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TMI Blog2023 (12) TMI 1117X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessment order passed by the Assessing Officer disregarding the instructions of the CBDT are liable to the set aside and no substantial of law arises. CBS International Projects Pvt. Ltd. [ 2019 (2) TMI 1748 - ITAT DELHI] and Best Plastics Pvt. Ltd. [ 2006 (4) TMI 53 - HIGH COURT, DELHI] Considering CBDT Circular and the Judicial Precedents, we hold that the Assessing Officer can widen the scope of scrutiny even the case is selected for limited scrutiny under CASS, however, the condition precedent for such widening of the scope is that the Assessing Officer has to seek prior approval of the authorities mentioned. Such prior approval and the permission of the PCIT is lacking in the instant case. There was no satisfaction about the merits of the issue which necessitated complete scrutiny in the instant case. Hence, the Assessment framed by the Assessing Officer on the issues which are not inconsonance of the instruction of CBDT are liable to be quashed. The additions made by the Assessing Officer being beyond the scope of the limited scrutiny and the same is deleted. Decided in favour of assessee. - Shri M. Balaganesh, Accountant Member And Shri Yogesh Kumar U.S., Judicia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on and without observing the principles of natural justice and deserves to be quashed . 8. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in not reversing the action of Ld. AO in charging interest u/s 234B and 234C of Income Tax Act, 1961. 9. That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other. 3. Brief facts of the case are that, the Assessee filed return of income declaring income of Rs. 41,80,240/- and thereafter the case of the Assessee was selected through CASS for limited scrutiny and a notice u/s 143(2) of the Income Tax Act, ( Act for Short) was issued. The reasons for the limited scrutiny selection of the Assessee s case are as under:- (i) Large interest expenses relatable to exempt income (u/s 14A) (ii) High interest expense as compared to business turnover. The assessment order came to be passed u/s 143(3) of t he Act by making additions of Rs. 4,96,00,000/- u/s 68 of the Act on account of unsecured loan, Rs. 11,52,000/- on account of unaccounted expenditure an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unsecured loans to the assessee company has already been exhausted during search seizure operation conducted by the Investigation wing in the case of Shri. Deepak Agarwal Shri Mukesh Kumar. Therefore, in view of the discussion held in the above paras the unsecured loans amounting to Rs. 4,96,00,000/- (5,76,00,000-80,00,000) is liable to be added to the total income of the assessee company as unexplained cash credits in terms of sec. 68 of the I.T. Act, 1961. In view of the above fact, addition of Rs. 4,96,00,000/- is made u/s 68 of the 1.T. Act, 1961 in the hands of the assessee. [Addition of Rs. 4,96,00,000/-] 8. In view of the above discussion, wherein it has been held that the whole amount of unsecured loans were noting but accommodation entries provided to the assessee company by the established entry providers directly or through layers on which normally accommodation entry operators charged commission @2%. Therefore, the assessee company has made unaccounted expenditure of an amount of Rs. 11,52,000/- (2% of Rs. 5,76,00,000/-) to arrange impugned entries. Hence, an amount of Rs. 11,52,000/- is added in the hands of assessee company being unaccounted commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5,85,99,063/- 8. It is found that the learned Assessing Officer travelled beyond the issues involved in the limited scrutiny and made enquiries and the additions of Rs. 4,96,00,000/- u/s 68 of the Act on account of unsecured loan, Rs. 11,52,000/- on account of unaccounted expenditure and further made addition of Rs. 36,66,823/- on account of interest expenses. 9. On the background of the above facts and circumstances, we find it handy to refer the instructions of CBDT issued in respect of examination of issue other than the reasons taken up in limited scrutiny case. The instructions of the CBDT are as under: INSTRUCTION NO.20/2015 Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes North Block, New Delhi, the 29th of December, 2015 Subject: Scrutiny Assessments-some important issues and scope of scrutiny in cases selected through Computer Aided Scrutiny Selection ('CASS')-reg .- The Central Board of Direct Taxes ('CBDT'), vide Instruction No. 7/2014 dated 26-9-2014 had clarified the extent of enquiry in certain category of cases specified therein, which are selected for scrutiny through CASS. Fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of enquiry shall be restricted to the 'Limited Scrutiny' issues. c. These cases shall be completed expeditiously in a limited number of hearings. d. During the course of assessment proceedings in 'limited Scrutiny' cases, if it comes to the notice of the Assessing Officer that there is potential escapement of income exceeding Rs. five lakhs (for metro charges, the monetary limit shall be Rs. ten lakhs) requiring substantial verification on any other issue(s), then, the case may be taken up for 'Complete Scrutiny' with the approval of the Pr. CIT/CIT concerned. However, such an approval shall be accorded by the Pr. CIT/CIT in writing after being satisfied about merits of the issue(s) necessitating 'Complete Scrutiny' in that particular case. Such cases shall be monitored by the Range Head concerned. The procedure indicated at points (a), (b) and (c) above shall no longer remain binding in such cases. (For the present purpose, 'Metro charges' would mean Delhi, Mumbai, Chennai, Kolkata, Bengaluru, Hyderabad and Ahmadabad). 4. The Board further desires that in all cases under scrutiny, where the Assessing Officer proposes to make ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a reasonable view that there is possibility of under assessment of income if the case is not examined under 'Complete Scrutiny'. In this regard, the monetary limits and requirement of administrative approval from Pr. CIT/CIT/Pr.DIT/DIT, as prescribed in Para 3(d) of earlier Instruction dated 29.12.2015, shall continue to remain applicable. 3. Further, while forming the reasonable view, the Assessing Officer would ensure that: a. there exists credible material or information available on record for forming such view; b. this reasonable view should not be based on mere suspicion, conjecture or unreliable source; and c. there must be a direct nexus between the available material and formation of such view. 4. It is further clarified that in cases under 'Limited Scrutiny', the scrutiny assessment proceedings would initially be confined only to issues under 'Limited Scrutiny' and questionnaires, enquiry, investigation etc. would be restricted to such issues. Only upon conversion of case to 'Complete Scrutiny' after following the procedure outlined above, the AO may examine the additional issues besides the issue(s) involved in 'Lim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal High Court in the case of Best Plastics Pvt. Ltd. 295 ITR 256, wherein it was held that the assessment order passed by the Assessing Officer disregarding the instructions of the CBDT are liable to the set aside and no substantial of law arises. The said Judgment relied upon the decision of Hon'ble Supreme Court in the case of Commissioner of Customs Vs Indian Oil Corporation and also the judgment of Hon'ble Supreme Court in the case of UCO Bank Vs CIT: 237 ITR 889. 13. Considering the above facts and circumstances and also the CBDT Circular and the Judicial Precedents, we hold that the Assessing Officer can widen the scope of scrutiny even the case is selected for limited scrutiny under CASS, however, the condition precedent for such widening of the scope is that the Assessing Officer has to seek prior approval of the authorities mentioned. Such prior approval and the permission of the PCIT is lacking in the instant case. There was no satisfaction about the merits of the issue which necessitated complete scrutiny in the instant case. Hence, the Assessment framed by the Assessing Officer on the issues which are not inconsonance of the instruction of CBDT are liable to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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