2017 (9) TMI 581 - AT - Income Tax

Selection of case of scrutiny assessment u/s 143(3) - failure to record any reasons - Ld. CIT granted approval for selection of case for scrutiny by the AO without application of mind - contravention of the guidelines laid down by the CBDT Circular - Held That - The Circular does not require recording reasons for giving approval - The Circular does not require recording reasons for giving approval. In any event, these are internal guidelines issued for effective functioning of the Department. The requirement of obtaining approval of CIT/CCIT, as required in this Departmental communication cannot be equated with the requirements specified under the statute in Section 151(1) of the Act When the CIT is satisfied with the reasons given by the AO, he in not once again give separate reasons or repeat the reasons recorded by the AO and then give his approval for the same.Therefore we reject these grounds of the assessee and hold that selection of assessee s case for scrutiny is in accordance with law. - Decided against assessee.

Summary

Issues:
1. Validity of assessment order passed under section 143(3) in contravention of Board instruction
2. Legality of manual selection for scrutiny without recording reasons
3. Refusal to consider written arguments filed by the appellant during the hearing
4. Compliance with guidelines for income tax scrutiny for AY 2010-11

Issue 1: The appellant challenged the assessment order passed under section 143(3) for the AY 2010-11, alleging it was not justified as per the Board instruction. The appellant argued that the order was passed in contravention of the Board instruction F. No.225/127/2011/ITA-II dated 02.09.2011. The appellant sought deletion of the assessment order based on this ground.

Issue 2: The main contention was the legality of manual selection for scrutiny without recording reasons. The appellant argued that the selection for scrutiny was done manually by the Assessing Officer without proper application of mind, and approval was granted by the Commissioner of Income Tax without due consideration of guidelines. The appellant presented a paper book to support the argument that the selection was not in accordance with the guidelines laid down by the Central Board of Direct Taxes.

Issue 3: The appellant raised concerns regarding the refusal of the CIT(A) to consider the written arguments filed during the hearing. The appellant contended that the case was selected and approved by the CIT in violation of CBDT instructions, rendering the process void. However, no further arguments were presented by the appellant in this regard during the proceedings.

Issue 4: The Tribunal examined the compliance with guidelines for income tax scrutiny for AY 2010-11. The Assessing Officer manually selected the case for scrutiny, seeking approval from the CIT. The Tribunal reviewed the reasons recorded by the Assessing Officer for selecting the case and found them to be valid. The Tribunal also assessed the guidelines for income tax scrutiny for the relevant year and concluded that the requirements had been met in this case. The Tribunal emphasized that the term "compelling reasons" was relative and should be viewed from the perspective of the Assessing Officer.

In conclusion, the Tribunal rejected the grounds raised by the appellant, affirming that the selection of the case for scrutiny was in accordance with the law. The Tribunal dismissed the appeal, and the order was pronounced in open court on the specified date.