TaxTMI 
TaxTMI 
2025 (12) TMI 1821
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....on for limited scrutiny which stated: - "(i) Whether the investment and income relating to securities transactions are duly disclosed. (ii) Whether the investment and income relating to securities (derivative) transactions are duly disclosed"; and the undisclosed income assessed is related to the investment in securities. 2. Whether Ld. CIT(A) erred in not appreciating that the AO had examined the source of investments and found that credits in the 2 form of unsecured loan from M/s Rajdhani Nursuries Ltd. and other credits in bank account are amenable to addition u/s 2(22)(e) and section 69A of the Act respectively. 3. Whether on the facts and circumstances the Ld. CIT(A) erred in not deciding the addition u/s 2(22)(e) and section 69A on merits. 3. The first issue raised by the Revenue through its grounds of appeal number 1 and 2 are regarding the deletion of addition of Rs.1,69,69,770/- u/s 2(22)(e) and Rs. 4,65,85,000/- under section 69A of the Act by the ld. AO. The ld. CIT(A) has given relief on the premises that the ld. AO ought to have converted the limited scrutiny case to complete scrutiny category by taking prior approval of superviso....
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....ed number of hearings. d. If during the course of assessment proceedings, it is found that there is potential escapement of income exceeding Rs. 10 lakhs (for non-metro charges, the monetary limit shall be Rs. 5 lakhs) on any other issue(s) apart from the issues on which the case was selected under CASS requiring substantial verification, the case may be taken up for comprehensive scrutiny with the approval of the Pr. CIT/DIT concerned e. While proposing to take up 'Complete Scrutiny' in a case which was originally earmarked for 'Limited Scrutiny', the Assessing Officer shall be required to form a reasonable view that there is possibility of under assessment of income if the case is not examined under 'Complete Scrutiny' f. The reasonable view of the Assessing Officer should be based on the following factors: i) there exists credible material or information available on record for forming such view, ii) this reasonable view should not be based on mere suspicion, conjecture or unreliable source; and iii) there must be a direct nexus between the available material and formation of such view. g. Suc....
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....by the CBDT are untenable in law and hence such additions are deleted. Since the additions made in the assessment order have been deleted on this legal ground, therefore, contentions raised by the appellant in respect of merits of additions are not being adjudicated here as they would only be rendered academic in nature........" 5. The Revenue is assailing the impugned relief accorded by the ld. CIT(A). 6. The ld. DR vehemently argued that the relief on the premise taken by ld. CIT(A) is erroneous. He strongly argued in favour of the order of the ld. AO. It was contended that due disclosure would not mean mere disclosure in Return of Income but rather disclosure as per the provisions of Act. It was argued that accordingly there was infirmity in the AO's order. 7. The ld. Counsel for the assessee fiercely argued in favour of the order of the ld. First Appellate Authority. It was submitted that learned Assessing officer has travelled beyond the scope of the limited scrutiny to make additions on account of deemed dividend u/s 2(22)(e) of the Act and unexplained money u/s 69A of the Act. The ld. Counsel argued that this issue in no longer res-integra in view of the CBDT instru....
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...., 2015 Subject: Scrutiny Assessments-some important issues and scope of scrutiny in cases selected through Computer Aided Scrutiny Selection ('CASS')-reg .- The Central Board of Direct Taxes ('CBDT'), vide Instruction No. 7/2014 dated 26-9-2014 had clarified the extent of enquiry in certain category of cases specified therein, which are selected for scrutiny through CASS. Further clarifications have been sought regarding the scope and applicability of the aforesaid Instruction to cases being scrutinized. 2. In order to facilitate the conduct of scrutiny assessments and to bring further clarity on some of the issues emerging from the aforesaid Instruction, following clarifications are being made: i. Year of applicability: As stated in the Instruction No. 7/2014, the said Instruction is applicable only in respect of the cases selected for scrutiny through CASS-2014. ii. Whether the said Instruction is applicable to all cases selected under CASS: The said Instruction is applicable where the case is selected for scrutiny under CASS only on the parameter(s) of AIR/CIB/26AS data. If a case has been selected under CASS for any other reas....
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....utiny' in that particular case. Such cases shall be monitored by the Range Head concerned. The procedure indicated at points (a), (b) and (c) above shall no longer remain binding in such cases. (For the present purpose, 'Metro charges' would mean Delhi, Mumbai, Chennai, Kolkata, Bengaluru, Hyderabad and Ahmadabad). 4. The Board further desires that in all cases under scrutiny, where the Assessing Officer proposes to make additions or disallowances, the assessee would be given a fair opportunity to explain his position on the proposed additions/disallowances in accordance with the principle of natural justice. In this regard, the Assessing Officer shall issue an appropriate show-cause notice duly indicating the reasons for the proposed additions/disallowances along with necessary evidences/reasons forming the basis of the same. Before passing the final order against the proposed additions/disallowances, due consideration shall be given to the submissions made by the assessee in response to the show-cause notice. 5. The contents of this Instruction should be immediately brought to the notice of all concerned for strict compliance. (Ankita Pandey....
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....rmation of such view. 4. It is further clarified that in cases under 'Limited Scrutiny', the scrutiny assessment proceedings would initially be confined only to issues under 'Limited Scrutiny' and questionnaires, enquiry, investigation etc. would be restricted to such issues. Only upon conversion of case to 'Complete Scrutiny' after following the procedure outlined above, the AO may examine the additional issues besides the issue(s) involved in 'Limited Scrutiny'. The AO shall also expeditiously intimate the taxpayer concerned regarding conducting 'Complete Scrutiny' in such cases. 5. It is also clarified that once a case has been converted to 'Complete Scrutiny', the AO can deal with any issue emerging from ongoing scrutiny proceedings notwithstanding the fact that the reason for such issue have not been included in the Note. 6. To ensure proper monitoring in cases which have been converted from 'Limited Scrutiny' to 'Complete Scrutiny', it is suggested, that provisions of section 144A of the Act may be invoked in suitable cases. To prevent possibility of fishing and roving enquiries in such....
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....ssing Officer can widen the scope of scrutiny even the case is selected for limited scrutiny under CASS, however, the condition precedent for such widening of the scope is that the Assessing Officer has to seek prior approval of the authorities mentioned. Such prior approval and the permission of the PCIT is lacking in the instant case. There was no satisfaction about the merits of the issue which necessitated complete scrutiny in the instant case. Hence, the Assessment framed by the Assessing Officer on the issues which are not inconsonance of the instruction of CBDT are liable to be quashed. The additions made by the Assessing Officer being beyond the scope of the limited scrutiny and the same is deleted......" 9. Compliance to CBDT instructions is mandatory for field formations. In scrutiny proceedings, the conduct of an Assessing Officer is also governed by instructions of the CBDT issued on specific subjects. This proposition has been reiterated by judicial authorities in a catena of judgments including that of M/s Shivalik Educational and Placement Services (supra). In the absence of any distinguishment of facts, pointed out by Revenue, of the present case with those of Sh....