Selecting cases for Scrutiny necessarily required to obtain approval OR recording the reason u/s 151 is sufficient?

M/s Brothers & Sisters Enterprise vs. JCIT (ITAT Kolkata) - 8 Sep 2017

Question of fact discussed : On the facts of the case the Ld. CIT(A) was not justified in sustaining the assessment order passed u/s. 143(3) dated 31.12.2012, when the same has been passed in contravention of the Board instruction F. No.225/127/2011/ITA-II dated 02.09.2011 and as such the same may please be deleted


Some useful discussions/ points during the course of case law for easy reference:


1- The Circular does not require recording reasons for giving approval. In any event, these are internal guidelines issued for effective functioning of the Department. The requirement of obtaining approval of CIT/CCIT, as required in this Departmental communication cannot be equated with the requirements specified under the statute in Section 151(1) of the Act. Section 151(1) and 151(2) of the Act require the Commissioner of Income Tax to record satisfaction, as compared to, mere approval in the case of Board’s circular.

2- Learned representative of the department states that "that the guidelines in question for selecting cases for scrutiny are Internal Administrative’s instruction for the purpose of smooth functioning of the Department and these guidelines cannot be read and interpreted as if it is the Income Tax Act or Rules"

3- It was further discussed that "  the application of mind is evident from the fact that the proposal of the Assessing Officer to select the case of the cases has not been approved by the Ld. CIT. The Circular does not require recording reasons for giving approval. In any event, these are internal guidelines issued for effective functioning of the Department. The requirement of obtaining approval of CIT/CCIT, as required in this Departmental communication cannot be equated with the requirements specified under the statute in Section 151(1) of the Act. Section 151(1) and 151(2) of the Act require the Commissioner of Income Tax to record satisfaction, as compared to, mere approval in the case of Board’s circular.

Hence learned court held "In view of above discussion, we reject these grounds of the assessee and hold that selection of assessee’s case for scrutiny is in accordance with law"

For reading full text of the judgement please refer - http://itatonline.org/archives/ms-brothers-sisters-enterprise-vs-jcit-itat-kolkata-cbdt-guidelines-for-scrutiny-of-cases-law-explained-as-to-how-the-cbdt-guidelines-for-manual-selection-of-cases-for-scrutiny-have-to-be-interpreted/brothers-manual-selection-cbdt-scrutiny-cases/

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