Dev Milk Foods Pvt Limited, New Delhi V. ACIT Special Range-3, New Delhi

ITA 6767/DEL/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 0749 (ITAT-DELHI)
• Duration Of Justice: 9 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-06-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2015-2016
• Appeal Filed On: 14-08-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S. N. MEENA
• Keywords: Unexplained expenditure; Principle of natural justice; Accommodation entries; Assessment record; Onus to prove; Borrowed satisfaction; Capital Gains; Bogus
• Section: 143(3); 143(2); 13; 22; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: B, NEW DELHI BEFORE SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO.6767/DEL/2019 (ASSESSMENT YEAR-2015-16) DEV M ILK FOODS PVT. LTD. C/O KAPIL GOEL ADVOCATE, F-26/124, SECTOR-7, ROHINI, DELHI-110085. PAN AACCD 2586M VS. ADD. CIT, SPECIAL RANGE -3 NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY SH. KAPIL GOEL, ADV. RESPONDENT BY SH. S.N.MEENA, SR.DR ORDER PER SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER: THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST OR DER DATED 18.06.2019 PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-34, NEW DELHI {CIT(A)} FOR ASSESSMENT YEAR 2015-16. 2.0 THE BRIEF FACTS OF THE CASE ARE THAT THE ASSE SSEE COMPANY IS ENGAGED IN MANUFACTURING, MARKETING AND TRANSPORTAT ION OF MILK AND DAIRY PRODUCTS. AS PER THE RECORDS, DURING THE YEAR UNDER CONSIDERATION, THE MAIN SOURCE OF INCOME WAS FREIGHT INCOME AND LON G TERM CAPITAL GAINS. THE RETURN OF INCOME WAS FILED DECLARING A TOTAL INC OME OF 2 ITA NO.6767/DEL/2019 DEV MILK FOODS PVT. L TD. VS. ACIT RS.19,44,88,700/-. THE CASE WAS SELECTED FOR LIMITE D SCRUTINY THROUGH CASS. 2.1 IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER NOTED THAT THE ASSESSEES CASE WAS SELECTED FOR LIMITED SCRUTINY WI TH RESPECT TO LONG TERM CAPITAL GAINS BUT IT WAS NOTICED THAT THE ASSESSEE H AD CLAIMED A SHORT TERM CAPITAL LOSS OF RS.4,20,94,764/- WHICH HAD BEEN ADJUSTED AGAINST LONG TERM CAPITAL GAINS. AS PER THE ASSESSING OFFIC ER, THE LOSS CLAIMED BY THE ASSESSEE APPEARED TO BE SUSPICIOUS IN NATURE PR IMARILY DUE TO THE REASON THAT THE LOSS COULD POSSIBLY HAVE BEEN CREAT ED TO REDUCE THE INCIDENCE OF TAX ON LONG TERM CAPITAL GAINS SHOWN B Y THE ASSESSEE. THE ASSESSING OFFICER FURTHER STATED IN THE ASSESSMENT ORDER THAT IN ORDER TO VERIFY THIS ASPECT, APPROVAL OF THE LD. PRINCIPAL C OMMISSIONER OF INCOME TAX (PCIT) WAS TAKEN TO CONVERT THE CASE FROM LIMITE D SCRUTINY TO COMPLETE SCRUTINY AND THAT THE ASSESSEE WAS ALSO INTIMATED A BOUT THE CHANGE IN STATUS OF THE CASE. AS NOTED IN THE ASSESSMENT ORDE R, THE STATEMENT OF SHRI ROHIT VERMA, DIRECTOR OF THE COMPANY WAS RECORDED U/ S 131 OF THE ACT ON 27.11.2017 WHEREIN SHRI ROHIT VERMA IS SAID TO HAVE STATED THAT THE ASSESSEE COMPANY HAD PURCHASED SHARES FROM FOUR BRO KERS NAMELY M/S ROCHAK VINIMAY PVT. LTD., EKAPARNIK VINTRADE PVT. L TD, ROCHI DEALCOM 3 ITA NO.6767/DEL/2019 DEV MILK FOODS PVT. L TD. VS. ACIT PVT. LTD. & DUARI MARKETING PVT. LTD. AS PER THE AS SESSING OFFICER, SINCE ALL THESE BROKERS WERE KOLKATA BASED AND SINCE THERE WAS DETAILED INVESTIGATION BY THE INVESTIGATION WING OF THE INCO ME TAX DEPARTMENT IN CASES OF ENTRY OPERATORS/SHARES BROKERS AND SINCE T HE ASSESSEE COMPANY HAD PURCHASED SHARES FROM THE BROKERS UNDER INVESTI GATION AND THE SHARES PERTAINED TO COMPANIES UNDER INVESTIGATION, A FURTHER QUESTIONNAIRE WAS ISSUED TO THE ASSESSEE IN WHICH AS SESSEE WAS CONFRONTED ON THE ISSUE ON NON-GENUINE CAPITAL LOSS . THE ASSESSEE RESPONDED TO THE QUESTIONNAIRE AND, THEREAFTER, FUR THER QUERIES WERE AGAIN RAISED BY ISSUING ANOTHER QUESTIONNAIRE WHICH WAS ALS O RESPONDED TO BY THE ASSESSEE. THE ASSESSEE REQUESTED THE AO TO BE G IVEN AN OPPORTUNITY TO CROSS-EXAMINE THOSE PERSONS ON WHOSE STATEMENTS THE AO WAS PROPOSING TO RELY AND CONCLUDE THAT THE SHORT TERM CAPITAL LO SS WAS NOT GENUINE. HOWEVER, THE AO NOTED THAT SUCH AN OPPORTUNITY WAS N OT TO BE GIVEN. 