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Facts
The Assessee reported a turnover of Rs. 251,97,81,810/- and total income of Rs. 12,50,95,220/-. The case was selected for 'Complete Scrutiny', and the AO made additions leading to an assessed income of Rs. 17,44,53,906/-.
Held
The Tribunal held that the CIT(A) erred in quashing the additions made by the AO based on a circular not applicable to 'Complete Scrutiny' cases. The matter was remanded to the CIT(A) for a decision on merits.
Key Issues
Whether the CIT(A) was correct in quashing additions made by the AO on the ground of lack of prior approval, when the case was selected for 'Complete Scrutiny'?
Sections Cited
147, 148, 143(3)
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Income Tax Appellate Tribunal, DELHI
Before: SHRI YOGESH KUMAR U.S. & SHRI MANISH AGARWAL
The present Appeal and the Cross Objection are filed by the Department of Revenue and the Assessee are against the order of the Commissioner of Income Tax Appeal/National Faceless Appeal Centre [‘NFAC’ for short] dated 01/07/2024 for the Assessment Year 2020- 21.
Brief facts of the case are that, during the year under consideration, the Assessee reported the turnover of Rs. 251,97,81,810/- and total income at Rs. 12,50,95,220/-. The case of the Assessee was selected for ‘Complete Scrutiny’ and an assessment order came to be passed on 28/09/2022 by computing income of the Assessee at Rs. 17,44,53,906/- by making certain disallowances.
Aggrieved by the assessment order dated 28/09/2022, the Assessee preferred an Appeal before the Ld. CIT(A). The Ld. CIT(A) vide order dated 01/07/2024, allowed the Appeal filed by the Assessee on the ground that ‘the A.O. made addition other than the issues covered by selection criteria/CASS without prior approval of higher authority’. As per the Ld. CIT(A), the A.O. has travelled beyond his jurisdiction. Accordingly, quashed the additions made by the A.O.
Aggrieved by the said order of the Ld. CIT(A) dated 01/07/2024, the Department of Revenue preferred the captioned Appeal. The Assessee has also filed Cross Objection by raising both technical as well as grounds on the merit of the case.
The Ld. Department's Representative taken us through the assessment order and contended that the case of the Assessee was selected for ‘Complete Scrutiny’, however, the Ld. CIT(A) erroneously relied on the CBDT Circular dated 08/09/2010, which is applicable to the scrutiny on the basis of data in AIR. The Ld. Department's Representative further submitted that since the case of the Assessee was selected for ‘Complete Scrutiny’, there is no requirement on the part of the A.O. to take any approval from the higher authorities in order to frame the Assessment Order. Thus, submitted that the Ld. CIT(A) has allowed the on erroneous finding thus, submitted that Appeal of the Revenue is liable to be allowed.
Per contra, the Ld. Assessee's Representative addressing on the grounds of the Cross-Objection and also against the Grounds of Appeal of the Revenue, submitted that the order of the Ld. CIT(A) requires no interference and by relying on the order of the Ld. CIT(A), sought for dismissal of the Appeal of the Revenue and sought for allowing the Cross-Objection.
6.We have heard both the parties and perused the material available on record. The only ground cited by the Ld. CIT(A) for quashing the additions made in the assessment order that,‘the A.O. made additions other than the issues covered by selection criteria/CASS without prior approval of higher authorities’. As per the Ld. CIT(A), the A.O. has transferred beyond his jurisdiction. It can be seen from the assessment order itself the case of the Assessee was selected for Complete Scrutiny for the reason ‘claim of large value of refund’.
Since, it is the case of the Complete Scrutiny, the Circular of CBDT dated 08/09/2010 is not applicable. As per the said Circular, A.O. is not required to take any approval from the higher authorities. Thus, in our considered opinion, the Ld. CIT(A) has committed error in quashing the additions made by the A.O. Therefore, the order impugned of the Ld. CIT(A) is hereby quashed and the matter remand to the file of the Ld. CIT(A) with a direction to decide the Appeal on its merit. Accordingly, the Appeal of the Revenue is partly allowed for statistical purpose.
C.O No. 98/DEL/2024 (A.Y. 2020-21)
Since, we have quashed the order of the Ld. CIT(A) and remanded the matter to the file of the Ld. CIT(A) for fresh adjudication, we reserve liberty to the Assessee to urge all the contentions both legal as well as on the merit before the Ld. CIT(A) and the Ld. CIT(A) shall decide the same in accordance with law.