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2019 (6) TMI 1179 - AT - Income TaxCase selected under CASS - limited scrutiny - no permission from the superior authorities - selection of the case was made under CASS for limited scrutiny but enlarged for complete scrutiny in the absence of any permission taken from the Principal Commissioner or the Commissioner - HELD THAT - As relying on SHASHI BHUSHAN MAJOOR, RADHE RADHE LABOUR CO. OP. SOCIETY LTD. VERSUS THE INCOME TAX OFFICER, WAD 1, JALNA 2019 (4) TMI 416 - ITAT PUNE in the absence of any permission received from the Principal Commissioner or the Commissioner, find no merit in the order of Assessing Officer in making the aforesaid addition on an issue which was not the basis for selection of the case under CASS. The additional grounds of appeal raised by the assessee are thus allowed.
Issues Involved:
1. Validity of the assessment order. 2. Jurisdiction of the Assessing Officer (AO) in finalizing scrutiny beyond the scope of CBDT circular. Detailed Analysis: 1. Validity of the Assessment Order: The appellant contended that the assessment order should be held as bad in law and quashed. The Tribunal noted that the case was selected for scrutiny through Computer Aided Scrutiny Selection (CASS) specifically for verifying "low profit before interest and taxes." The AO accepted the explanation regarding low profits but expanded the scrutiny to include the eligibility of the claim under section 80P of the Income Tax Act without obtaining necessary approval from the Principal Commissioner or the Commissioner. The Tribunal found that similar issues had been adjudicated in favor of the assessee in previous cases, such as Shashi Bhushan Majoor Sahakari Sanstha Ltd. Vs. ITO and Nazare Vikas Karyakari Seva Sahakari Society Ltd. Vs. ITO. 2. Jurisdiction of the Assessing Officer: The Tribunal examined whether the AO exceeded his jurisdiction by expanding the scope of scrutiny beyond the limited purpose for which the case was selected under CASS. According to CBDT Instruction No.5/2016, any extension of scrutiny beyond the initial limited purpose requires prior approval from the Pr.CIT/CIT. The Tribunal found that the AO did not obtain such approval before examining the claim under section 80P. This was consistent with the Tribunal's earlier rulings, which held that any additions on non-CASS issues without proper approval were not sustainable in law. The Tribunal referred to several precedents, including Suresh Jugraj Mutha vs. Addl.CIT, where it was established that extending the scope of scrutiny without necessary approval renders the assessment order invalid. The Tribunal emphasized that CBDT instructions are binding on the AO, and failure to adhere to these instructions results in the assessment order being annulled. Conclusion: The Tribunal concluded that the assessment order was invalid due to the AO's failure to obtain the required approval before expanding the scope of scrutiny. Consequently, the additional grounds of appeal were allowed, and the regular grounds became infructuous. The appeal was thus allowed, and the assessment order was quashed. Order: The appeal of the assessee is allowed, and the assessment order is quashed. The order was pronounced on June 24, 2019.
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