2.2 THE ASSESSING OFFICER WENT ON TO HOLD THAT THE PURCHASE OF SHARES DID NOT TAKE PLACE AND THE TRANSACTIONS WERE SHAM IN VIEW OF DOCUMENTARY EVIDENCES, CIRCUMSTANTIAL EVIDENCES, HU MAN CONDUCT AND PREPONDERANCE OF PROBABILITIES. THE ASSESSING OFFIC ER OBSERVED THAT THE ENTIRE EXERCISE WAS A DEVICE TO AVOID TAX. THE ASSES SING OFFICER (AO) 4 ITA NO.6767/DEL/2019 DEV MILK FOODS PVT. L TD. VS. ACIT COMPLETED THE ASSESSMENT U/S 143(3) OF THE INCOME T AX ACT, 1961 (HEREINAFTER CALLED AS THE ACT) AFTER MAKING AN A DDITION OF RS.4,20,94,764/- ON ACCOUNT OF DISALLOWANCE OF SHOR T TERM CAPITAL LOSS, RS.8,41,895/- FOR ALLEGED UNEXPLAINED EXPENDITURE O N COMMISSION AND RS.1,93,20,000/- ON ACCOUNT DIFFERENCE IN COMPUTATI ON OF LONG TERM CAPITAL GAINS. THUS, THE TOTAL INCOME WAS COMPUTED AT RS.25,67,43,360/- BY THE ASSESSING OFFICER. 2.3 AGGRIEVED, THE ASSESSEE APPROACHED THE LD. FIR ST APPELLATE AUTHORITY. THE LD. CIT (A) WAS OF THE OPINION THAT T HE EVIDENCES FURNISHED BY THE ASSESSEE WITH RESPECT TO THE SHORT TERM CAPIT AL LOSS OF RS.4,20,94,764/- COULD NOT BE ACCEPTED AS GENUINE A S IT HAD BEEN ESTABLISHED BY THE INVESTIGATION WING OF THE DEPART MENT, AFTER MAKING DETAILED ENQUIRIES, THAT THE BROKERS THROUGH WHOM TH E ASSESSEE HAD PURCHASED SHARES WERE INVOLVED IN BUSINESS OF PROVI DING ACCOMMODATION ENTRIES AND THAT THE SHARES PURCHASED BY THE ASSESS EE WERE IN THE NATURE OF PENNY STOCK. THE LD. CIT (A) ALSO HELD THAT THE ASSESSING OFFICER WAS RIGHT IN DENYING THE ASSESSEES REQUEST FOR CROSS E XAMINATION OF THOSE PERSONS ON WHOSE STATEMENTS DEPARTMENT HAD RELIED UP ON IN THIS RESPECT. THUS, THE ALLOWANCE OF SHORT TERM CAPITAL GAINS OF RS.4,20,94,764/- WAS 5 ITA NO.6767/DEL/2019 DEV MILK FOODS PVT. L TD. VS. ACIT UPHELD ALONG WITH THE ADDITION OF RS.8,41,895/- MADE ON ACCOUNT OF ALLEGED UNEXPLAINED COMMISSION EXPENDITURE. HOWEVER, THE LD. CIT (A) DELETED THE ADDITION OF RS.1,93,20,000/- ON ACCOUNT OF LONG TERM CAPITAL GAINS AS THE SAME WAS BASED ON INCORRECT COMPUTATION . 2.4 NOW, THE ASSESSEE HAS APPROACHED THIS TRIBUNAL CHALLENGING THE ORDER OF THE LD. CIT (A) AND HAS RAISED THE FOLLOWIN G GROUNDS OF APPEAL: 1. THAT ORDER PASSED BY LD AO DATED 30/12/2017 AND FURTHER ORDER PASSED BY LD GIT A DATED 18/06/2019 ARE BAD I N LAW IN AS MUCH AS MECHANICAL NOTICE U/S 143(2) ON BASIS OF CA SS IS NOT IN ACCORDANCE WITH JURISDICTIONAL CONDITIONS STIPULATE D UNDER THE ACT SO IT SHOWS GRAVE AND PATENT NON APPLICATION OF MIND O N PART OF LD AO IN ISSUING NOTICE U/S 143(2) AND ACCORDINGLY ALL SU BSEQUENT PROCEEDING INCLUDING ORDERS PASSED BY LD AO AND LD CIT-A ARE VOID AB INITIO. 2. THAT ORDER PASSED BY LD AO DATED 30/12/2017 AND FU RTHER ORDER PASSED BY LD CIT A DATED 18/06/2019 ARE BAD I N LAW IN AS MUCH AS ADMITTED FROM PARA 3 OF ASSESSMENT ORDER T HAT CASE WAS PRIMARILY SELECTED FOR LIMITED SCRUTINY ONLY ON LIM ITED ISSUE OF LONG TERM CAPITAL GAINS (LTCG) ON WHICH ASPECT AS PER LD , CIT-A ORDER THERE REMAINS NO EXISTING ADDITION AND CONVERSION O F LIMITED SCRUTINY TO COMPLETE SCRUTINY ON MERE SUSPICION ONLY AND FOR VERIFICATION ONLY, ON BASIS OF INVALID APPROVAL OF PCIT-3, ENTIRE ADDI TION ON A/C DISALLOWANCE, OF SHORT TERM CAPITAL LOSS OF RS 420, 94,764 & RS 6 ITA NO.6767/DEL/2019 DEV MILK FOODS PVT. L TD. VS. ACIT 8,41,895 AS ALLEGED UNEXPLAINED COMMISSION EXPENSE IS NOT AS PER CBDT INSTRUCTIONS (REFER INSTRUCTION NO 19&20/2015 OF29/12/2015) ON THE SUBJECT AND ERGO ULTRA VIRES TO PROVISIONS O F THE ACT. OTHER GROUNDS ON MERITS- QUA DISALLOWANCE OF SHORT TERM CAPITAL LOSS (STCL) OF RS.420,94,764/- & ADDITION FOR RS 8,41,895 AS ALLE GED UNEXPLAINED COMMISSION EXPENSE (RS 42936,659) 3. THAT ORDER PASSED BY LD AO DATED 30/12/2017 AND FU RTHER ORDER PASSED BY LD CIT A DATED 18/06/2019 ARE BAD I N LAW IN AS MUCH AS DISALLOWANCE OF RS 42936,659/- (BREAK UP: D ISALLOWANCE ON A/C OF SHORT TERM CAPITAL LOSS ON SHARE SALE OF RS 420,94,764/- & RS.8,41,895/- AS ALLEGED UNEXPLAINED COMMISSION EXPENSE) IS MADE IN MOST PERFUNCTORY AND LIGHT HEARTED MANNER WHICH IS HIGHL IGHTED ELABORATELY IN NEXT GROUND BY OUTLINING STRIKING FE ATURES OF EXTANT CASE. 4. THAT ORDER PASSED BY LD AO DATED 30/12/2017 AND FU RTHER ORDER PASSED BY LD CIT A DATED 18/06/2019 ARE BAD I N LAW IN AS MUCH AS ADDITION OF RS.42936,659/- (BREAK UP : DISA LLOWANCE ON A/C