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2019 (7) TMI 861 - AT - Income TaxExpansion of scope of Limited scrutiny - notice u/s. 143(2) under CASS - non obtaining the written approval of the concerned CIT as directed by the Circular of CBDT dated 8th September, 2010 and Board Instruction No. 7/2014 dated 26. 09. 2014 - HELD THAT - In the instant case before us, nowhere on record, it is seen that prior written approval was obtained from the Commissioner of Income Tax. On perusal of the order in SURESH JUGRAJ MUTHA VERSUS ADDL. CIT, 2018 (5) TMI 1855 - ITAT PUNE , the Tribunal clearly has considered therein the Board s Instruction No. 7/2014 dated 26. 09. 2014 and CBDT Circular dated 08th September, 2010 and on the basis of these Board s Circulars, it is necessary to take written approval from the Administrative Commissioner in a case where scrutiny has been done on the basis of CASS. In absence of such prior written approval from the Administrative Commissioner any assessment order passed should have to be declared null and void. In the instant case, the assessment order suffers the same fate. Accordingly, we hold that the assessment order passed in the case of the assessee without any prior written approval from the Administrative Commissioner makes the assessment order void-ab-initio. We direct to quash the assessment order. The legal issue raised in the additional ground of appeal by the assessee is answered in his favour.
Issues Involved:
1. Validity of additions made by the Assessing Officer (AO) without prior approval from the Administrative Commissioner in a limited scrutiny case under Computer Aided Scrutiny Selection (CASS). Issue-wise Detailed Analysis: 1. Validity of Additions Made by the Assessing Officer Without Prior Approval: The primary issue in this case revolves around whether the Assessing Officer (AO) was justified in making additions exceeding Rs. 10 Lakhs without obtaining prior written approval from the Administrative Commissioner, as mandated by the Central Board of Direct Taxes (CBDT) Circular dated 8th September 2010 and Board Instruction No. 7/2014 dated 26th September 2014. The appellant argued that the AO's actions were in violation of these binding instructions, which require written approval from the Commissioner of Income Tax or the Principal Commissioner of Income Tax before making substantial additions in a case selected for limited scrutiny under CASS. The appellant's representative referred to specific sections of the AO's order and the notice issued under section 143(2) of the Income Tax Act, 1961, which indicated that the case was selected through CASS. The appellant further supported their argument by presenting the relevant Board Instruction and CBDT Circular, which explicitly state that in cases selected under CASS, any substantial verification requiring comprehensive scrutiny must be approved in writing by the Principal Commissioner of Income Tax. The appellant also cited a previous decision by the Pune Tribunal in ITA No. 05/PUN/2016, where the Tribunal held that an assessment order passed without such approval was void ab-initio. In contrast, the Departmental Representative (DR) defended the actions of the AO by relying on the orders of the subordinate authorities. However, the Tribunal found that the case records clearly indicated that the AO had not obtained the necessary written approval from the Commissioner of Income Tax. The Tribunal referred to the precedent set by the Co-ordinate Bench of the Tribunal, Pune, which had dealt with a similar issue. In that case, the Tribunal had held that the AO's failure to obtain the required approval rendered the assessment order void ab-initio. The Tribunal emphasized that the CBDT instructions are binding on the AO and must be strictly followed. The Tribunal concluded that, in the absence of the required written approval from the Administrative Commissioner, the assessment order in the present case was void ab-initio. Consequently, the Tribunal quashed the assessment order and allowed the appeal in favor of the assessee. All other grounds raised in the appeal were deemed academic in nature due to the resolution of the primary issue. Conclusion: The Tribunal's judgment underscores the importance of adhering to procedural requirements and obtaining necessary approvals in cases selected for limited scrutiny under CASS. The failure to do so renders the assessment order void ab-initio, as per the binding instructions of the CBDT. The appeal was allowed, and the assessment order was quashed.
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