Case Law Details
Dev Milk Foods Pvt. Ltd. Vs ACIT (ITAT Delhi)
The issue under consideration whether conversion of the case from limited scrutiny to complete scrutiny is justified in law?
In present case, the assessee company is engaged in manufacturing, marketing and transportation of milk and dairy products. As per the records, during the year under consideration, the main source of income was freight income and long term capital gains. The case was selected for limited scrutiny through CASS. The AO noted that the assessee’s case was selected for limited scrutiny with respect to long term capital gains but it was noticed that the assessee had claimed a short term capital loss of which had been adjusted against long term capital gains. As per the Assessing Officer, the loss claimed by the assessee appeared to be suspicious in nature primarily due to the reason that the loss could possibly have been created to reduce the incidence of tax on Long Term Capital Gains shown by the assessee. The Assessing Officer further stated in the assessment order that in order to verify this aspect, approval of the Ld. Principal Commissioner of Income Tax (PCIT) was taken to convert the case from limited scrutiny to complete scrutiny.
CBDT letter bearing No. DGIT VIF/HQ SI/2017-18 dated 30.11.2017 enforces checks and balances upon the power of the Assessing Officer to do fishing and roving enquiries in cases selected for limited scrutiny etc. In this very letter, the CBDT has highlighted the aspect of cryptic order sheet entries which according to the CBDT shows irresponsible, ad hoc and indisciplined working of an Officer of the Department. A perusal of the aforesaid instructions would show that the objective behind the issuance of these instructions is (i) to prevent possibility of fishing and roving enquiries; (ii) ensure maximum objectivity; and (iii) to enforce checks and balances upon the powers of an Assessing Officer.
ITAT states that there is not an iota of any cogent material mentioned by the Assessing Officer which enabled him to have reached the conclusion that this case was a fit case for conversion from limited scrutiny to complete scrutiny. Further, ITAT have also gone through the statement of assessee’s Director Mr. Rohit Verma which was recorded that after the conversion of the case and even in his statement nothing adverse is coming out vis. a vis. the impugned transactions. If the proposal of the Assessing Officer and the approval of the Ld. Pr. Commissioner of Income Tax are examined on the anvil of CBDT Instruction No.5/2016, it is very much clear that no reasonable view is formed as mandated in the said CBDT Instruction No.5/2016 in an objective manner and secondly merely suspicion and inference is the foundation of the view of the Assessing Officer. ITAT also note that there is no direct nexus brought on record by the Assessing Officer in the said proposal and, therefore, it is very much apparent that the proposal of converting the limited scrutiny to complete scrutiny was merely aimed at making fishing enquiries.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
Author Bio