OF SHORT TERM CAPITAL LOSS ON SHARE SALE OF RS. 420,94,764/-) IS MADE WITHOUT APPRECIATING THAT: 7 ITA NO.6767/DEL/2019 DEV MILK FOODS PVT. L TD. VS. ACIT I) FIRSTLY, NO WHERE IT IS BROUGHT ON RECORDS BY REFERENCE TO ANY PARTICULAR MATERIAL THAT CASH HAS BEEN RECEIVED BACK BY ASSESSEE FROM CONCERNED PARTIES AFTER MAKING PURCHASES AND SIMILARLY THERE IS NO EVIDENCE TO PRO VE THAT ASSESSEE HAS PASSED ON CASH TO CONCERNED PARTIES AF TER RECEIVING THE SALE PROCEEDS OF SHARES IA ITS BANK A CCOUNT THROUGH PROPER BANKING CHANNELS, II) SECONDLY NO WHERE ASSESSEES AUDITED BOOKS A/S 145 ARE DOUBTED AND SO LOSS EMERGING THERE FROM CAN. AL SO NOT BE SUBJECT MATTER OF DOUBT/DEBATE III) THIRDLY PRINCIPLE THAT THE COMMERCIAL EXPEDIE NCY OF THE CONTRACT IS TO BE ADJUDGED BY THE CONTRACTING, PART IES AS TO ITS TERMS: WHICH DIRECTLY ANSWERS THE BASIS TAKEN BY LD AO/CIT-A IN DRAWING ADVERSE INFERENCE IV) FOURTHLY NEITHER THERE IS ANY COLLUSION BEING E STABLISHED ON RECORDS BY ANY COGENT MATERIAL NOR IT IS THE CAS E OF LD AO/CIT-A THAT TRANSACTION DONE ARE AT VARIANCE WITH PRICE ON GIVEN DATE ON STOCK EXCHANGE (V) FIFTHLY CASE SET UP BY LD AO/CIT-A TO DISALLOW STATED LOSS ON GROUND OF PROBABILITY, SUSPICION, WOULD FAL L THE FOWL OF TEST OF LIVE NEXUS WHERE THERE IS NO LIVE NEXUS BETWEEN 8 ITA NO.6767/DEL/2019 DEV MILK FOODS PVT. L TD. VS. ACIT INFERENCE OF ACCOMMODATION ENTRY AND DISALLOWANCE L OSS VIS A VIS SALE/PURCHASE OF SHARES VI) SIXTHLY NO MATERIAL WORTH NAME IN FORM OF STATE MENT IMPLICATING ASSESSES OR ITS TRANSACTION IN QUESTION HAS BEEN CONFRONTED/CROSS EXAMINED TO ASSESSEE IN MANNER KNO WN TO LAW EXCEPT GENERAL ALLEGATIONS BEING MADE VII) LASTLY NO CASE SPECIFIC AND TRANSACTION SPECI FIC MATERIAL IS BROUGHT ON RECORDS TO DISLODGE EVIDENCE OF GENUINE SHARE SALE LOSS CLAIM OF ASSESSEE. IN VIEW OF ABOVE WE PRAY FOR OUTRIGHT DISALLOWANCE OF LOSS AS MADE BY LD AO AND AS MECHANICALLY SUSTAINED BY LD CIT-A WHERE LD CIT-A HAS JUST MECHANICALLY APPLIED GENERAL SERMONS WITHOUT GIVING ANY SPECIFIC FINDING ON OUR ASSAIL LODGED BE FORE HIM. 5. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, ID CIT-A ERRED IN SUSTAINING THE ACTION OF LD AO IN MAKING LOSS DISALLOWANCE OF RS.42936.659/- WITHOUT APPRECIATING THAT BURDEN TO PROVE THAT TRANSACTION IS BOGUS/SHAM HAS REMAINED, UN-DISCHARGED FROM SIDE OF REVENUE. 6. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, LD CIT-A ERRED IN SUSTAINING THE ACTION OF LD AO IN MAKING ADDITION OF RS 42936,659/- WITHOUT APPRECIATING TH AT BASIS OF 9 ITA NO.6767/DEL/2019 DEV MILK FOODS PVT. L TD. VS. ACIT FINDINGS OF THE LOWER AUTHORITIES IS SUSPICION A ND HUMAN PROBABILITIES ONLY WHICH IS NEVER CONVERTED TO REL IABLE AND TRUSTWORTHY MATERIAL AND ENTIRE ASSESSMENT ORDER IS PASSED ON SOLE BASIS OF BORROWED SATISFACTION AND WITHOUT ANY IN DEPENDENT APPLICATION OF MIND (LIKE A RUBBER STAMP ORDER). 7. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LD CIT-A ERRED IN SUSTAINING THE ACTION OF ID AO IN MAKING ADDITION OF RS 42936359/- WITHOUT APPRECIATING THAT NO OPPORTUNITY IS GIVEN TO THE ASSESSEE TO BE CONFRONTED WITH BACK MATERIAL RELIED EXTENSIVELY IN IMPUGNED ORDERS LIKE INVESTIGATION W ING REPORT ETC AND NO OPPORTUNITY TO CROSS EXAMINE THE REVENUES W ITNESS WAS GIVEN DESPITE SPECIFIC WRITTEN REQUEST IN THIS REGA RD MADE TO LD AO/CIT-A. 8. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, LD CIT-A ERRED IN SUSTAINING THE ACTION OF LD AO IN MAKING ADDITION OF RS.429.36,659/- WITHOUT APPRECIATING TH AT IN IDENTICAL FACTS IN VARIOUS ORDERS RELIEF HAS BEEN GRANTED TO ASSESSES ACCEPTING LOSS CLAIMED AS GENUINE. 