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TMI Blog2021 (6) TMI 366X X X X Extracts X X X X X X X X Extracts X X X X ..... 6.10.2016 admitting a total income of Rs. 44,03,430. The case was selected for limited scrutiny under CASS to verify and examine the following issues : (i) Whether sales turnover / receipts have been correctly offered for tax ? (ii) Whether contract receipts/fees have been correctly offered for tax ? Accordingly, notice u. 143(2) of the Income Tax Act, 1961 ('the Act') was issued to the assessee. During the assessment proceedings u/s. 143(3) of the Act, the Assessing Officer observed that the assessee has received contract receipts of Rs. 8,03,01,580. In this regard, the financials of the assessee were called for u/s. 142(1) of the Act. In response to the notice, the assessee submitted his P & L Account and Balance Sheet of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n law in failing to note that the Assessing Officer has travelled beyond the parameters of a limited scrutiny and in gross violation of the relevant instructions issued by the CBDT, has passed the assessment order u/s. 143(3) of the IT Act without obtaining the approval of the Principal CIT. In the result the ld. CIT(A)-6, Hyderabad failed to note that the Assessing Officer passed by the ld. Assessing Officer is not as per law and is liable to be quashed. 2. The ld. CIT(A)-6, Hyderabad, failed to note that the mandate of the Assessing Officer under the limited scrutiny was the verification of, whether, the contract receipts / sales, turnover have been correctly offered for tax, and having found that the same have been correctly considered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assessment order passed is invalid in law, and is to be quashed. 7. Any other ground or grounds that may be urged at the time of hearing." 5. The learned Counsel for the assessee submitted that this is a case of limited scrutiny, whereas the Assessing Officer has exceeded his jurisdiction by conducting complete scrutiny without obtaining approval of the Pr. CIT for conversion of the assessment into complete scrutiny assessment. He submitted that for this reason alone, the assessment has to be set aside and this appeal is to be allowed. In support of this contention, the learned Counsel for the assessee has placed reliance upon the following decisions: i) Copy of Judgement of the Hon'ble Income Tax Appellant Tribunal, Hyder ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue, he submitted that the assessee's books of account were audited for the earlier A.Ys as well and the net profit offered by the assessee and accepted by the Assessing Officer for all these years was less than 4% and therefore, the income offered by the assessee should have accepted by the Assessing Officer. On the issue of Assessing Officer exceeding his jurisdiction by connecting the limited scrutiny to complete scrutiny without the approval of the Pr. CIT, the learned DR, submitted that the Assessing Officer has confined himself to the points for which the assessment was selected for limited scrutiny under CASS and the CIT (A) has properly appreciated the issue and has rightly held that the Assessing Officer has not exceeded his juri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profit from business and whether the net profit offered by the assessee was correct and since the assessee has failed to produce the books of account, the Assessing Officer had no option but to estimate the income of the assessee at a percentage of the turnover. Therefore, as rightly held by the CIT (A), the Assessing Officer has restricted himself to the points of limited scrutiny and has not converted limited scrutiny into complete scrutiny as alleged by the assessee and therefore, there was no need for him to obtain the approval of the Pr. CIT before completing the assessment. Therefore, the case law relied upon by the learned Counsel for the assessee are not applicable to the case before us. Therefore, Ground of appeal Nos.1, 2 and 3 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usiness of the assessee. In the case of Allied Construction (Supra), the Special Bench observed that where FD's made in the Bank were utilized to give bank guarantees or as a performance security, the interest income therefrom cannot be said to have any nexus with the business of the assessee. The learned Counsel for the assessee has not been able to rebut these findings of the CIT (A) with any evidence or decision to the contrary and therefore, the assessee's ground of appeal No.4 is also rejected. 12. As regards the estimation of net profit at 6% of the gross receipts by the CIT (A), the learned Counsel for the assessee has relied upon the percentage of net income to gross receipts in the earlier years to plead that the net profit for th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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