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TMI Blog2019 (4) TMI 416X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment year 2015-16 against respective orders passed under section 143(3) of the Income-tax Act, 1961 (in short the Act ). 2. Both the appeals of different assessee on similar issue were heard together and are being disposed of by this consolidated order for the sake of convenience. However, in order to adjudicate the issues, we are making reference to the facts and issues in ITA No.1589/PUN/2018. 3. The assessee in ITA No.1589/PUN/2018 has raised the following grounds of appeal:- 1. On the facts and circumstances of the case and in law, the Hon'ble CIT Appeal-1, Aurangabad has erred in confirming the addition of ₹ 1539405/-. The A.O. has adopted 8% profit on the gross receipt in spite the assessee maintained regular books of account which are duly audited. The book profit may kindly be accepted and the addition made by the A.O. may kindly be deleted. 2. On the facts and circumstances of the case and in law, the CIT Appeal-1, Aurangabad has erred in confirming the order of the A.O. in rejecting the deduction U/S.80P (ii) (a) (vi) of the I.T. Act the same may kindly be allowed. 3. On the facts and circumstances of the case and in law the A.O. has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the assessee along with notice issued under section 142(1) of the Act and the same reads as under:- 5. Reasons for selection is Low profit before interest and Tax (PBT) shown . In this regard, necessary interest account along with reasons for low profit may be submitted with evidences. 8. In the said notice, it was very categorically mentioned that reply to the questionnaire was to be issued and in the submissions specifically CASS should be quoted. The perusal of assessment order however, reflects the Assessing Officer to have proceeded and disallowed the deduction claimed under section 80P(2)(a)(iv) of the Act. 9. The issue which arises is whether in cases picked up for limited scrutiny, can any other issue be decided without taking necessary permission from the concerned Commissioner? In this regard, first we will make reference to CBDT, which vide Instruction No.5/2016, dated 14.07.2016 had clearly pointed out that in the cases falling under limited scrutiny or complete scrutiny, it is clarified that in cases under limited scrutiny, the scrutiny assessment proceedings would initially be confined only to the issue under limited scrutiny and only upon conversion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as under : 4. In case, during the course of assessment proceedings, it is found that there is potential escapement of income exceeding ₹ 10 lakhs (for non-metro charges, the monetary limit shall be ₹ 5 lakhs) on any other issue(s) apart from the AIR/CIB/26AS information based on which the case was selected under CASS requiring substantial verification, the case, may be taken up for comprehensive scrutiny with the approval of the Pr.CIT/DIT concerned. However, such an approval shall be accorded by the Pr.CIT/DIT in writing after being satisfied about merits of the issue(s) necessitating wider and detailed scrutiny in the case. Cases so taken up for detailed scrutiny shall be monitored by the Jt. CIT/Addl.CIT concerned. 10. We also perused the CBDT letter dated 08-09-2010 which deals with selection of cases for scrutiny on the basis of data in AIR returns and subsequent assessment proceedings. The instructions given in the said letter reads as under : 2. The above mentioned guidelines have been reconsidered by the Board and it has been decided that the scrutiny of such cases would be limited only to the aspects of information received through AIR. Howev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He further pointed out that in case the criteria is not met with, then as per clause (g), the Assessing Officer can select any return for scrutiny after recording reasons and after obtaining the approval of CCIT/DGIT. In this regard, he pointed out that no such approval was received from the CCIT. Our attention was drawn to the letter dated 13.05.2013 issued from the office of ACIT, Circle (1), Sangli, wherein the Assessing Officer informed the assessee that there was no record to show that previous approval of CCIT was obtained to select the cases manually for scrutiny for assessment year 2008-09. The learned Authorized Representative for the assessee stressed that where the selection was not through CASS but was manually made, then the previous approval of the CCIT was compulsory. Referring to the order of CIT(A), the assessee pointed out that the CIT(A) states that the case of assessee was selected through CASS and also mentions that the contention of assessee would have been acceptable had the case been manually selected for scrutiny. The learned Authorized Representative for the assessee further placed reliance on the ratio laid down by the Hyderabad Bench of Tribunal in Smt. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer, the requirement of guidelines issued for this purpose for relevant assessment year was that the same should be after obtaining approval of the CCIT / DGIT. Since no such approval was received from the CCIT / DGIT, the Assessing Officer had no jurisdiction to proceed with the scrutiny assessment in the case of assessee. The assessee had raised the issue before the Assessing Officer and CIT(A) but the facet of argument before the authorities below was that the case of assessee could not be selected for scrutiny under CASS since in the case of Survey, certain conditions were laid down and the assessee having fulfilled the said conditions, then no scrutiny could takes place in the hands of assessee. 14. In the facts of the case, Survey under section 133A of the Act was carried out at the premises of assessee on 30.01.2008. During the course of Survey, the assessee made declaration of additional income of ₹ 45,93,467/- which was offered as additional income over and above the income to be returned for the year under consideration. The assessee claims that it had disclosed the said additional income in its return of income wherein the return was filed declaring income of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 93/2009/ITA.II. 15. The said guidelines for selection of scrutiny were published and it was pointed out that the said guidelines were only for the use of Officers of Income Tax Department and the same could not be disclosed even under the RTI Act, 2005. The said application under the RTI Act and the order under the RTI Act are placed at pages 20 to 22 of the Paper Book. The assessee has also placed the copy of guidelines issued for scrutiny, copy of which is placed at page 23 of Paper Book. The said guidelines were for use of Income Tax Department, wherein selection criteria was provided which was applicable to all Income Tax returns at all stations. The guidelines vis- -vis survey cases are provided therein and vide clause (g), it is provided that the Assessing Officer may select any return for scrutiny after recording reasons and after obtaining the approval of CCIT / DGIT. The cases under this category should be selected, if there are compelling reasons and cases not selected under CASS. These cases are watched by the CCIT / CIT for the quality of assessment. The said guidelines are as per F.No.225/93/2009/ITA.II. The reply under RTI also refers to the said guidelines and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roval of CCIT was obtained, then the Assessing Officer lacks jurisdiction to carry out the scrutiny assessment in the present case and accordingly, assessment order passed by the Assessing Officer is bad in law. Hence, we hold so. Since the assessment order is held to be bad in law, the issue on merits becomes academic and the grounds of appeal raised by both the assessee and the Revenue in their respective appeals are infructuous. The appeal of assessee is thus, allowed and the appeal of Revenue is dismissed. Therefore, the Board circular do not permit the AO from converting the limited scrutiny case like the present one to the unlimited one without the approval of Administrative Commissioner of Income Tax. AO did not mention the reasons for not taking such an administrative approval before making the said addition. As such, the Pune Bench of the Tribunal has already taken the favourable view in these matters in favour of the assessee. We do not understand why AO failed to take approval for such conversion. Considering the settled nature of the issue, we allow the legal ground raised by the assessee vide Ground No.1 and hold that the assessment order passed by the AO is bad ..... X X X X Extracts X X X X X X X X Extracts X X X X
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