Facts of the Case

The assessee’s case was selected for compulsory scrutiny assessment, and notice under Section 143(2) was issued. Subsequently, the Assessing Officer completed the assessment under Section 143(3).

The assessee challenged the validity of the scrutiny proceedings on the ground that the case was selected in violation of mandatory CBDT Instructions governing compulsory scrutiny selection and approval requirements.

It was contended that the Assessing Officer lacked jurisdiction to initiate scrutiny proceedings due to non-compliance with prescribed conditions.

 Issues Involved

  1. Whether compulsory scrutiny proceedings were validly initiated.
  2. Whether absence of mandatory approval and conditions rendered the proceedings without jurisdiction.
  3. Whether the assessment framed pursuant to such proceedings was sustainable in law.

Petitioner’s (Assessee’s) Arguments

  • The case was selected for compulsory scrutiny without satisfying mandatory conditions under CBDT Instructions.
  • Required approvals from competent authority were not obtained.
  • Therefore, issuance of notice under Section 143(2) itself was invalid.
  • An assessment framed without jurisdiction is void ab initio.

 Respondent’s (Revenue’s) Arguments

  • The Assessing Officer acted within statutory powers to scrutinize the return.
  • The assessment order was passed after examination of records.
  • Procedural lapses, if any, did not invalidate the assessment.

Court Order / Findings (ITAT)

  • The prescribed conditions for compulsory scrutiny were not fulfilled.
  • Mandatory approval from the competent authority had not been obtained.
  • CBDT Instructions issued under Section 119 are binding on tax authorities.

Important Clarification by the Tribunal

  • Jurisdictional defects cannot be cured by subsequent proceedings.
  • Compliance with CBDT Instructions is mandatory, not procedural formality.
  • Assessments initiated without lawful authority are void.
  • Tax administration must adhere strictly to statutory and administrative safeguards.

 Link to download the order –

https://itat.gov.in/public/files/upload/1652850017-ita%20no.%20162%20of%202019%20Girdhar%20Gopal%20Rastogi%20new.pdf

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.