Invalid Assessment Order Quashed on Jurisdictional Grounds. Disallowances Overturned Due to Lack of Authority.

The appeal was allowed in favor of the assessee. The Tribunal found that the notice under Section 143(2) was issued without jurisdiction by the Assistant Commissioner of Income Tax, rendering the assessment order invalid. Disallowances made beyond the limited scrutiny scope were deemed invalid as they lacked prior approval from higher authorities. The disallowance under Section 43B for service tax payment was deleted due to factual inaccuracies, and the disallowance of employees' contribution towards provident fund was overturned following legal precedents.

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Issues Involved:
1. Jurisdiction of the Assessing Officer (AO) issuing notice under Section 143(2) of the Income Tax Act, 1961.
2. Disallowance made beyond the scope of limited scrutiny under CASS.
3. Disallowance under Section 43B for service tax payment.
4. Disallowance of employees' contribution towards provident fund.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Assessing Officer (AO):
The primary issue addressed was whether the notice under Section 143(2) of the Income Tax Act, 1961, was issued by an officer who had jurisdiction over the assessee. The assessee argued that the jurisdiction lay with the Income Tax Officer (ITO) and not with the Assistant Commissioner of Income Tax (ACIT) since the returned income was below Rs. 20 lakh. The Tribunal referenced the CBDT Instruction No. 1/2011 dated 31.01.2011, which specifies the jurisdictional limits based on income thresholds. It was concluded that the notice issued by the ACIT was without jurisdiction, rendering the assessment order invalid. The Tribunal cited previous judgments, including the case of Sri Krishnendu Chowdhury and Shri Sukumar Chandra Sahoo, to support this conclusion.

2. Disallowance Made Beyond the Scope of Limited Scrutiny:
The assessee contended that the AO exceeded the scope of limited scrutiny by making disallowances under Sections 43B and 36(1)(va) of the Act, which were not part of the scrutiny criteria. The Tribunal observed that the scrutiny was limited to verifying specific items such as contract receipts, bonus/commission to employees, sales turnover, sundry creditors, and tax credit mismatch. It was held that any disallowance beyond these items required prior approval from higher authorities, which was not obtained in this case. As a result, the disallowances were deemed invalid.

3. Disallowance under Section 43B for Service Tax Payment:
The AO disallowed the service tax payment under Section 43B, claiming it was paid after the due date for filing the return. However, the assessee provided evidence that the service tax was paid before the end of the financial year on 31st March 2015. The Tribunal reviewed the payment dates and concluded that the disallowance was factually incorrect. Consequently, the disallowance under Section 43B was deleted.

4. Disallowance of Employees' Contribution towards Provident Fund:
The AO disallowed the employees' contribution towards provident fund, arguing that the payments were made beyond the due date specified under the Act. The assessee countered that the payments were made before the due date for filing the return of income. The Tribunal referred to the case of CIT vs. Vijay Shree Ltd., where it was held that such payments are allowable if made before the filing deadline. Respectfully following this precedent, the Tribunal deleted the disallowance.

Conclusion:
The appeal was allowed in favor of the assessee. The Tribunal quashed the assessment order due to the jurisdictional error in issuing the notice under Section 143(2). It also invalidated the disallowances made beyond the scope of limited scrutiny and deleted the disallowances under Sections 43B and 36(1)(va) based on the evidence and legal precedents provided.

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