2011 (2) TMI 1578 - AT - Income Tax

Summary

Issues involved:
The appeal challenges the assessment order u/s 143(3) of the I.T. Act for the assessment year 2007-08, specifically regarding the selection of the case under scrutiny and the violation of CBDT guidelines.

Summary:

Issue 1: Violation of CBDT guidelines in case selection
The assessee raised a preliminary objection against the scrutiny assessment u/s 143(3) due to violation of CBDT guidelines. The Assessing Officer selected the case for scrutiny based on incorrect information regarding deductions claimed u/s 54B/54D. The CIT(A) admitted additional grounds of appeal but erred in applying section 292BB to the case selection issue. The Tribunal found that the selection was indeed in violation of CBDT guidelines, rendering the assessment order illegal.

Issue 2: Compliance with CBDT guidelines
The Tribunal examined the circular guidelines for selecting cases for scrutiny during the financial year 2008-09. It was found that the Assessing Officer incorrectly selected the return of income for scrutiny based on deductions exceeding a certain limit, which was not claimed by the assessee. The Tribunal held that the assessment order was bad in law due to the violation of CBDT guidelines.

Conclusion:
The Tribunal allowed the appeal, setting aside the assessment order as it was deemed to be in violation of the law. Other grounds related to additions/disallowances were not addressed due to the primary issue of the case selection being decided in favor of the assessee.