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2019 (4) TMI 388 - AT - Income TaxScope of scrutiny in cases selected under CASS - conversion the limited scrutiny in to unlimited - CBDT Instruction No.7/2014, dated 26-09-2014 - approval of the Pr.CIT/DIT for taken up for comprehensive scrutiny - HELD THAT - In the cases, selected under CASS, the additions on the non-CASS issues can only be made after obtaining due permission from the superior authorities and the said approval of the superior authorities in writing should be available on records. In all these ten appeals under consideration, we find there is no whisper about the obtaining of such approval from the superior authorities before the scrutiny scope is extended to non-CASS issues. In any case, the Assessing Officer did not make any addition on account of the issues selected under CASS. Therefore, in our considered view, the said order of the Tribunal covers the common solitary preliminary issue raised before us in all the ten appeals. Accordingly, the preliminary issue raised by the assessee in all these ten appeals is allowed.
Issues Involved:
1. Legality of Assessing Officer's extension of scrutiny beyond the scope selected under CASS without requisite permission. 2. Validity of assessment orders passed based on extended scrutiny. Issue-wise Detailed Analysis: 1. Legality of Assessing Officer's Extension of Scrutiny Beyond CASS: The primary issue raised by the assessees was that their cases were selected for scrutiny under the Computer Aided Scrutiny Selection (CASS) system. According to the Circular of CBDT, the Assessing Officer (AO) is required to limit the scrutiny to the issues selected under CASS. If the AO wishes to extend the scrutiny to other issues, they must obtain permission from higher authorities. In these ten appeals, the AOs extended the scope of scrutiny to non-CASS issues without obtaining the necessary permissions. This approach was argued to be outside the scope of the CBDT Circular dated 08.09.2010. The Tribunal referenced the case of Suresh Jugraj Mutha vs. Addl.CIT, where it was adjudicated that such additions made by the AO without the requisite approval are not sustainable in law. The Tribunal cited relevant paragraphs from this precedent, emphasizing that the AO did not obtain the written approval of the concerned Commissioner before extending the scope of scrutiny, which is a requirement as per CBDT Instruction No.7/2014 and the CBDT letter dated 08-09-2010. 2. Validity of Assessment Orders Based on Extended Scrutiny: The Tribunal found that in all ten appeals, the AOs did not obtain the necessary approval from superior authorities before extending the scrutiny scope to non-CASS issues. It was noted that the AOs did not make any additions on the issues selected under CASS, but rather on non-CASS issues, which is not permissible without the required administrative approval. The Tribunal referenced the case of M/s. S.F. Chougule Vs. JCIT, where it was held that the AO must follow the guidelines issued for selecting cases for scrutiny and obtain the approval of the CCIT/DGIT for manual selection. Failure to do so renders the assessment order invalid. The Tribunal concluded that the assessment orders in these ten appeals are bad in law and void-ab initio due to the lack of necessary approvals for extending the scope of scrutiny. Consequently, the Tribunal allowed the preliminary issue raised by the assessees and dismissed the other grounds as academic. Conclusion: The Tribunal allowed the appeals of the assessees on the preliminary issue, holding that the assessment orders passed by the AOs are invalid due to the lack of requisite approvals for extending scrutiny beyond the CASS-selected issues. The other grounds raised by the assessees were dismissed as academic, given the relief granted on the preliminary issue. All ten appeals were partly allowed, and the order was pronounced on 08th February, 2019.
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