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Income Tax Appellate Tribunal, DELHI BENCH ‘SMC’, NEW DELHI
Before: Sh. N. K. Saini
ORDER These two appeals by the assessees are directed against the separate orders each dated 07.10.2016 of ld. CIT(A)-18, New Delhi.
Since, the issues involved in these appeals are common having similar facts, therefore, the appeals were heard together & 6665/Del/2016 2 Shekar & Shalabh Om Prakash Jalan and are being disposed off by this consolidated order for the sake of convenience and brevity.
In 2009-10, following grounds have been raised by the assessee:
1. That the order passed by the Ld. A.O and partially confirmed by the C1T (A), New Delhi is not only bad in law but also against the facts of the case.
2. That the Ld. CIT(A) erred under law while not appreciating the fact that the assumption of jurisdiction by the ITO to initiate proceeding u/s 143(2) of the Act and to frame assessment u/s 143(3) by way of making various additions without having approval of administrative commissioner is not in accordance with the instruction dated 08.09.2010 issued by CBDT is out of jurisdiction. Constituently the impugned assessment order is without valid jurisdiction and void ab- initia.
3. That the Ld. CIT(A) is erred under law while confirming the addition of interest expenses amounting to Rs. 85,225/- as made by the A.O. in the impugned assessment order u/s 143(3) of the Act.
4. That the Ld. CIT(A) is erred under law while confirming addition u/s 68 of the Act inspite of necessary documents & detail filed by the appellant in support of genuineness of the loan transactions of the appellant.
5. Any other grounds of appeal may be added/amended/deleted at the time of hearing of appeal. & 6665/Del/2016 3 Shekar & Shalabh Om Prakash Jalan Therefore, it is prayed as under:-
1. That the impugned assessment order u/s 143(3) as framed by the A.O. may please be declared as null and void as the same has been framed without jurisdiction.
2. That interest expenses as claimed may please be allowed
3. That addition made u/s 68 may please be deleted.”
4. Facts of the case in brief are that the assessee filed the return of income on 30.09.2009 declaring an income of Rs.2,88,460/- which was processed u/s 143(1) of the Income-tax Act, 1961 (hereinafter referred to as the Act). Thereafter, the case was selected for security on the basis of CASS. The AO framed the assessment at an income of Rs.7,45,160/- by making the various additions and disallowances.
Being aggrieved the assessee carried the matter to the ld. CIT(A) and challenged the validity of the assessment order by stating that the AO enlarged the scope of scrutiny without having prior approval from the Administrative Commissioner and framed the assessment order. The assessee also referred to the CBDT Circular No. 225/26/2006-ITA.II(Pt) dated 8.9.2010 and stated that as per this Circular if a case was selected on the basis of AIR information then scrutiny was required to be limited only to the issue and the scope of scrutiny could not be expanded without permissions of the Administrative Commissioner and that the instruction being binding on the revenue authorities, the scope could not have been expanded without the permission of the Commissioner. The reliance was placed on the judgment of the Hon’ble Apex court in the & 6665/Del/2016 4 Shekar & Shalabh Om Prakash Jalan case of UCO Bank reported at 237 ITR 889. The ld. CIT(A), however, did not find merit in the submissions of the assessee by observing in para 5.2.1.4 of the impugned order which read as under: “5.2.1.4 I find that the case was selected for scrutiny on the basis of CASS which is also known as Computer Assisted Scrutiny System. The case was taken for scrutiny by issue of notice u/s 143(2) on 13/9/2010 whereas the instructions have been issued on 8.9.2010 and, therefore, the said instruction possibly had not reached the AO. Once the case is selected for scrutiny under the CASS and notice is issued u/s 143(2) then whole of assessment is open for scrutiny. In any case this is an administrative matter and could have been objected to before the AO/ Commissioner in administrative capacity and cannot be challenged at a later stage, as is evident from a reading of sec 292B and 292BB.”
Now the assessee is in appeal. The ld. Counsel for the assessee reiterated the submissions made before the authorities below and further submitted that the AO enlarged the scope of scrutiny without taking the approval from the Administrative Commissioner and made the another additions apart from the AIR information. Therefore, the additions made by the AO were not justified. It was further submitted that the decision of the ITAT Chandigarh Bench in the case of Anup Sharma Vs. The Addl. CIT in ITA No. 161/Chd/2012 order dated 10.09.2014 relied by the ld. CIT(A) was on different facts.
In his rival submissions the ld. DR submitted that the instructions were issued by the CBDT on 08.09.2010 and the case was taken for & 6665/Del/2016 5 Shekar & Shalabh Om Prakash Jalan scrutiny by issuing the notice u/s 143(2) of the Act on 13.09.2010, so there was a small gap and the instructions might have not reached to the AO.
I have considered the submissions of both the parties and carefully gone through the material available on the record. In the present case, it is noticed that the ld. CIT(A) while rejecting the legal issue raised by the assessee relied upon the decision of the ITAT Chandigarh Bench in the case of Anup Sharma Vs. The Addl. CIT (supra) wherein the view taken by the ld. CIT(A) has been affirmed. The said decision has been reproduced by the ld. CIT(A) in para 5.2.1.5 of the impugned order and the relevant portion of the said order read as under: “5.7. In our opinion the Ld. CIT(A) has correctly adjudicated the issue because in this case the case was selected on the basis of CASS which is also known as Computer Assisted Scrutiny System. Moreover, the case was selected for security on 2.9.2009 when a notice u/s 143(2) was issued whereas the instructions have been issued on 8.9.2010 and, therefore, they cannot apply to the earlier period. Once the case is selected for scrutiny under the CASS and notice is issued u/s 143(2) then whole of assessment is open for scrutiny. In any case the Ld. CIT(A) has correctly observed that this is an administrative matter and could have been objected to before the Commissioner in administrative capacity and cannot be challenged in the appeal, therefore, in our opinion no interference is required in the order of Ld. CIT(A).”
On perusal of the aforesaid findings, it is noticed that in the said case it was clearly mentioned that the case was selected for scrutiny on 02.09.2009 whereas the instruction had been issued on 08.09.2010. & 6665/Del/2016 6 Shekar & Shalabh Om Prakash Jalan Therefore, those could not be applied to the earlier period. In my opinion, the ld. CIT(A) had not considered this fact that in the present case, the notice was issued by the AO on 13.09.2010 i.e. after the issuance of instruction by the CBDT, as such, the ld. CIT(A) had not appreciated the facts in right perspective. I, therefore, deem it appropriate to set aside this issue back to the file of the ld. CIT(A) to be adjudicated afresh in accordance with law after providing due and reasonable opportunity of being heard to the assessee.
In the facts are similar as were involved in Shekar Om Prakash Jalan Vs ITO, Ward No. 31(2), New Delhi (supra). Therefore, our findings given in the former part of this order shall apply mutatis mutandis in respect of this appeal i.e. ITA No. 6665/Del/2016.
In the result, the appeals of the assessees are allowed for statistical purposes. (Order Pronounced in the Court on 24/05/2017)