Case Law Details
1. The argument of the assessee in this case is that the selection for scrutiny of this case manually done by the Assessing Officer is bad in law and that the Commissioner of Income Tax has granted approval for selection of this case for scrutiny by the AO without application of mind. Ld. Counsel for the assessee filed a paper book running 1 to 23 pages. The sum and substance of the case is that Ld. CIT has granted approval without application of mind and in contravention of the guidelines laid down by the Central Board of Direct Taxes for picking of case of tax scrutiny for Assessment Year 2010-11. Certain cases have been relied upon and we would deal with them as and when required in the later part of the order.
2. Ld. Departmental Represented, on the other hand, relied upon the order of Ld. CIT and submitted that the guidelines in question for selecting cases for scrutiny are Internal Administrative’s instruction for the purpose of smooth functioning of the Department and these guidelines cannot be read and interpreted as if it is the Income Tax Act or Rules. He prayed that order of Ld. CIT be upheld.
3. This case has been selected for scrutiny by the Assessing Officer. This case is one of the 25 cases that were selected for scrutiny manually. The AO sought the ld. CIT’s for approval for this manual selection. Ld. CIT vide his order dated 26.09.2011 granted approves for selection of 24 cases for scrutiny by the Assessing Officer. Approval was denied in one case only. The assessee has at page 5 of its paper book enclosed a photo copy of reasons recorded by the Assessing Officer in his proposal for selection of the assessee’s case for scrutiny for the AY 2010-11. This reads as follows:-
“net profit appears to be low which needs verification with regard to the expenses claimed by the assessee insured loan of ₹79,07,960 and sundry creditors for ₹3,255/- are to be verified.”
In our view, no fault can be found in the reasons recorded by the Assessing Officer for selecting the assessee’s case for scrutiny. At page 15 & 16 of the paper book, the assessee enclosed copy of the criteria / guidelines for income tax scrutiny for AY 2010-11 dated 10.09.2011. The relevant portion of the Circular restricted for the reference:-
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