9. THAT THE APPELLANT CRAVES LEAVE TO ADD/ALTER ANY/AL L GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING OF THE A PPEAL. HUMBLE PRAYER: I) TO DELETE THE ADDITION OF RS 42936,659/- ON A/E OF ALLEGED BOGUS LOSS RESULTING FROM, INNOCUOUS SHARE SALE 10 ITA NO.6767/DEL/2019 DEV MILK FOODS PVT. L TD. VS. ACIT II) TO QUASH ASSESSMENT ORDER AND LD CIT-A ORDER FOR B EING PASSED IN SERIOUS VIOLATION OF AUDI ALTREM PARTEM III) TO QUASH THE ASSESSMENT ORDER AND LD CIJ-A ORDER FO R BEING PASSED IN SERIOUS VIOLATION OF CBDT INSTRUCTIONS ON ASPECT OF LIMITED SCRUTINY ISSUE IV) TO RESTORE RETURNED INCOME V) ANY OTHER APPROPRIATE RELIEF 3.0 THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT HE MAY BE GIVEN THE OPPORTUNITY TO FIRST ARGUE GROUND NOS.1 & 2 WHICH WERE LEGAL GROUNDS CHALLENGING THE VALIDITY OF NOTICE ISSUED U /S 143(2) OF THE ACT AND THAT IF THE BENCH IS SATISFIED WITH THE ARGUMENTS ON THESE TWO GROUNDS AND HOLD THEM IN FAVOUR OF THE ASSESSEE, THEN THE O THER GROUNDS WOULD BECAME ACADEMIC IN NATURE. THE LD. SR. DEPARTMENTA L REPRESENTATIVE AGREED TO THE PROPOSAL OF THE LD. AUTHORIZED REPRES ENTATIVE. THEREFORE, WE ARE PROCEEDING TO HEAR BOTH THE PARTIES INITIALLY O N GROUND NOS.1 & 2. 4.0 THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED T HAT THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER WA S BAD IN LAW BECAUSE, ADMITTEDLY, THE CASE WAS SELECTED FOR LIMITED SCRUTI NY ON THE LIMITED ISSUE OF LONG TERM CAPITAL GAINS AND IT WAS CONVERTED TO A COMPLETE SCRUTINY ONLY ON A MERE SUSPICION AND FOR THE PURPOSES OF VERIFIC ATION ONLY ON THE BASIS 11 ITA NO.6767/DEL/2019 DEV MILK FOODS PVT. L TD. VS. ACIT OF AN INVALID APPROVAL BY THE LD. PR. COMMISSIONER OF INCOME TAX. IT WAS SUBMITTED THAT THE CONVERSION FROM LIMITED SCRUTINY TO COMPLETE SCRUTINY IN THE INSTANT CASE WAS NOT AS PER THE INSTRUCTIONS ISSUED BY THE CBDT VIZ. INSTRUCTION NO.19 & 20/2015 DATED 29.12.2015 A ND, THEREFORE, THE ENTIRE ASSESSMENT WAS VOID AB INITIO . THE LD. AUTHORIZED REPRESENTATIVE VEHEMENTLY ARGUED THAT THE CONVERSION FROM LIMITED SCRUTINY TO COMPLETE SCRUTINY WAS ITSELF BAD IN LAW. THE LD. AUTHORIZED RE PRESENTATIVE DREW OUR ATTENTION TO THE NOTICE ISSUED BY THE DEPARTMENT DA TED 11.04.2016 FOR LIMITED SCRUTINY AND ALSO LETTER DATED 17.10.2017 I SSUED BY THE DEPARTMENT INFORMING THE ASSESSEE OF CONVERTING TH E LIMITED SCRUTINY INTO COMPLETE SCRUTINY. THE LD. AUTHORIZED REPRESENTATIV E ALSO DREW OUR ATTENTION TO THE COMPUTATION OF INCOME BY THE ASSES SEE AND SUBMITTED THAT IT WAS EVIDENT FROM THE COMPUTATION THAT NOWHER E WAS THE DETAILS OF THE LOSS INCURRED IN SHARES DISCLOSED COMPANY-WISE. IT WAS SUBMITTED THAT THE DETAILS OF THE COMPANIES IN WHICH THE ASSESSEE HAD INCURRED LOSS IN THE SHARES TRANSACTION WAS COMMUNICATED ONLY BY THE ASSESSEE AT THE TIME OF THE ASSESSMENT PROCEEDINGS AND ALSO IN THE STATEMENT RECORDED BY THE ASSESSING OFFICER OF THE ASSESSEE COMPANYS DIR ECTOR. THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT, THUS, IT WAS VERY MUCH 12 ITA NO.6767/DEL/2019 DEV MILK FOODS PVT. L TD. VS. ACIT APPARENT THAT THE DEPARTMENT HAD CONVERTED THE LIMI TED SCRUTINY INTO COMPLETE SCRUTINY ONLY FOR MAKING ROVING ENQUIRIES AND THAT THE DEPARTMENT DID NOT HAVE A REASONABLE VIEW AS MANDATE D IN CBDT INSTRUCTION NO.5/2016 DATED 14.07.2016 AND, THUS, T HERE WAS INHERENT WEAKNESS AND DEFICIENCY IN THE ACTION TO CONVERT THE LIMITED SCRUTINY INTO FULL SCRUTINY. 4.1 IT WAS ALSO POINTED OUT THAT THE, ADMITTEDLY, T HERE WAS NO ADVERSE INFERENCE WITH RESPECT TO LONG TERM CAPITAL GAINS AS THE ENTIRE LONG TERM CAPITAL GAINS HAD BEEN OFFERED TO TAX. THE LD. AUTHORIZED REPRESENTATIVE DREW OUR ATTENTION TO THE AFORESAID C BDT INSTRUCTION WHEREIN IT HAS BEEN STATED THAT WHILE FORMING THE REA SONABLE VIEW, THE ASSESSING OFFICER HAS TO ENSURE THAT THERE EXISTED CREDIBLE MATERIAL OR INFORMATION AVAILABLE ON RECORD FOR FORMING SUCH VI EW AND THAT THE REASONABLE VIEW SHOULD NOT BE BASED ON MERE SUSPICIO N OR CONJECTURE AND THAT THERE MUST BE A DIRECT NEXUS BETWEEN AVAILABLE MATERIAL AND FORMATION OF SUCH VIEW. THE LD. AUTHORIZED REPRESENT ATIVE SUBMITTED THAT IN THE PRESENT CASE THERE WAS NO DIRECT NEXUS DEMONS TRATED BETWEEN THE MATERIAL AVAILABLE AND THE FORMATION OF SUCH VIEW AS NO SUCH MATERIAL IS STATED IN THE PROPOSAL ITSELF. HE DREW OUR ATTENTION TO THE PROPOSAL WHEREIN 13 ITA NO.6767/DEL/2019 DEV MILK FOODS PVT. L TD. VS. ACIT IT HAS BEEN STATED THAT THERE IS A POSSIBILITY OF U NDER ASSESSMENT OF INCOME IF THE CASE IS NOT EXAMINED UNDER COMPLETE S CRUTINY. 