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TMI Blog2019 (6) TMI 1179X X X X Extracts X X X X X X X X Extracts X X X X ..... essee is against the order of Commissioner of Income Tax (Appeals) 1, Aurangabad dated 01.10.2018 relating to assessment year 2015-16 against order passed u/s 143(3) of the Income Tax Act 1961 (in short the Act ). 2. During the course of hearing, the assessee had raised the additional grounds of appeal and has pointed out that the said grounds of appeal goes to the root of the jurisdiction invoked by the Assessing Officer and hence be admitted for adjudication. I find the additional grounds of appeal raised by the assessee do not require any investigation into the facts, hence the same are admitted for adjudication. The additional grounds of appeal read as under : I. On the facts and circumstances of the case the assessment order may be held as bad in law and quashed. II. The Assessing Officer has exceeded his jurisdiction in finalizing a case scrutiny beyond the scope of CBDT circular and without following due process and therefore be held as bad in law. 3. The learned Authorized Representative for the assessee further pointed out that the issue stands covered by the order of Tribunal in connected cases wherein s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ete 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 of case to complete scrutiny after following the procedure i.e. after taking approval from the Pr.CIT / CIT, the Assessing Officer may examine additional issues beside the issue involved in limited scrutiny. 10. The Tribunal in the case of Nazare Vikas Karyakari Seva Sahakari Society Ltd. Vs. ITO (supra) on similar circumstances of extension of scope of scrutiny to other issues and making addition on such issues, where the case of assessee was picked up for scrutiny under CASS have held as under:- 3. On hearing the parties and the precedent, we find the similar issue was the subject-matter of adjudication before Pune Bench of the Tribunal in the case of Suresh Jugraj Mutha vs. Addl.CIT vide ITA No.05/PUN/2016 for the assessment year 2011-12, order dated 04.05.2018. In this case, the Tribunal analyzed the scope of the circulars/provisions and came to the conclusion that such additions made by the Assessing Officer are not sustainable in law. For the sake ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctions 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. However, a case may be taken up for wider scrutiny with the approval of the administrative Commissioner, where it is felt that apart from the AIR information there is a potential escapement of income more than ₹ 10 Lacs. 3. It has also been decided that in all the cases which are picked for scrutiny only on the basis of AIR information, the notice u/s.143(2) of Income Tax Act, 1961 should clearly be stamped with AIR case. 11. Further, on perusing the orders of the Revenue, we find the facts are similar to the ones already decided by the Pune Bench of the Tribunal in the case of M/s. S.F. Chougule Vs. JCIT (supra) is relevant to the facts present case of the assessee. We therefore proceed to extract the relevant findings given by the Tribunal here as under : 10. The learned Authorized Representative for the assessee pointed out that the assessee was engaged in r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es 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. Nayana P. Dedhia Vs. ACIT (2003) 86 ITD 398 (Hyd) for the proposition of binding nature of CBDT circulars upon the IT authorities. He further pointed out that the said decision has been approved by the Hon ble High Court of Andhra Pradesh in CIT Vs. Smt. Nayana P. Dedhia (2004) 270 ITR 572 (AP). Further, he referred to the ratio laid down by the Hon ble High Court of Delhi in CIT Vs. Best Plastics (P) Ltd. (2007) 295 ITR 256 (Del) for the proposition that where the guidelines are laid down for selection of cases for scrutiny and if the case of the assessee was taken up for scrutiny in violation of CBDT Instructions, then the assessment order has to be set aside. He further referred to the decision of Hon ble Bombay High Court in Bombay Cloth Syndicate Vs. CIT (1995) 214 ITR 210 (Bom) for the proposition that the CBDT Instructions were binding. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mises 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 ₹ 81,64,598/-. However, the perusal of computation of income reflected that net profit shown in Profit Loss Account was ₹ 11,62,084/- and certain disallowances were made on account of personal expenses, capital expenses and disallowances under section 40(a)(ia) of the Act at ₹ 68,31,574/- and other disallowances and the income was aggregately shown at ₹ 85,69,672/- The Assessing Officer and CIT(A) thus, were of the view that the assessee had not included the additional income of ₹ 45,93,467/-, where it had declared the business income at only ₹ 11,62,084/-, though it had filed the return of income declaring income of ₹ 81,64,590/-. The case of authorities below is that the assessee had not fulfilled the conditions laid down in the guidel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing 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 admittedly, these guidelines were used to select the case of assessee for scrutiny. Further, the assessee also filed on record letter dated 13.05.2013 issued by the ACIT, Circle (1), Sangli, wherein in reply to the letter of assessee, it has been informed that there is no record to show that previous approval of CCIT / DGIT was obtained to select the case manually for scrutiny for assessment year 2008-09. So, taking into consideration the said correspondence which has come into existence after the date of passing of assessment order and appellate order, the first thing to be taken note of is that the case of assessee was not selected for scrutiny in CASS which is the reply given in answer to RTI query as per letter dated 12.04.2012. The second aspect is that the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 in law and void-ab initio. Consequently, we find adjudication of other grounds by the assessee on merits becomes academic. Therefore, the said grounds are dismissed are academic. 4. From the above, it is settled legal issue at the level of the Tribunal, Pune Bench, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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