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TaxTMI 
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TaxTMI 
2024 (11) TMI 158
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.... the assessee for adjudication. 3. The assessee has raised the following grounds of appeal in his cross objections:- "1. That the Ld. CIT(A) has erred in law as well as on facts in dismissing the specific legal ground raised as Ground No. 1(a) and (b) which clearly leads to the assessment bad in law and required to be quashed as he failed to appreciate that: a) The Assessing officer cannot select the case of the assessee for scrutiny contrary to the criteria for selection for scrutiny as specified in Para 1 (vi) of the Instruction No. 5/2017 dated 07.07.2017, since no specific or verifiable information has been received in the case of assessee pointing out tax evasion. b) No mandatory approval as specified in Para 1(vi) of the Instruction No. 5/2017 dated 07.07.2017 for selection of scrutiny was obtained by the Assessing Officer from the concerned jurisdictional Pr. CIT/Pr.DIT/CIT/DIT. 4. We have heard the rival submissions and perused the materials available on record. The assessee is an individual earning income from house property and capital gains during the year under consideration. The return of income for the Asst Year 2016-17 was filed by the assessee on 27.2.2017 d....
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.... for scrutiny in terms of Para 1(vi) of the Instruction No. 5/2017 dated 7.7.2017 is invalid as no approval was obtained by the ld AO from the Jurisdictional PCIT as mandated in the Instruction No. 5/2017 dated 7.7.2017. For the sake of convenience, the said CBDT Instruction No. 5/2017 dated 7.7.2017 is reproduced below:- "SECTION 143 OF THE INCOME-TAX ACT, 1961 - ASSESSMENT - GENERAL - GUIDELINES FOR SELECTION OF CASES FOR SCRUTINY DURING FINANCIAL YEAR 2017-18 INSTRUCTION NO.5/2017 [F.NO.225/180/2017/ITA.II], DATED 7-7-2017 1. In supersession of earlier Instructions on the above subject, the Board hereby lays down the following procedure and criteria for compulsory manual selection of returns/cases requiring scrutiny during the financial-year 2017-2018:- (i) Cases involving addition in an earlier assessment year(s) on a recurring issue of law or fact of following amounts: * in excess of Rs. 25 lakhs in eight metro charges at Ahmedabad, Bengaluru, Chennai, Delhi, Hyderabad, Kolkata, Mumbai and Pune, while at other charges, quantum of such addition should exceed Rs. 10 lakhs; * for transfer pricing cases, quantum of such addition should exceed Rs. 10 crore and where: ....
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....tions may be brought to the notice of all concerned for necessary compliance. 8. We find that the Grounds 1(a) and 1(b) were disposed of by the ld NFAC by making the following observations in pages 7 to 9 of its order which is reproduced hereunder:- "4. In Ground No. 1, the appellant has stated that the Assessing Officer erred in selecting the case of the appellant for scrutiny even though the criteria for compulsory selection for scrutiny as specified in para 1 (vi) of the Instruction No. 52017 dated 07.07.2017 were not fulfilled since no specific or verifiable information had been received in the case of appellant pointing out tax evasion as well as in selecting the case for scrutiny without requisite mandatory approval as specified in para 1 (vi) of the Instruction No. 52017 dated 07.07.2017. In the statement of facts the appellant also stated "Neither in the assessment order nor in the notices issued has the Assessing Officer pointed out whether any specific or verifiable information has been received in the case of appellant pointing out tax evasion". 4.1 In response to notice u/s 250 of the I.T. Act, 1961, the appellant has made submission relying upon several decisions ....
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.... for scrutiny as per Para 1(vi) of Instruction No. 5/2017 dated 7.7.2017. We find that the ld NFAC was silent on the aspect of approval not obtained by the ld AO from ld PCIT before selecting the case for scrutiny as mandated in Para 1(vi) of Instruction No. 5/2017 dated 7.7.2017. Since this is a legal issue, we are addressing the same as all the facts are already available on record and further a factual report from the ld AO is also placed on record by the ld DR before us. As stated earlier, the ld NFAC had adjudicated the issue of return getting selected for scrutiny in terms of Para 1(vi) of Instruction No. 5/2017 dated 7.7.2017. The order of assessment gets merged with the order of ld NFAC. When the appeal is pending before this Tribunal, the revenue cannot change its stand that the return was selected for scrutiny in terms of Para 1(iii) of Instruction No. 5/2017 dated 7.7.2017 and hold that there is no requirement of seeking permission or approval from the ld PCIT by the ld AO. Since the requisite permission from the ld PCIT is admittedly not obtained by the ld AO for selecting the case for scrutiny in the instant case, there is a clear violation of CBDT Instruction No. 5/20....
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....5 lakhs or less; and (c) the tax was fully paid for the assessment year 1994-95 before the return was filed. 2. Suggestions have been received to extend this scheme for the assessment year 1995-96 also. After considering them, it has been decided that the above norm of exclusion from sample scrutiny could be extended for the assessment year 1995-96 also in such cases where the following criteria are satisfied : (i) the income returned for the assessment year 1995-96 is at least 30 per cent more than the total income returned for the assessment year 1994-95." 3. The assessment order passed by the Assessing Officer has in the light of the above been set aside by the Commissioner which order has been upheld by the Tribunal in appeal. No substantial question of law arises for our consideration in the light of the settled legal position emanating from the aforementioned judgments of the Supreme Court. This appeal accordingly fails and is hereby dismissed." 10. In view of the aforesaid observations and respectfully following the judicial precedents relied upon hereinabove, we hold that the entire assessment proceedings becomes void ab initio as the return was selected for scruti....