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TMI Blog2024 (9) TMI 296X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer to pass the assessment order, more so by disregarding the settled principle that there can be no estoppel against law. B. Whether Hon'ble ITAT erred in law in upholding the addition of undisclosed investment by passing a non speaking order. C. Whether Hon'ble ITAT erred in law in upholding the addition on account of "Addition to fixed assets" when such assets are appearing in the balance sheet. D. Whether the order passed by Hon'ble Tribunal is in accordance with law. 3. The appellant is a partnership firm against whom an assessment for the assessment year 2005-06 was framed by ITO, Ward No.4, Srinagar ["Assessing Officer"] as against the income of Rs. 2,21,148/-. The aforesaid order of assessment of the appellant was framed by the Assessing Officer after selecting the case for scrutiny as per the guidelines laid down in action plan for the year 2006-07 as contained in Clause 2 (q) thereof. The Assessing Officer made an aggregate addition of Rs. 20,28,885/- as unexplained income on the ground that plant and machinery shown in the balance sheet on 31st March, 2004 was to the tune of Rs. 21,58,400/- whereas the same was shown as on 1st April, 2004 by a figure which exce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estoppel against law. On facts, it was argued that the additions made on account of fixed assets to the tune of Rs. 13,29,206/- and Rs. 6,99,679/-, aggregating to Rs. 20,28,885/-, was not tenable as these amounts were part of the books of accounts and balance sheet and, therefore, could not have been termed as addition to the assets. 7. Per contra, Mr. Suraj Singh Wazir, learned counsel appearing for the revenue, has sought to justify the assessment order and the orders passed by the CIT (A) and ITAT. He would submit that the Assessing Officer as well as both the appellate authorities have taken note of all aspects of the matter and have rightly concluded that there were unexplained additions made to the fixed assets for which the assessee was bound in law to account for. 8. On behalf of the revenue it is submitted that the findings of the learned 1st appellate authority i.e. CIT (A) are on the basis of remand report filed by the Assessing Officer on 16th April, 2008. The remand report was served upon the assessee and he was asked to submit his explanation. The first appellate authority i.e. CIT (A) considered the remand report and the clarifications thereto submitted by the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocedural guidelines, in particular its clauses (o) and (q) are relevant for our discussion and are, thus, set out below:- "2. The following categories of cases shall be compulsorily scrutinized:- (a) .......................................... (b) ......................................... (c) ......................................... (d)..................................... (e) ................................ (f) .......................................... (g) ....................................... (h) ........................... (i) ...................................... (j) ........................................... (k) .......................................... (l) ....................................... (m)........................................ (n) ........................................ (o) All cases of contractors whose gross contractual receipts exceed Rs.1 crore in laces other than 60 cities on computer network if total income declared is less than 5% of gross contractual receipts. (p) ............................................ (q) All cases in which fresh capital introduced during the year exceeds Rs.1 crore in Delhi, Mumbai, Chenn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of Rs. 13,29,206/- as an undisclosed income. 15. The Assessing Officer as also both the appellate forums below have, on facts, found further addition of Rs. 6,99,679/- made during the assessment year in question. Otherwise also, these are question of facts, which have been conclusively determined by the three forums below. 16. The reasoning of CIT (A), which is upheld by the ITAT that the appellant had not raised any objection with regard to the jurisdiction of the Assessing Officer to select his case for scrutiny cannot be found fault with. The appellant, if aggrieved by selection of his case for scrutiny by the Assessing Officer, could have challenged the notice issued under Section 143 (2) of the Act. The appellant did not object to the notice and rather voluntarily participated in the proceedings conducted by the Assessing Officer, which ultimately culminated in framing of the assessment under Section 144 of the Act. 17. As is held herein above, CBDT circular laying down procedure for picking up cases for scrutiny may be binding on the Assessing Officers of the Income Tax Department but the same does not have the force of law nor can it supplant the express statutory pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come and have, therefore, rightly made additions to the income assessable to tax under the Act. 21. Learned counsel for the appellant relied upon some judgments of the Hon'ble Supreme Court and various High Courts to substantiate his argument that pure question of law which arises out of undisputed facts can be raised even at the appellate stage. There is no gainsaying that the aforesaid proposition of law is well settled and does not call for any debate. 22. Mr. Gupta, learned counsel for the appellant, has also relied upon couple of judgments from various High Courts to submit that if a case is picked up for scrutiny in violation of the CBDT circular/guidelines, subsequent assessment made in such case is not sustainable. Reliance was placed by Mr. Aditya Gupta, learned counsel for the appellant, on a Single Bench judgment of the Andhra Pradesh High Court in the case of CIT v. Nayana P. Dedhia dated 27th August, 2004. 23. In the aforesaid case, learned Single Bench of Andhra Pradesh High Court was examining the circular of CBDT issued under Section 119(1) of the Act for laying down procedure to select returns for the assessment year 1996-97. Clause 749A of the circular clearly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve that any claim of loss, exemption, deduction, allowance or relief made in the return is inadmissible, it shall serve a notice on the assessee specifying particulars of such claim of loss, exemption, deduction, allowance or relief and require him to produce any evidence or particulars specified therein or on which the assessee may rely in support of such claim. 26. Similarly, under Sub-section (2) of Section 143 of the Act, if Assessing Officer considers it necessary or expedient to ensure that the assessee has not understated the income or has not computed excessive loss or has not under-paid the tax, it shall serve on the assessee a notice either to attend his office or produce any evidence on which the assessee may rely in support of the return. This is notwithstanding anything contained in Clause (1). 27. In short, the power conferred upon the Assessing Authority under Sub-section (2) of Section 143 of the Act is statutory in character and cannot be tinkered with or taken away by any order or instruction issued by the CBDT in the exercise of the power conferred upon it under Section 119 of the Act, for, issuance of such order or direction would be tantamount to requiring th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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