9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2024 (11) TMI 158 - AT - Income TaxValidity of scrutiny process - no approval was obtained by the ld AO from the Jurisdictional PCIT as mandated in the Instruction No. 5/2017 dated 7.7.2017 - Whether non-following of the CBDT Instructions would become fatal to the assessment proceedings per se? - HELD THAT - This question is answered in the case of CIT vs Best Plastics P Ltd 2006 (4) TMI 53 - HIGH COURT, DELHI wherein it was held that the revenue is bound to follow the instructions given by CBDT and not following the same would become fatal to the entire assessment proceedings We hold that the entire assessment proceedings becomes void ab initio as the return was selected for scrutiny in violation of Para 1(vi) of CBDT Instruction No. 5/2017 dated 7.7.2017 by not getting approval from the PCIT. DR vehemently placed reliance on the provisions of section 292BB of the Act which would cure the defect pointed out in the instant case. We find that the jurisdictional defect cannot be cured by provisions of section 292BB of the Act. See LAXMAN DAS KHANDELWAL 2019 (8) TMI 660 - SUPREME COURT Reliance placed by the DR on section 292BB of the Act would not rescue the ld AO if there is a defect in assuming jurisdiction per se. Accordingly, we quash the entire assessment framed in the hands of the assessee for the Asst Year 2016-17. The grounds raised by the assessee in his cross objections are allowed.
Issues Involved:
1. Delay in filing cross objections by the assessee. 2. Legality of the scrutiny selection process by the Assessing Officer (AO). 3. Requirement of mandatory approval for scrutiny selection. 4. Validity of assessment proceedings in light of CBDT Instruction No. 5/2017. 5. Applicability of Section 292BB of the Income-tax Act, 1961. Detailed Analysis: 1. Delay in Filing Cross Objections: The Tribunal noted a delay of 7 days in filing cross objections by the assessee. Considering the reasons provided in the condonation petition, the Tribunal decided to condone the delay and admitted the cross objections for adjudication. This decision reflects the Tribunal's discretion to allow delays if justified, ensuring that the assessee's rights to challenge the assessment are preserved. 2. Legality of the Scrutiny Selection Process by the AO: The assessee contested the legality of the scrutiny selection, arguing that the AO selected the case contrary to the criteria specified in Para 1(vi) of Instruction No. 5/2017, as no specific or verifiable information indicating tax evasion was received. The Tribunal examined the AO's actions and noted discrepancies in the dates of notices issued under Section 143(2), which raised questions about the procedural integrity of the scrutiny selection. 3. Requirement of Mandatory Approval for Scrutiny Selection: The Tribunal highlighted that the AO failed to obtain the mandatory approval from the jurisdictional Principal Commissioner of Income Tax (PCIT) as required under Para 1(vi) of Instruction No. 5/2017. This oversight was a significant procedural lapse, as the Instruction mandates prior administrative approval for selecting cases for scrutiny based on specific and verifiable information of tax evasion. 4. Validity of Assessment Proceedings in Light of CBDT Instruction No. 5/2017: The Tribunal found that the return was selected for scrutiny in violation of the CBDT Instruction No. 5/2017 due to the absence of the required approval from the PCIT. Citing the Supreme Court's decision in Commissioner of Customs vs. Indian Oil Corporation Ltd, the Tribunal emphasized that CBDT instructions are binding on revenue authorities, and non-compliance renders the assessment proceedings void ab initio. The Tribunal also referenced the Delhi High Court's ruling in CIT vs. Best Plastics P Ltd, reinforcing that failure to adhere to CBDT instructions is fatal to the assessment proceedings. 5. Applicability of Section 292BB of the Income-tax Act, 1961: The Revenue argued that Section 292BB could cure the defect in the assessment proceedings. However, the Tribunal, referencing the Supreme Court's decision in CIT vs. Laxman Das Khandelwal, clarified that Section 292BB does not apply to jurisdictional defects. It only addresses infirmities in the service of notice, not the complete absence of mandatory procedures such as obtaining approval for scrutiny selection. Consequently, the Tribunal quashed the entire assessment for the Assessment Year 2016-17, as the jurisdictional defect was not curable under Section 292BB. Conclusion: The Tribunal allowed the cross objections of the assessee, quashing the assessment proceedings due to procedural violations, and dismissed the Revenue's appeal as infructuous. The judgment underscores the importance of adhering to procedural mandates and obtaining necessary approvals in tax assessments, reaffirming the binding nature of CBDT instructions on revenue authorities.
|
