Board Instructions - AIR

[Guest]

If a case is taken into scrutiny on the basis of AIR, can asseessee has any right to restrict the AO to the inquiry covered under AIR or AO has similar powers in other cases picked up in scrutiny. I think some board instructions had been issued in past and later modified or so. Please help me out.

[Surender Gupta]

There is no provision in Income Tax to restrict the power of AO to make assessment as a whole under section 143(2), (3). Once assessment proceedings are started, AO is duty bound to complete the assessment for the whole assessment year by computing the whole income.

[DEV KUMAR KOTHARI]

Prima facie I agree with Mr. Surendra Gupta that the A.O. can proceed to examine all aspects for assessment even if notice u/s 143(2) is issued on the basis of AIR. However, reading between lines of s. 143 (2) (ii) it can be said that the expressions used therein like "...if he (AO) consider it necessary or expedient to ensure that the assessee had not understated..." mean that the A.O. should have so considered by application of his mind, and therefore, there should also be recording for the same because otherwise it cannot be said that he has actually applied his mind and so considered about need of enquiry beynd what is suggested by AIR. If the notice is issued in mechanical manner based on AIR alone, and without any other reason recorded by the A.O. , the assessee can request the A.O. to restrict scope of enquiry to the aspects covered by AIR. For this purpsoe the assessee must have copy of order sheet and other relevant records, to establish that notice has been issued only on the basis of AIR and not in terms of necessity or expediency found by the A.O. after application of his mind. The matter will involve litigation and further professional assignemnts.

AI Summary

Can an Assessing Officer Limit Inquiries to AIR Suggestions Under Sections 143(2) and (3) of the Income Tax Act? A discussion on whether an Assessing Officer (AO) can limit inquiries to those suggested by an Annual Information Return (AIR) when a case is scrutinized. One participant argues that under sections 143(2) and (3) of the Income Tax Act, the AO has the authority to assess the entire income for the year. Another participant concurs but suggests that if the AO issues a notice based solely on AIR without further reasoning, the assessee might request limiting the inquiry. The discussion highlights potential litigation if the AO's notice lacks documented rationale beyond the AIR.