Assessing Officer's Lack of Jurisdiction Invalidates Compulsory Scrutiny Assessment

The Tribunal found that the Assessing Officer lacked jurisdiction to initiate compulsory scrutiny assessment as they were not authorized to conduct the survey under the Income Tax Act. The Tribunal deemed the initiation of compulsory scrutiny proceedings as invalid and without jurisdiction, leading to the quashing of the assessment framed by the Assessing Officer.

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Issues Involved:
1. Jurisdiction of the Assessing Officer to initiate compulsory scrutiny assessment.
2. Validity of the survey proceedings and subsequent actions taken by the Assessing Officer.
3. Compliance with CBDT instructions for compulsory scrutiny.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Assessing Officer to Initiate Compulsory Scrutiny Assessment:
The Tribunal initially dismissed the assessee's additional ground regarding the jurisdiction of the Assessing Officer. However, upon reconsideration, it was found that the Assessing Officer was not part of the authorized team to conduct the survey under section 133A of the Income Tax Act. This mistake was deemed apparent from the record, leading to the recall of the Tribunal's earlier order. The Tribunal emphasized that the failure to consider this crucial fact amounted to a mistake that needed rectification under section 254(2) of the Income Tax Act.

2. Validity of the Survey Proceedings and Subsequent Actions Taken by the Assessing Officer:
The Tribunal noted that the survey conducted on 6.1.2012 was interrupted and left unconcluded. The Assessing Officer later issued a notice under section 131, conducted a post-survey enquiry, and impounded the books of accounts on 27.1.2012. The Tribunal initially considered these actions as part of the survey proceedings. However, it was later clarified that the Assessing Officer was not authorized to conduct the survey, and the impounding of books was not part of the survey proceedings under section 133A. The Tribunal cited the Hon'ble Delhi High Court's judgment in the case of SKY View Consultants (P.) Ltd., which held that an Income Tax Officer without proper authorization could not exercise powers under section 133A(1).

3. Compliance with CBDT Instructions for Compulsory Scrutiny:
The Tribunal examined the CBDT instructions, specifically instruction no. 10/2013, which outlines the criteria for compulsory scrutiny. The instructions required that for a case to fall under compulsory scrutiny, there must be impounded books of accounts or documents during the survey under section 133A, and the returned income should not be less than the preceding year's income. The Tribunal found that the Assessing Officer issued the notice under section 143(2) on 11.6.2013, before the CBDT issued the relevant instructions on 5.8.2013. Moreover, the impounding of books of accounts by the Assessing Officer under section 131(3) could not be linked to the survey proceedings under section 133A. Consequently, the Tribunal concluded that the notice for compulsory scrutiny was issued without jurisdiction and was invalid.

Conclusion:
The Tribunal allowed the additional ground of the appeal, declaring the initiation of compulsory scrutiny proceedings by the Assessing Officer as invalid and without jurisdiction. Consequently, the assessment framed by the Assessing Officer was quashed. The order was pronounced in open court on 13.05.2022 at Allahabad.

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