Assessment Orders Invalidated for Exceeding Scope, Lack of Approvals

The Tribunal held that the assessment orders passed by the Assessing Officers (AOs) were invalid as they extended scrutiny beyond the Computer Aided Scrutiny Selection (CASS) issues without obtaining necessary approvals. The Tribunal found the assessment orders to be void-ab initio due to the lack of required administrative approvals for extending the scope of scrutiny. Consequently, the Tribunal allowed the appeals of the assessees on this preliminary issue, dismissing other grounds as academic. All ten appeals were partly allowed, with the decision pronounced on 08th February 2019.

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Issues Involved:
1. Legality of Assessing Officer's extension of scrutiny beyond the scope selected under CASS without requisite permission.
2. Validity of assessment orders passed based on extended scrutiny.

Issue-wise Detailed Analysis:

1. Legality of Assessing Officer's Extension of Scrutiny Beyond CASS:
The primary issue raised by the assessees was that their cases were selected for scrutiny under the Computer Aided Scrutiny Selection (CASS) system. According to the Circular of CBDT, the Assessing Officer (AO) is required to limit the scrutiny to the issues selected under CASS. If the AO wishes to extend the scrutiny to other issues, they must obtain permission from higher authorities. In these ten appeals, the AOs extended the scope of scrutiny to non-CASS issues without obtaining the necessary permissions. This approach was argued to be outside the scope of the CBDT Circular dated 08.09.2010. The Tribunal referenced the case of Suresh Jugraj Mutha vs. Addl.CIT, where it was adjudicated that such additions made by the AO without the requisite approval are not sustainable in law. The Tribunal cited relevant paragraphs from this precedent, emphasizing that the AO did not obtain the written approval of the concerned Commissioner before extending the scope of scrutiny, which is a requirement as per CBDT Instruction No.7/2014 and the CBDT letter dated 08-09-2010.

2. Validity of Assessment Orders Based on Extended Scrutiny:
The Tribunal found that in all ten appeals, the AOs did not obtain the necessary approval from superior authorities before extending the scrutiny scope to non-CASS issues. It was noted that the AOs did not make any additions on the issues selected under CASS, but rather on non-CASS issues, which is not permissible without the required administrative approval. The Tribunal referenced the case of M/s. S.F. Chougule Vs. JCIT, where it was held that the AO must follow the guidelines issued for selecting cases for scrutiny and obtain the approval of the CCIT/DGIT for manual selection. Failure to do so renders the assessment order invalid. The Tribunal concluded that the assessment orders in these ten appeals are bad in law and void-ab initio due to the lack of necessary approvals for extending the scope of scrutiny. Consequently, the Tribunal allowed the preliminary issue raised by the assessees and dismissed the other grounds as academic.

Conclusion:
The Tribunal allowed the appeals of the assessees on the preliminary issue, holding that the assessment orders passed by the AOs are invalid due to the lack of requisite approvals for extending scrutiny beyond the CASS-selected issues. The other grounds raised by the assessees were dismissed as academic, given the relief granted on the preliminary issue. All ten appeals were partly allowed, and the order was pronounced on 08th February, 2019.

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