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Income Tax Appellate Tribunal, PUNE BENCH “SMC”, PUNE
Before: SHRI ANIL CHATURVEDI
आदेश / ORDER PER ANIL CHATURVEDI, AM :
This appeal filed by the assessee is emanating out of the order of 1. Commissioner of Income Tax (A) – 7, Pune dated 29.06.2018 for the assessment year 2014-15.
The relevant facts as culled out from the material on record are as under :-
Assessee is a Co-operative Society stated to be engaged in the business of sale and purchase of Milk and its products, Cattle feeds and Chara Chhavani etc. Assessee electronically filed its return of income for A.Y. 2014-15 on 01.04.2015 declaring total income of Rs.Nil. The case
ITA No.1531/PUN/2018
was selected for scrutiny and thereafter assessment was framed u/s
143(3) of the Act vide order dated 09.12.2016 and the total income was
determined at Rs.4,97,600/-. Aggrieved by the order of AO, assessee
carried the matter before Ld.CIT(A), who vide order dated 29.06.2018 (in
appeal No.PN/CIT(A)-7/ITO, Wd-1/10945/2016-17) granted partial relief
to the assessee. Aggrieved by the order of Ld.CIT(A), assessee is now in
appeal and has raised the following grounds :
“1. In the facts and circumstances of the case and in law, the learned C.I.T.[A] ought to have annulled/cancelled the impugned assessment order framed by the learned Assessing Officer as the same was contrary to the Instruction No.7j2014 dated 27/09/2014 issued by the C.B.D.T. and hence bad in law and being without authority of law and hence null and void. 2 Without prejudice to above and by way of an alternate submission it is submitted that the learned C.I.T.[A] has erred in confirming the following disallowances which are based on surmises and conjecture and being bad in law and devoid of merits and hence the same may please be deleted: 1. Disallowance out of Expenses of Chara – Rs.2,09,349.00 2. Disallowance out of Water Expenses - Rs. 38,250.00”
Before me at the outset, Ld.A.R. submitted that if ground No.1 is
raised in the present appeal is decided in assessee’s favour, the other
grounds raised on merits would be rendered academic and would
therefore requires no adjudication. In view of the aforesaid submissions
of Ld.A.R., I first proceed to dispose of ground No.1.
Before me, Ld.A.R. pointing to the assessment order submitted that
the case was selected for scrutiny under CASS for the limited purpose to
identify (1) Contract receipts / Fee mismatch and (2) Tax credit Mis-
match. He submitted that AO thereafter in the assessment order framed
u/s 143(3) of the Act made additions on other issues namely expenses
with respect to Chara and Water and income from other sources which
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were not part for which the case was initially selected under CASS. He
submitted that when the case which is initially selected for “limited
scrutiny” and is thereafter converted into “complete scrutiny”, the AO is
required to take administrative approval from PCIT / CIT in terms of
Instruction No.5/2016 dated 14.07.2016. He submitted that in the
present case, no administrative approval from the competent authority
was obtained by the AO. In such a situation, he submitted that the order
passed by the AO being contrary to the instructions issued by CBDT is
null and void. In support of his contentions, he placed reliance on the
decision of Pune Bench of the Tribunal in the case of Ahilyadevi Mahila
Dudh Utpadak Sahakari Sanstha Ltd., Vs. ITO and others (in ITA
Nos.1536-1540/PUN/2018 order dated 01.02.2019). He also placed on
record the copy of the aforesaid decision. From the aforesaid order, he
pointed to the grounds raised therein which are similar to the grounds in
the present appeal. He further submitted that the issue in the present
case is similar to that of Ahilyadevi Mahila Dudh Utpadak Sahakari
Sanstha Ltd., (supra) and following the aforesaid decision, the order of AO
be held to be null and void. Ld. D.R. on the other hand, supported the
order of AO and Ld.CIT(A).
I have heard the rival submissions and perused the material on
record. It is an undisputed fact and as noted by AO in the assessment
order that the case of the assessment was initially selected for scrutiny
under CASS for “limited purpose” of examination of Contracts receipt/Fee
mismatch and Tax Credit Mis-match. It is also an undisputed fact that
no administrative approval was obtained by the AO for converting the
case of the assessee from “limited scrutiny” into “complete scrutiny” case.
