S. 143(3) assessment void if case picked up contrary to CBDT's Scrutiny Guidelines :
For AY 2006-07, the assessee filed a ROI declaring income of Rs. 3.97 crore. The case was selected for scrutiny under clause 2(v)(b) of
the Scrutiny Guidelines issued by the CBDT. The said clause of the Scrutiny Guidelines provided that a case had to be selected for
compulsory scrutiny if an addition/ disallowance of Rs. 5 lacs or more was pending in appeal before the CIT(A) and such identical
issue also originated in the year under consideration. The assessee claimed that as this condition stipulated in the Scrutiny
Guidelines was not satisfied, the AO had no jurisdiction to select the case for scrutiny. The AO & CIT(A) rejected the claim. On appeal
by the assessee to the Tribunal, HELD allowing the appeal :
The CBDT's instructions for assumption of jurisdiction for selection of cases of corporate assesses for scrutiny and assessment are
issued u/s 119 and are binding on the AO and have to be followed by him in letter and spirit. The burden lies on the authority
assuming jurisdiction to show and establish that such instructions have duly been complied and satisfied in letter and spirit. On
facts, as there was no disallowance of Rs. 5 lacs or more in the earlier years and as no identical issue had arisen in the present year, the
notice issued u/s 143(2) was not in terms of the CBDT's Scrutiny Guidelines and consequently the assumption of jurisdiction was
illegal and the entire assessment proceedings were invalid (Nayana P. Dedhia 270 ITR 572 (AP) followed). (CRYSTAL
PHOSPHATES LTD. V. ACIT [2013] 33 taxmann.com 116 (Delhi - Trib.)
Regards,
Pawan Singla , LLB
M. No. 9825829075
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