INCOME TAX ACT, 1961

Section 143(3)

Assessment - Validity - AO widened the scope of scrutiny assessment under CASS without having sought prior approval of higher authorities -

In assessee's case limited scrutiny was initiated under CASS to examine correctness capital gains/loss on sale of property whereas addition had been made under section 69 treating the investment in immovable property as unexplained investment. Assessee challenged this on the ground of AO not having sought prior approval of higher authorities. Held: A perusal of CBDT Instructions no. 5 of 2016 dated 14-7-2016 shows that AO can widen the scope of scrutiny even if it is selected for scrutiny assessment under CASS. However, condition precedent for such action of AO is that he has to seek prior approval of higher authorities. In the instant case perusal of assessment order shows that AO had not mentioned as to when permission from PCIT was sought to make further enquiries. Considering the facts of case in totality, in the light of CBDT Instructions, qua notice under section 143(2) assessment order so framed by AO was not in consonance with Instruction of the CBDT and, therefore deserved to be quashed.

REFERRED : Late Smt. Gurbachan Kaur v. DCIT (in ITA No. 692/JP/2019 vide Order dated 05-12-2019)

FAVOUR : in assessee's favour

A.Y. :

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