4.2 THE LD. AUTHORIZED REPRESENTATIVE ARGUED THAT THE PROPOSAL AND THE APPROVAL BOTH WERE COMPLETELY NON-DESCRIPTIVE AS EVEN THE BASIC DETAILS REQUIRED FOR FORMING A REASONABLE VIEW WERE COMPLETELY MISSING. THE LD. AUTHORIZED REPRESENTATIVE PLACED RELIANCE O N NUMEROUS JUDICIAL PRECEDENTS WHEREIN IT HAD BEEN HELD THAT THE VIOLATI ON OF CBDT INSTRUCTION GOVERNING THE SCRUTINY U/S 143(2) OF THE ACT WOULD L EAD TO THE INVALIDATION OF THE ENTIRE ASSESSMENT. 4.3 THE LD. AUTHORIZED REPRESENTATIVE ALSO SUBMITT ED THAT THE IMPUGNED ADDITION HAD BEEN MADE ONLY BY MAKING SOME REFERENCE OF THE REPORT OF THE INVESTIGATION WING WHICH THE ASSESSEE WAS NOT CONFRONTED WITH AND FURTHER THE ASSESSEES PRAYER FOR GRANTING OPPORTUNITY FOR CROSS EXAMINING THOSE PERSONS ON WHOSE STATEMENTS THE DEPA RTMENT HAD RELIED UPON WAS ALSO DENIED. IT WAS ARGUED THAT IT WAS APPAR ENT THAT THE DE HORS THE MATERIAL RELIED UPON BY THE DEPARTMENT, THE ADD ITION HAD NO FEET TO STAND. IN THIS REGARD ALSO, THE LD. AUTHORIZED REPR ESENTATIVE PLACED RELIANCE ON NUMEROUS JUDICIAL PRECEDENTS AND SUBMIT TED THAT WHERE THERE WAS NO MATERIAL AVAILABLE WITH THE DEPARTMENT EXCEPT THE SO CALLED 14 ITA NO.6767/DEL/2019 DEV MILK FOODS PVT. L TD. VS. ACIT INVESTIGATION REPORT, THE DEPARTMENT CANNOT BE ALLO WED TO IMPROVE UPON THE REASONING OF THE ASSESSING OFFICER AND THE LD C IT (A) . 4.4 THE LD. AUTHORIZED REPRESENTATIVE ALSO SUBM ITTED THAT THERE WAS AN INORDINATE DELAY IN GETTING THE CASE CONVERTE D TO COMPLETE SCRUTINY WHICH WAS EVIDENT FROM THE FACT THAT INFORMATION DATE D AUGUST, 2015 OF THE INVESTIGATION WING IS PURPORTEDLY MADE THE BAS IS OF CONVERSION OF THE CASE FROM LIMITED SCRUTINY TO COMPLETE SCRUTINY IN OCTOBER, 2017 WHEREAS THE CASE WAS SELECTED FOR SCRUTINY IN APRIL, 2016. T HEREFORE, IT WAS APPARENT THAT THIS CONVERSION WAS NOT WITHIN THE SPRI T AND MEANING OF CBDT INSTRUCTIONS NO.20/2015 & 5/2016. 5.0 IN RESPONSE THE, LD. SR. DR SUBMITTED THAT TH E DEPARTMENT HAD FOLLOWED THE CBDT INSTRUCTIONS IN LE TTER IN SPIRIT WHILE CONVERTING THIS CASE FROM LIMITED SCRUTINY TO COMPL ETE SCRUTINY. THE LD. SR. DR, WHILE REFERRING TO THE CONTENTS OF THE PROPOSAL DATED 05.10.2017 AND APPROVAL DATED 10.10.2017, SUBMITTED THAT THERE WAS NOTHING WRONG WITH THEM AND THAT THEY SATISFIED THE CONDITIONS LAI D DOWN IN THE CBDT INSTRUCTIONS. THE LD. SR. DEPARTMENTAL REPRESENTATI VE ALSO DEFENDED THE ACTION OF THE LOWER AUTHORITIES IN NOT ALLOWING CROSS EXAMINATION OF THE PERSONS WHOSE STATEMENTS HAD BEEN RELIED UPON AND PL ACED RELIANCE ON 15 ITA NO.6767/DEL/2019 DEV MILK FOODS PVT. L TD. VS. ACIT CERTAIN JUDICIAL PRECEDENTS FOR THE SAME. THE LD. S R. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT QUASI JUDICIAL ADJUDI CATIONS DO NOT REQUIRE ANY OPPORTUNITY TO PROVIDE CROSS EXAMINATION OR OPP ORTUNITY TO LEAD EVIDENCE. THE LD. SR. DEPARTMENT REPRESENTATIVE ALS O ARGUED THAT INVESTIGATION WING IS A PART OF THE DEPARTMENT ITSE LF AND NOT A THIRD PARTY AND, THEREFORE, THE ASSESSING OFFICER WAS COMPLETELY JUSTIFIED IN RELYING ON THE REPORT OF THE INVESTIGATION WING WHILE CONVERTIN G THE CASE OF LIMITED SCRUTINY TO COMPLETE SCRUTINY. THE LD. SR. DEPARTME NT REPRESENTATIVE ARGUED THAT THE CASE OF THE ASSESSEE SHOULD NOT BE DECIDED ON THE LEGAL GROUND AND THE MERITS OF THE CASE ALSO SHOULD ALSO BE CONSIDERED. 6.0 WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE A LSO PERUSED THE MATERIAL ON RECORD. AFTER CONSIDERING THE ENTIRE FA CTUAL MATRIX WE FIRST DEAL WITH THE PRIMARY ARGUMENTS OF THE LD. AUTHORIZED REP RESENTATIVE THAT THE CONVERSION OF THE CASE FROM LIMITED SCRUTINY TO COM PLETER SCRUTINY WAS NOT LEGALLY VALID. THE SUBJECT OF CONVERSION OF CASE FR OM LIMITED SCRUTINY TO COMPLETE SCRUTINY HAS BEEN DEALT WITH IN CBDT INSTRU CTION NO.5/2016 WHICH IS BEING REPRODUCED HEREIN UNDER FOR THE SAKE OF CONVENIENCE: 2. IN ORDER TO ENSURE THAT MAXIMUM OBJECTIVITY IS MAINTAINED IN CONVERTING A CASE FALLING UNDER LIMITED SCRUTINY INTO A COMPLETE SCRUTINY CASE, THE MATTER HAS BEEN FURTHER EXAMINE D AND IN PARTIAL 16 ITA NO.6767/DEL/2019 DEV MILK FOODS PVT. L TD. VS. ACIT MODIFICATION TO PARA 3(D) OF THE EARLIER ORDER DATE D 29.12.2015, BOARD HEREBY LAYS DOWN THAT WHILE PROPOSING TO TAKE UP C OMPLETE SCRUTINY IN A CASE WHICH WAS ORIGINALLY EARMARKED FOR LIMIT ED SCRUTINY, THE ASSESSING OFFICER (AO) SHALL BE REQUIRED TO FORM A REASONABLE VIEW THAT THERE IS POSSIBILITY OF UNDER ASSESSMENT OF IN COME IF THE CASE IS NOT EXAMINED UNDER COMPLETE SCRUTINY. IN THIS REG ARD, THE MONETARY LIMITS AND REQUIREMENT OF ADMINISTRATIVE APPROVAL F ROM PR. CIT/CIT/PR. DIT/DIT, AS PRESCRIBED IN PARA 3(D) OF EARLIER INST RUCTION DATED 29.12.2015, SHALL CONTINUE TO REMAIN APPLICABLE. 