemplates that it was issued for scrutiny under Computer Aided Scrutiny Selection System. The notice was issued on 24.09.2018 i.e. after the Board Circular dated 23.06.2017, whereby a forma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot 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 Scrutiny7 after following the procedure outlined above, the AO may examine the additional issues besides the issue(s) involved in 'Limited Scrutiny7. The AO shall also expeditiously intimate the taxpayer concerned regarding conducting 'Complete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 143(2) of the Income-tax Act. 1961 PAN No:.............. Dated:................ To Sir/Madam This is for your kind information that the return of income for Assessment Year filed vide ack. No..............on........... has been selected for Scrutiny. Following issue(s) have been identified for examination: 2. In view of the above, I would like to give you an opportunity to produce any evidence/information which you feel is necessary in support of the said return of income on or before............. 12. A perusal of the above format would indicate that though in the heading, it exhibits limited scrutiny (Computer Aided Scrutiny Selection) but thereafter in the first paragraph, it only talks of scrutiny and then in second paragraph, it talks upon the opportunity being provided to the assessee what he wants to say in support of the return. It is pertinent to observe that in para one, the ld. AO has to identify the issues for examination. If this proforma is being read with the first paragraph of the assessment order, then, it would reveal that in the third line of the first paragraph, ld. Assessing Officer has used the expression "this return was selected for scrutiny ..... X X X X Extracts X X X X X X X X Extracts X X X X
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