The Orissa High Court held that Prior approval of Chief Commissioner of Income Tax (CCIT) or Director General of Income Tax (DGIT) for scrutiny assessment is mandatory. The appellant in the present case is Nababharat Shiksha Parishad.
The Central Board of Direct Taxes had issued guidelines dated 10th September, 2011 and it concerns the selection of cases for scrutiny.
The relevant clause of the guideline reads as under: “(g) Assessing Officer may select any return for scrutiny after recording the reason and obtaining approval of the CCIT/DGIT. The cases under this category should be selected if, there are compelling reasons and the case is not selected through CASS. These cases should be watched by CCIT/CIT in respect of the quality of assessment.”
The specific case of the Appellant-Assessee was that while completing the assessment under Section 143(3) of the Income Tax Act, 1961, the Assessing Officer did not comply with the requirement of the above clause. In other words, the prior approval of the CCIT/DGIT was not obtained.
The Commissioner of Income Tax (Appeals) dismissed the Appellant’s following which the Appellant went before the Income Tax Appellate Tribunal (ITAT), Cuttack Bench. The contention that the assessment order stood vitiated for non-compliance with the mandatory requirement of the guidelines was negatived by the ITAT on the ground that the Authorized Representative (AR) of the Appellant could not prove that there is lack of jurisdiction of the AO and further that the explanations of the AR were not convincing.
A Coram consisting of the Chief Justice M S Raman, observed that “There is no doubt that under the said clause in the guideline obtaining the prior approval of the CCIT for scrutiny assessment was mandatory and in the present case that was not obtained.”
“The Court is unable to agree with the approach of the ITAT that the Assessee was required to ‘prove’ lack of jurisdiction of the AO. When the admitted fact is that prior approval of the CCIT was not obtained, nothing more need to be shown to demonstrate that the guideline was not followed” the Court opined.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
