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TMI Blog2023 (1) TMI 705X X X X Extracts X X X X X X X X Extracts X X X X ..... orted by the assessee, the assessing officer has accepted three and only made a deviation in respect of one transaction relating to provision of training services generating revenue of Rs.16,20,992. AO has treated it as FTS both under domestic law as well as India- Singapore DTAA. The question arising for consideration is, whether the Assessing Officer could have expanded the scope of the limited scrutiny to traversed into a completely different arena of examining whether an item of revenue received by the assessee falls in the category of FTS. Once, the international transactions reported in Form 3CEB have been verified by the TPO and no adjustments were suggested, it has to be accepted that assessee has reported the transactions correctly. Therefore, then, the purpose of limited scrutiny gets sub-served and the matter should have ended there. However, the Assessing Officer exceeding his jurisdiction has ventured into recheracterizing the nature and character of a particular item of income, which in our view, is beyond the scope of limited scrutiny. This is so because, in terms of CBDT Instruction nos. 20/2015 and 5/2016 read with DGIT(Vigilance) letter dated 30th November, 2017 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the considered view that in view of the settled legal position that the requirement of issuance of such notice is a jurisdictional one, it does go to the root of the matter as far as the validity of the reassessment proceedings under Section 147/148 of the Act is concerned. It raises a question of law as far as the present cases are concerned since it is not in dispute that prior to finalization of the reassessment orders, notice under Section 143(2) of the Act was not issued by the AO to the Assessee. With there being no fresh evidence or disputed facts sought to be brought on record, and the issue being purely one of law, the ITAT was not in error in permitting the Assessee to raise such a point before it. This finds support in the decision of the Supreme Court in National Thermal Power Co. Ltd. (supra) and the decision of this Court in Gedore Tools (P) Ltd. (supra)." 5. As could be seen from the additional ground, the issue arising for consideration is whether the assessing officer could have enlarged the scope of limited scrutiny for which the assessment in assessee's case was selected. 6. Briefly, the facts are that the assessee is a non-resident corporate entity incorporat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see had changed his position as earlier the assessee stated that these revenues were actual reimbursement for IT support services, whereas, afterwards the assessee stated that these are for recovery of training program cost. Be that as it may, the assessing officer added back the amount of Rs.16,20,992 at the hands of the assessee by treating it as FTS. While deciding the issue in appeal, learned Commissioner (Appeals) upheld the decision of the assessing officer. 10. Before us, learned counsel appearing for the assessee submitted that the scope of limited scrutiny was to verify, whether the value of international transactions with the AE have been correctly shown in Form 3 CEB. He submitted, the matter was referred to the TPO, who after verification has accepted the value of international transactions He submitted, the Assessing Officer proceeded beyond the scope of limited scrutiny by changing the nature of a particular receipt as FTS. He submitted, this is beyond the jurisdiction of the assessing officer as it is in violation of Instruction nos. 20/2015 and 5/2016 issued by Central Board of Direct Taxes (CBDT). 11. Drawing our attention to the instructions of CBDT, learned cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... officer was only discharging his duty in terms of the limited scrutiny while calling for the necessary documents to ascertain the nature of transaction. She submitted, in absence of proper explanation from the assessee to demonstrate that the revenue received from provisions of training services is not in the nature of FTS, the Assessing Officer was justified in taxing the income at the hands of the assessee. Without prejudice, she submitted, the assessee cannot avail the defense of violation of limited scrutiny by the assessing officer, as, any such violation has to be dealt with departmentally. Thus, she submitted, the additional ground raised should be dismissed. 13. We have considered rival submissions in the light of decisions relied upon and perused the material on record. 14. Undisputedly, assessee's case was selected for limited scrutiny to examine whether value of international transactions in respect of mutual agreement or arrangement have been correctly shown in Form 3CEB. In other words, the scrutiny was only for the purpose of verifying whether the international transactions with the related parties have been correctly declared by the assessee in the audit report. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... culars. 17. We find the answer to the aforesaid question in the decisions cited before us by learned counsel for the assessee. As per the ratio laid down by the co-ordinate Benches in these decisions, violation of norms of limited scrutiny in terms with the CBDT instructions and conversion to complete scrutiny without seeking prior approval would render the assessment order not only without jurisdiction but a nullity in the eyes of law. This is so because, as per section 119 of the Act CBDT instructions/circulars are binding on Assessing Officer. That being the legal position enunciated in the decisions cited before us, the impugned assessment order has to be declared as wholly without jurisdiction, hence, null and void. That being the case, the assessment order deserves to be quashed. Accordingly, we do so. Consequently, the impugned order of learned Commissioner (Appeals) is hereby set aside. Since, while deciding the additional ground raised by the assessee, we have quashed the assessment order, the other grounds raised by the assessee having become infructuous, do not require adjudication at this stage. 18. However, the parties are at liberty to contest the issues raised in t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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