ITO Vs Sangeeta Bafna Mewari Gate (ITAT Jaipur)
ITAT Jaipur held that reasons recorded for selecting case for scrutiny never mentioned that case was selected for limited scrutiny hence approval for conversion not required. Matter remanded to CIT(A) to decide case based on merits.
Facts- The case of the assessee was selected for scrutiny under CASS and assessed total income of assessee as Rs. 3,03,60,730/-, u/s. 143(3) r.w.s 144B of the Income Tax Act. Penalty proceedings u/s. 270A for under-reporting of income issued separately. Notably, deficiencies were found in respect of under reporting of G.P; undervaluation of closing stock; discount and brokerage/commission.
When the assessee challenged the assessment order before Learned CIT(A), NFAC, said appeal was allowed on the technical ground raised by the assessee-appellant that the AO had converted the limited scrutiny case to an unlimited scrutiny case, and as the assessment order was bad in law and void-ab-initio, when the AO failed to obtain approval of the competent authority i.e. Administrative Commissioner Income Tax, before converting it to a complete scrutiny case. Being aggrieved, revenue has preferred the present appeal.
Conclusion- Held that Learned CIT(A), NFAC fell in error in observing that the Assessing Officer had passed the assessment order without following procedure e. without seeking approval of the competent authority, as per CBDT Circular dated 28.11.2018, which contains directions for converting of a limited scrutiny case to an unlimited scrutiny case. Having regard to the reasons recorded for selecting the case for scrutiny, it cannot be said to be a case selected for “limited scrutiny” or that the Assessing Officer had expanded his jurisdiction. Consequently, the impugned order passed by Learned CIT(A) is hereby set aside and the matter is remanded to ld. CIT(A), NFAC for decision of the appeal afresh, on merits, i.e. excluding the technical ground, which led to allowing of the appeal filed by the assessee. Of course, Learned CIT(A) shall allow reasonable opportunity to the assessee- appellant of being heard.
