Burden is on the Revenue to show that for assuming jurisdiction: Non-compliance with CBDT Circular rendered assessment invalid
Recently, Rajkot ITAT quashes assessment proceedings observing that the notice issued u/s 143(2) was in contravention to the CBDT Circular No. F. No. 225/157/2017/ITA-II dated June 23, 2017, which is binding in nature and therefore holds that the said notice is invalid in the eyes of law; ITAT accedes to Assessee’s submission that Revenue was wholly erroneous for failing to consider the CBDT Circular while issuing notices as it failed to specify whether it was a case of limited scrutiny, complete scrutiny or a compulsory manual scrutiny.
Outlining SC decision in Indian Oil Corporation, ITAT states that it is a settled law that the CBDT circulars are binding on the Revenue. Tribunal further observed that perusal of the CBDT Circular clearly shows that the notice u/s 143(2) has to be issued in three formats and not in any other format wherein the notice should specifically mention the type of scrutiny for which it was selected.
ITAT articulates that in Assessee’s case the notice u/s 143(2) is silent on the type of scrutiny being carried out given the said notice is not in the format as prescribed by the CBDT.
ITAT asserts that the burden is on the Revenue to show that for assuming jurisdiction, it has duly complied and satisfied in letter with the instruction issued.
Emphasizing on the SC decision in UCO Bank that dealt with the circular issued by CBDT in exercise of its statutory powers u/s 119, Tribunal states that the circular, instructions issued by the CBDT are mandatory and binding on the Revenue authorities failing which the proceedings would be rendered as invalid:
The copy of the order is as under:
