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2023 (4) TMI 817 - HC - Income TaxScrutiny assessment - Instructions issued by CBDT for selection of case for scrutiny not complied with - Assessment u/s 144 completed making the additions - Hon ble ITAT quashing the notice as well as assessment made in the case of the assessee by holding that instructions issued by CBDT for selection of cases for scrutiny for the financial year 2007-08 are not shown to have been satisfied for assumption of jurisdiction - HELD THAT - Tribunal has followed the guidelines issued by Hon ble the Supreme Court UCO BANK, TAMIL NADU INDUSTRIAL INVESTMENT CORPORATION LTD. 1999 (5) TMI 3 - SUPREME COURT and has observed that with respect to the notice dated 27.11.2007. The appellant submitted reply on 18.01.2008 and had taken up the issue with regard to jurisdiction of the assessing authority to issue such notice. Tribunal has rightly observed that it cannot be held that the appellant had acquiesced to the jurisdiction. As per CBDT instructions, the burden was on the authority assuming jurisdiction to show and establish that such instructions have been duly complied and satisfied in letter and spirit. Since notice under Section 143 (2) of the Act was not in terms of the instructions of the CBDT, both the notice and the assessment framed were held to be without valid jurisdiction and were accordingly, quashed. Since, in the present case, the question of jurisdiction was to be decided first by the Assessing Officer, which has not been done, the assessment order was quashed being against the instructions of the CBDT. After going through the impugned judgment(s), this Court is of the view that the in this case, the instructions issued by the CBDT have not been complied with in letter and spirit. Tribunal has rightly allowed the appeal(s) of the assessee by appreciating the facts in the right perspective.
Issues involved:
The judgment involves the appeal against the order passed by the Income Tax Appellate Tribunal, Delhi Bench, regarding the assessment year 2006-07. The key issues include the validity of the notice and assessment made by the Assessing Officer, compliance with CBDT instructions for scrutiny, and the burden of proof on the authority assuming jurisdiction. Assessment Proceedings: The appellant-revenue challenged the order of the Income Tax Appellate Tribunal, Delhi Bench, regarding the assessment year 2006-07. Various additions were made during the assessment, including treating certain amounts as income from undisclosed sources due to unproved identity and creditworthiness of parties involved. Appeals and Tribunal Decision: The Commissioner of Income Tax (Appeals) partially confirmed some additions but deleted others. Both the department and the assessee filed appeals before the Income Tax Appellate Tribunal, which quashed the notice and assessment made by the Assessing Officer. The Tribunal considered the CBDT instructions and found the notice and assessment to be without valid jurisdiction. CBDT Instructions and Tribunal Decision: The Tribunal referred to CBDT instructions and held that the notice and assessment did not comply with them. The Tribunal emphasized that the burden was on the authority to establish compliance with CBDT instructions. As the notice under Section 143 (2) was not in line with CBDT instructions, both the notice and assessment were deemed invalid and quashed. Compliance with CBDT Circulars: The judgment cited precedents where scrutiny assessments violating CBDT circulars were deemed invalid. The Tribunal followed guidelines set by the Supreme Court and held that the appellant did not acquiesce to the jurisdiction by responding to the notice. The Tribunal's decision aligned with CBDT instructions, leading to the dismissal of the appeals. Conclusion: The High Court found that the CBDT instructions were not adhered to in the case, leading to the dismissal of the appeals. The Revenue failed to provide convincing evidence, and no substantial question of law arose for consideration. Consequently, the appeals, ITA No. 140 of 2013 and ITA No. 141 of 2013, were dismissed.
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