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I find that identical issue arose in the case of Ahilyadevi Mahila Dudh
Utpadak Sahakari Sanstha Ltd., (supra) wherein the Co-ordinate Bench
of the Tribunal has held as under :
“7. I have heard the rival submissions and perused the material on record. It is an undisputed fact that the case of the assessee was initially selected for scrutiny for the limited purpose of examination of contract receipts / fee mismatch and tax credit mismatch. It is also an undisputed fact that no administrative approval was obtained by the AO for converting the case of the assessee from “limited scrutiny” into “complete scrutiny” case. I find that the Instruction No.7 of 2014 dt.26.09.2014 issued by the Central Board of Direct Taxes (CBDT) vide para 2 states that the AO shall confine his enquiry or verification only to the specific points on the basis of which the particular return has been selected for scrutiny. Vide para 4 of the aforesaid Instruction, it is stated that in case during the assessment proceedings, it is found that there is potential escapement of income based on the monetary limits prescribed therein or on the conditions stated therein, the case may be taken up for comprehensive scrutiny with the approval of the PCIT/DIT concerned and such approval shall be accorded by the PCIT/DIT in writing after being satisfied about the merits of the issue necessitating wider and detailed scrutiny in the case.
It is a settled law that the CBDT is competent to issue Circulars u/s 119 of the Income Tax Act, 1961. The Circulars so issued have the force of law and are binding on all the officers of the Department. In the present case, no material has been placed on record by the Revenue to demonstrate that in terms of the aforesaid Circular the AO had taken the approval of the concerned PCIT/DIT. I further find that on identical facts in the case of Suresh Jugraj Mutha (supra) the Pune Bench of the Tribunal held that when no administrative approval from the CIT was taken for converting the limited scrutiny case to full scrutiny case, the assessment order passed by the AO in violation of such instructions to be bad and void ab initio. Before me, Revenue has not placed any contrary binding decision. I therefore following the decision in the case of Suresh Jugraj Mutha (supra) and for reasons cited herein, hold that the assessment order passed by the AO without following the mandate prescribed in the Instructions of CBDT to be held as null and void. Thus, the ground No.1 of the assessee is allowed.”
Before me, Revenue has neither pointed out any distinguishing feature in
the facts of the present case and that of Ahilyadevi Mahila Dudh Utpadak
Sahakari Sanstha Ltd., (supra) nor has placed any material on record to
demonstrate that the order of the Tribunal in the case of Ahilyadevi
Mahila Dudh Utpadak Sahakari Sanstha Ltd., (supra) has been set aside
/ stayed / over-ruled by the higher Judicial Forum. I, therefore following
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the decision in the case of Ahilyadevi Mahila Dudh Utpadak Sahakari Sanstha Ltd., (supra) and for similar reasons cited herein, hold that the assessment order passed by the AO u/s 143(3) of the Act to be null and void and thus, the ground No.1 of the assessee is allowed. Since I have held the assessment order passed by the AO to be null and void, the other grounds raised by the assessee on merits have been rendered academic and therefore do not require adjudication. Thus, the ground No.1 of assessee is allowed.
In the result, the appeal of assessee is allowed.
Order pronounced on 7th day of June, 2019.
Sd/- Sd/-- (ANIL CHATURVEDI) लेखा सद�य / ACCOUNTANT MEMBER
पुणे Pune; �दनांक Dated : 7th June, 2019. Yamini
आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to :
अपीलाथ� / The Appellant 2. ��यथ� / The Respondent 3. CIT(A)-7, Pune. 4. Pr. CIT-6, Pune. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “एक सद�य” / 5 DR, ITAT, “SMC” Pune; 6. गाड� फाईल / Guard file.
आदेशानुसार/ BY ORDER // True Copy // व�र�ठ �नजी स�चव / Sr. Private Secretary आयकर अपील�य अ�धकरण ,पुणे / ITAT, Pune.