3. FURTHER, WHILE FORMING THE REASONABLE VIEW, THE ASSESSING OFFICER WOULD ENSURE THAT: A. THERE EXISTS CREDIBLE MATERIA L OR INFORMATION AVAILABLE ON RECORD FOR FORMING SUCH VIEW; B. THIS REASONABLE VIEW SHOULD NOT BE BASED ON MERE SUSPICION, CONJECTURE OR UNRELIABLE SOURCE; AND C. THERE MUST BE A DIRECT NEXUS BETWEEN THE AVAILAB LE MATERIAL AND FORMATION OF SUCH VIEW. 6. TO ENSURE PROPER MONITORING IN CASES WHICH HAVE BEEN CONVERTED FROM LIMITED SCRUTINY TO COMPLETE SCRUTINY, IT IS SUGGESTED, THAT PROVISIONS OF SECTION 144A OF THE ACT MAY BE INVOKE D IN SUITABLE CASES. TO PREVENT POSSIBILITY OF FISHING AND ROVING ENQUIR IES IN SUCH CASES, IT IS DESIRABLE THAT THESE CASES SHOULD INVARIABLY BE PICKED UP WHILE CONDUCTING REVIEW OR INSPECTION BY THE ADMINISTRATI VE AUTHORITIES. 7. THE ABOVE INSTRUCTION SHALL BE APPLICABLE FROM T HE DATE OF ITS ISSUE AND WOULD COVER THE CASES SELECTED UNDER CASS 2015 WHICH ARE PENDING SCRUTINY CASES AS WELL AS CASES SELECTED/BE ING SELECTED UNDER THE CASS 2016. 17 ITA NO.6767/DEL/2019 DEV MILK FOODS PVT. L TD. VS. ACIT 6.1 EARLIER PRECEDING INSTRUCTION IN THIS REGARD WA S 20/2015 WHICH STATES AS UNDER: INSTRUCTION NO. 20/2015 GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE CENTRAL BOARD OF DIRECT TAXES NORTH BLOCK, NEW DELHI, THE 29 TH OF DECEMBER, 2015 SUBJECT: SCRUTINY ASSESSMENTS-SOME IMPORTANT ISSUES AND SCOPE OF SCRUTINY IN CASES SELECTED THROUGH COMPUTER AIDED SCRUTINY S ELECTION ('CASS')-REG .- THE CENTRAL BOARD OF DIRECT TAXES ('CBDT'), VIDE IN STRUCTION NO. 7/2014 DATED 26 09.2014 HAD CLARIFIED THE EXTENT OF ENQUIR Y IN CERTAIN CATEGORY OF CASES SPECIFIED THEREIN, WHICH ARE SELECTED FOR SCR UTINY THROUGH CASS. FURTHER CLARIFICATIONS HAVE BEEN SOUGHT REGARDING T HE SCOPE AND APPLICABILITY OF THE AFORESAID INSTRUCTION TO CASES BEING SCRUTINIZED. 2. IN ORDER TO FACILITATE THE CONDUCT OF SCRUTINY A SSESSMENTS AND TO BRING FURTHER CLARITY ON SOME OF THE ISSUES EMERGING FROM THE AFORESAID INSTRUCTION, FOLLOWING CLARIFICATIONS ARE BEING MADE. I YEAR OF APPLICABILITY : AS STATED IN THE INSTRUCT ION NO. 7/2014 , THE SAID INSTRUCTION IS APPLICABLE ONLY IN RESPECT OF THE CA SES SELECTED FOR SCRUTINY THROUGH CASS-2014 II WHETHER THE SAID INSTRUCTION IS APPLICABLE TO AL L CASES SELECTED UNDER CASS : THE SAID INSTRUCTION IS APPLICABLE WHERE THE CASE I S SELECTED FOR SCRUTINY UNDER CASS ONLY ON THE PARAMETER(S ) OF AIR/CIB/26A S DATA . IF A CASE HAS 18 ITA NO.6767/DEL/2019 DEV MILK FOODS PVT. L TD. VS. ACIT BEEN SELECTED UNDER CASS FOR ANY OTHER REASON(S)/PA RAMETER (S) BESIDES THE AIR /CIB/26AS DATA, THEN THE SAID INSTRUCTION WOULD NOT APPLY. III SCOPE OF ENQUIRY : SPECIFIC ISSUE BASED ENQUIRY IS TO BE CONDUCTED ONLY IN THOSE SCRUTINY CASES WHICH HAVE BEEN SELECTED ON T HE PARAMETER(S ) OF AIR/CIB/26AS DATA . IN SUCH CASES, THE ASSESSING OFFICER, SHALL ALSO CO NFINE THE QUESTIONNAIRE ONLY TO THE SPECIFIC ISSUES PERTAINING TO AIR/CIB/2 6AS DATA. WIDER SCRUTINY IN THESE CASES CAN ONLY BE CONDUCTED AS PER THE GUI DELINES AND PROCEDURES STATED IN INSTRUCTION NO. 7/2014. IV REASON FOR SELECTION: IN CASES UNDER SCRUTINY FO R VERIFICATION OF AIR/CIB/26AS DATA , THE ASSESSING OFFICER HAS TO IN TIMATE THE REASON FOR SELECTION OF CASE FOR SCRUTINY TO THE ASSESSEE CONC ERNED. 3. AS FAR AS THE RETURNS SELECTED FOR SCRUTINY THRO UGH CASS-2015 ARE CONCERNED, TWO TYPE OF CASES HAVE BEEN SELECTED FOR SCRUTINY IN THE CURRENT FINANCIAL YEAR - ONE IS 'LIMITED SCRUTINY' AND OTHE R IS COMPLETE SCRUTINY'. THE ASSESSEES CONCERNED HAVE DULY BEEN INTIMATED AB OUT THEIR CASES FALLING EITHER IN 'LIMITED SCRUTINY' OR 'COMPLETE SCRUTINY' THROUGH NOTICES ISSUED UNDER SECTION 143(2) OF THE INCOME-TAX ACT, 1961 (' ACT'). THE PROCEDURE FOR HANDLING 'LIMITED SCRUTINY' CASES SHALL BE AS UNDER : A. IN 'LIMITED SCRUTINY ' CASES, THE REASONS/ISSUES SHALL BE FORTHWITH COMMUN ICATED TO THE ASSESSEE CONCERNED. B. THE QUESTIONNAIRE UNDER SECTION 142( 1) OF THE A CT IN 'LIMITED SCRUTINY ' CASES SHALL REMAIN CONFINED ONLY TO THE SPECIFIC RE ASONS/ISSUES FOR WHICH CASE HAS BEEN PICKED UP FOR SCRUTINY . FURTHER, THE SCOPE OF ENQUIRY SHALL BE RESTRICTED TO THE 'LIMITED SCRUTINY ' ISSUES. 