TaxTMI 
TaxTMI 
2025 (11) TMI 406
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....ayed payment of TDS amounting to Rs. 57,298/-. (4). That, the Ld. CIT(A) has wrongly confirmed the addition amounting to Rs. 25,35,850/- on account of difference in receipts as per books of accounts and form 26AS. (5). That, the Ld. CIT(A) has wrongly confirmed the addition of Rs. 30,50,000/- on account of unexplained cash deposits u/s 68 of the I.T. Act, 1961. (6). That, the Ld. CIT(A) has wrongly confirmed application of provisions of section 115BBE of the I.T. Act, 1961. (7). That, the Ld. CIT(A) has wrongly confirmed initiation of penalty proceedings u/s 274 r.w.s. 270A and 271AAC of the I.T. Act, 1961. (8). That, the Ld. CIT(A) has wrongly charged interest u/s 234A, 234B, 234C and 234D of the I. T. Act, 1961. (9). That, the findings of the Ld. CIT(A) are not justified and are bad-in-law. 3. The assessee has also raised additional grounds of appeal, which is as follows: "The notice issued under section 143(2) of the Act dated 23.08.2018, is in violation of CBDT instruction F.No.225/157/2017/ITA-II dated 23.06.2017." 4. Learned Counsel for the assessee submitted that the above additional legal ground raised by ....
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....d on 08.09.2019 and served upon the assessee. In response to the notices, the assessee- firm e-filed the details as called for. The assessee is a contractor and has earned contract income during the year. The various submission and evidences filed by the assessee were verified by the assessing officer. Since the assessing officer did not satisfy with the reply filed by the assessee, therefore assessing officer made disallowance of Rs. 77,29,459/- under section 43B of the Act, addition on account of difference in 26AS Rs. 30,50,000/- and other small additions were also made by the assessing officer under various heads. 8. Aggrieved by the order of the assessing officer, the assessee carried the matter in appeal before the learned CIT(A), who has confirmed the action of the assessing officer, therefore, assessee is in further appeal before us. 9. Learned Counsel for the assessee vehemently argued on the additional legal ground raised by the assessee stating that first notice issued u/s 143(2) of the Act dated 17/08/2018 and second notice u/s 143(2) of the Act, dated 23/08/2018, have been issued without following the instructions prescribed in CBDT Circular No. F.No.225/157/2017....
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....lead that it is not valid or that it is contrary to the terms of the statute. The assessment framed by the assessing officer, under consideration has certainly been contrary to the Circular issued by the CBDT, No. F. No. 225/157/2017/ITA-Il dated 23.06.2017 (supra). 12. We note that assessee -firm is engaged in the business of excavation and similar civil contracts as well as sub-contractor for the Government Organization namely, Gujarat Mineral Development Corporation Limited. During the year under consideration, the assessee -firm has filed the return of income on 31/10/2017, by declaring the total income of Rs. 3,28,650/-. The assessee- firm has maintained regular books of accounts and are duly audited u/s 44AB of the I.T. Act. The assessee`s case has been selected for scrutiny and first notice u/s 143(2) of the Act has been issued as on 17/08/2018 and second notice u/s 143(2) of the Act has been issued on 23/08/2018.We find that these notices were issued by the assessing officer, without following the instructions prescribed in CBDT Circular No. F.No.225/157/2017/ITA-II dated 23.06.2017. Both the notices u/s 143(2) of the Act, have not specified whether it is a limited scrut....
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....n format given in CBDT Circular F.No.225/157/2017/ITA-II dated 23.06.2017 and not any other format. We note that as per CBDT Instructions the burden is on the revenue authority, assuming jurisdiction, to show and establish that such instructions have been duly complied and satisfied in letter and spirit. Further, Section 119 of the Income-tax Act empowers the CBDT to issue circulars and instructions for the purpose of proper administration of the Act. On perusal of section 119, it can be stated that the circular, the instruction issued by the CBDT are mandatory and binding on the Income tax authorities failing which the proceedings would be rendered as invalid. In this regard reliance is placed on Hon'ble Apex Court in case of UCO Bank wherein it was held that the circular issued by CBDT in exercise of its statutory powers u/s 119 of the Act, are binding on the authorities. The Hon'ble Apex court held as under: "The Central Board of Direct Taxes under section 119 of the Income-tax Act, 1961, has power, inter alia, to tone down the rigour of the law and ensure a fair enforcement of its provisions, by issuing circulars in exercise of its statutory powers under sectio....
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....2018 which was not in the prescribed format as notified by the CBDT, is bad in law and void ab initio and the same was quashed. Therefore, in our opinion, the revenue authorities have to follow the instruction issued by CBDT and violation thereto would certainly render the notice as invalid with the result all the consequential proceeding would also be invalid. We therefore, hold that the notice issued u/s 143(2) of the Act is invalid notice and accordingly, the assessment framed consequentially is also invalid and is hereby quashed. The additional legal ground raised by the assessee is allowed. 17. We, therefore, quash the assessment proceedings/assessment order dated 24.12.2019. As the assessment u/s 143(3) of the Act, itself is quashed, all other issues on merits of the additions, in the impugned assessment proceedings, are rendered academic and infructuous. 18. In the result, the appeal is allowed in the terms indicated above. Order pronounced in the open court on 27-10-2025 ============= Document 1 The following are the formats as per CBDT Circular F.No.225/157/2017/ITA-Il dated 1. Format for Limited Scrutiny (Computer Aided Scrutiny Selection) 23.06.2017 ....