19 ITA NO.6767/DEL/2019 DEV MILK FOODS PVT. L TD. VS. ACIT C. THESE CASES SHALL BE COMPLETED EXPEDITIOUSLY IN A LIMITED NUMBER OF HEARINGS. D. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN ' LIMITED SCRUTINY ' CASES, IF IT COMES TO THE NOTICE OF THE ASSESSING OFFICER THAT THERE IS POTENTIAL ESCAPEMENT OF INCOME EXCEEDING RS. FIVE LAKHS (FOR METRO CHARGES, THE MONETARY LIMIT SHALL BE RS. TEN LAKHS) REQUIRING SU BSTANTIAL VERIFICATION ON ANY OTHER ISSUE(S) , THEN , THE CASE MAY BE TAKEN U P FOR 'COMPLETE SCRUTINY ' WITH THE APPROVAL OF THE PR. CIT/CIT CONCERNED . HO WEVER , SUCH AN APPROVAL SHALL BE ACCORDED BY THE BY THE PR. CIT/CI T IN WRITING AFTER BEING SATISFIED ABOUT MERITS OF THE ISSUE(S) NECESSITATIN G 'COMPLETE SCRUTINY' IN THAT PARTICULAR CASE. SUCH CASES SHALL BE MONITORED BY THE RANGE HEAD CONCERNED. THE PROCEDURE INDICATED AT POINTS (A), ( B) AND (C) ABOVE SHALL NO LONGER REMAIN BINDING IN SUCH CASES. (FOR THE PRESE NT PURPOSE, 'METRO CHARGES' WOULD MEAN DELHI, MUMBAI, CHENNAI, KOLKATA , BENGALURU, HYDERABAD AND AHMEDABAD). 4. THE BOARD FURTHER DESIRES THAT IN ALL CASES UNDE R SCRUTINY, WHERE THE ASSESSING OFFICER PROPOSES TO MAKE ADDITIONS OR DIS ALLOWANCES, THE ASSESSEE WOULD BE GIVEN A FAIR OPPORTUNITY TO EXPLA IN HIS POSITION ON THE PROPOSED ADDITIONS/DISALLOWANCES IN ACCORDANCE WITH THE PRINCIPLE OF NATURAL JUSTICE. IN THIS REGARD, THE ASSESSING OFFI CER SHALL ISSUE AN APPROPRIATE SHOW-CAUSE NOTICE DULY INDICATING THE R EASONS FOR THE PROPOSED ADDITIONS/DISALLOWANCES ALONG WITH NECESSARY EVIDEN CES/ REASONS FORMING THE BASIS OF THE SAME. BEFORE PASSING THE FINAL ORD ER AGAINST THE PROPOSED ADDITIONS/DISALLOWANCES DUE CONSIDERATION SHALL BE GIVEN TO THE SUBMISSIONS MADE BY THE ASSESSEE IN RESPONSE TO THE SHOW CAUSE NOTICE. 20 ITA NO.6767/DEL/2019 DEV MILK FOODS PVT. L TD. VS. ACIT 5. THE CONTENTS OF THIS INSTRUCTION SHOULD BE IMMED IATELY BROUGHT TO THE NOTICE OF ALL CONCERNED FOR STRICT COMPLIANCE. 6. HINDI VERSION TO FOLLOW. 6.2 WE HAVE ALSO GONE THROUGH THE CBDT LETTER BE ARING NO. DGIT VIF/HQ SI/2017-18 DATED 30.11.2017 WHICH STATES THAT THE IDEA BEHIND SUCH STIPULATION WAS TO ENFORCE CHECKS AND BALANCES UPON THE POWER OF THE ASSESSING OFFICER TO DO FISHING AND ROVING ENQU IRIES IN CASES SELECTED FOR LIMITED SCRUTINY ETC. IN THIS VERY LETTER, THE CBDT HAS ALSO HIGHLIGHTED THE ASPECT OF CRYPTIC ORDER SHEET ENTRIES WHICH ACCO RDING TO THE CBDT SHOWS IRRESPONSIBLE, AD HOC AND INDISCIPLINED WORKING OF AN OFFICER OF THE DEPARTMENT. A PERUSAL OF THE AFORESAID INSTRUCTIONS WOULD SHOW THAT THE OBJECTIVE BEHIND THE ISSUANCE OF THESE INSTRUCTIONS IS (I) TO PREVENT POSSIBILITY OF FISHING AND ROVING ENQUIRIES; (II) E NSURE MAXIMUM OBJECTIVITY; AND (III) TO ENFORCE CHECKS AND BALANCES UPON THE P OWERS OF AN ASSESSING OFFICER. 6.3 WE HAVE ALSO GONE THROUGH THE PROPOSAL DRAFTED BY THE ASSESSING OFFICER ON 05.10.2017 FOR CONVERTING THE CASE FROM LIMITED SCRUTINY TO COMPLETE SCRUTINY. THIS READS AS UNDER: . 4. IN THIS REGARD IT MAY BE MENTIONED HERE THAT THE ASSESSEE HAS SHOWN A SHORT TERM CAPITAL LOSS ON SALE OF SHARES P URCHASED ON 21 ITA NO.6767/DEL/2019 DEV MILK FOODS PVT. L TD. VS. ACIT 09.07.2014 AND SOLD ON 15.02.2015 . THE PURCHASE PR ICE OF THESE SHARES HAS BEEN STATED AT RS 499,98,440 AND SALE PR ICE HAS BEEN MENTIONED AT RS 79,03,676. THE RESULTANT LOSS OF RS 420,94,764 HAS BEEN SET OFF BY THE ASSESSEE AGAINST LONG TERM CAPI TAL GAINS. THIS TRANSACTION APPEARS TO BE SUSPICIOUS IN NATURE AND PROBABLY THIS LOSS HAS BEEN CREATED TO REDUCE THE INCIDENCE OF TAX ON LONG TERM CAPITAL GAINS DISCUSSED IN PARA 3. THIS ISSUE NEEDS TO BE T HOROUGHLY EXAMINED TO ASCERTAIN THE GENUINENESS OF THIS LOSS 6.4 WE HAVE ALSO THROUGH THE ORIGINAL ORDER SHEET ENTRIES, AS WERE PRESENT IN THE ASSESSMENT RECORDS AND WHICH HAD BEEN SUBMITTED FOR OUR PERUSAL BY THE LD. SR. DEPARTMENTAL REPRESENTATIVE UNDER OUR DIRECTIONS AND IT SHOWS THAT THERE IS NOT AN IOTA OF ANY COGENT MATERIAL MENTIONED BY THE ASSESSING OFFICER WHICH ENABLED HIM TO HAVE REAC HED THE CONCLUSION THAT THIS CASE WAS A FIT CASE FOR CONVERSION FROM L IMITED SCRUTINY TO COMPLETE SCRUTINY. WE HAVE ALSO GONE THROUGH THE ST ATEMENT OF ASSESSEES DIRECTOR MR. ROHIT VERMA WHICH WAS RECORDED ON 18.07 .2017 I.E., AFTER THE CONVERSION OF THE CASE AND EVEN IN HIS STATEMENT NO THING ADVERSE IS COMING OUT VIS. A VIS. THE IMPUGNED TRANSACTIONS. I F THE PROPOSAL OF THE ASSESSING OFFICER DATED 05.10.2017 AND THE APPROVAL OF THE LD. PR. COMMISSIONER OF INCOME TAX DATED 10.10.2017 ARE EXA MINED ON THE ANVIL 22 ITA NO.6767/DEL/2019 DEV MILK FOODS PVT. L TD. VS. ACIT OF PARAGRAPH 3 OF CBDT INSTRUCTION NO.5/2016, IT IS VERY MUCH CLEAR THAT NO REASONABLE VIEW IS FORMED AS MANDATED IN THE SAID CBDT INSTRUCTION NO.5/2016 IN AN OBJECTIVE MANNER AND SECONDLY MEREL Y SUSPICION AND INFERENCE IS THE FOUNDATION OF THE VIEW OF THE ASSES SING OFFICER. WE ALSO NOTE THAT THERE IS NO DIRECT NEXUS BROUGHT ON RECOR D BY THE ASSESSING OFFICER IN THE SAID PROPOSAL AND, THEREFORE, IT IS VERY MUCH APPARENT THAT THE PROPOSAL OF CONVERTING THE LIMITED SCRUTINY TO COMPLETE SCRUTINY WAS MERELY AIMED AT MAKING FISHING ENQUIRIES. WE ALSO N OTE THAT THE LD. PR. COMMISSIONER OF INCOME TAX HAS ACCORDED THE APPROVA L IN A MERE MECHANICAL MANNER WHICH IS IN CLEAR VIOLATION OF THE CBDT INSTRUCTIONS NO.20/2015. 6.5 THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF AMAL KUMAR GHOSH REPORTED IN 361 ITR 458 (CAL.) DISCUSSED THE PURPOSE BEHIND THE CBDT CIRCULARS. THE RELEVANT OBSERVATIONS OF THE HO NBLE CALCUTTA HIGH COURT ARE AS UNDER: ..MRS. GUTGUTIA, LEARNED ADVOCATE SUBMITTED THAT THE CIRCULARS ARE NOT MEANT FOR THE PURPOSE OF PERMITTING THE UNSCRUP ULOUS ASSESSEES FROM EVADING TAX. EVEN ASSUMING, THAT TO BE SO, IT CANNOT BE SAID THAT THE DEPARTMENT, WHICH IS STATE, CAN BE PERMITTED TO SELECTIVELY APPLY THE STANDARDS SET BY THEMSELVES FOR THEIR OWN CONDU CT. IF THIS TYPE OF DEVIATION IS PERMITTED, THE CONSEQUENCES WILL BE TH AT FLOODGATE OF 23 ITA NO.6767/DEL/2019 DEV MILK FOODS PVT. L TD. VS. ACIT CORRUPTION WILL BE OPENED WHICH IT IS NOT DESIRABLE TO ENCOURAGE. WHEN THE DEPARTMENT HAS SET DOWN A STANDARD FOR ITSELF, THE DEPARTMENT IS BOUND BY THAT STANDARD AND CANNOT ACT WITH DISCRIMI NATION. IN CASE, IT DOES THAT, THE ACT OF THE DEPARTMENT IS BOUND TO BE STRUCK DOWN UNDER ARTICLE 14 OF THE CONSTITUTION. IN THE FACTS OF THE CASE, IT IS NOT NECESSARY FOR US TO DECIDE WHETHER THE INTENTION OF CBDT WAS TO RESTRICT THE PERIOD OF ISSUANCE OF NOTICE FROM THE DATE OF FILING THE RETURN LAID DOWN UNDER SECTION 143(2) OF THE I.T. ACT. 6.6 THE CO-ORDINATE BENCH OF ITAT AT CHANDIGARH I N THE CASE OF PAYA KUMARI IN ITA NO.23/CHD/2011, VIDE ORDER DATED 24.02.2011, HAS HELD THAT EVEN SECTION 292 BB OF THE ACT CANNOT SAV E THE INFIRMITY ARISING FROM INFRACTION OF CBDT INSTRUCTIONS DEALING WITH TH E SUBJECT OF SCRUTINY ASSESSMENTS WHERE ASSESSMENT HAS BEEN FRAMED IN DIRE CT CONFLICT WITH THE GUIDELINES ISSUED BY THE CBDT. 6.7 THEREFORE, ON AN OVERALL VIEW OF THE FACTUAL MA TRIX AS WELL AS SETTLED JUDICIAL POSITION, WE ARE OF THE CONSIDERED OPINION THAT THE INSTANT CONVERSION OF THE CASE FROM LIMITED SCRUTINY TO COM PLETE SCRUTINY CANNOT BE UPHELD AS THE SAME IS FOUND TO BE IN TOTAL VIOLA TION OF CBDT INSTRUCTIONS NO.5/2016. ACCORDINGLY, IT IS OUR CONS IDERED OPINION THAT THE ENTIRE ASSESSMENT PROCEEDINGS DO NOT HAVE ANY FEET TO STAND ON. THEREFORE, WE HOLD THE ASSESSMENT ORDER TO BE NULLITY AND WE QU ASH THE SAME. 24 ITA NO.6767/DEL/2019 DEV MILK FOODS PVT. L TD. VS. ACIT 6.8 SINCE, WE HAVE QUASHED THE ASSESSMENT ORDER AS BEING NULLITY, THE OTHER GROUNDS RAISED BY THE ASSESSEE BECAME ACA DEMIC IN NATURE AND ARE NOT BEING ADDRESSED TO. 7.0 IN THE FINAL RESULT, THE APPEAL OF THE ASSESSE E STANDS ALLOWED. ORDER PRONOUNCED ON 12/06/2020. SD/- SD/- (PRASHANT MAHARISHI) (SUDHANSHU SRIVASTAVA) ACCOUNTANT MEMBER JUDICIAL MEMBE R DATED: 12/06/2020 PK/PS COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI