CBDT scrutiny guidelines does not preclude random selection by AO – High Court

CBDT scrutiny guidelines are only for compulsory selection and does not preclude random selection for scrutiny by the Assessing Officers.

In a recent judgment, Hon’ble Patna High Court has held that CBDT guidelines are only for compulsory selection of returns for scrutiny and it does not preclude random selection for scrutiny by the Assessing Officers.

ABCAUS Case Law Citation:
4282 (2024) (10) abcaus.in HC

In the instant case, the Petitioner was a government company incorporated under the Companies Act, 2013. It filed a Wit Petition challenging series of assessment orders contending that no scrutiny could have been carried out, as per the guidelines dated 10.06.2021 issued by the Central Board of Direct Taxes for compulsory selection for returns of complete scrutiny during the financial year 2021-22 and the conduct of the assessment proceedings in such cases.

It was submitted that the petitioner was a completely owned government company depending only on the government funds to carry out the development activities with its seat at Patna; totally funded by the Government.

However, the Hon’ble High Court opined that the scrutiny guidelines are only for compulsory selection of returns for scrutiny and it does not preclude random selection for scrutiny by the Assessing Officers. The categories coming under the guidelines were those which are to be taken up mandatorily for scrutiny and this does not create any restriction of any other category being taken up for scrutiny.

The next contention was one of violation of principles of natural justice, insofar as no personal hearing having been granted to the assessee.

The Hon’ble High Court noted that admittedly, the petitioner while uploading the application did not seek for an opportunity for personal hearing. The petitioner’s contention was that the reply filed specifically sought for such personal hearing.

The Hon’ble High Court further observed that as per system generated notices and uploading of on-line replies in specified forms; there is a specific column provided for requesting personal hearing. Unless the personal hearing is sought for, there would be no requirement to issue such personal hearing. Admittedly, in the instant case, the column for personal hearing was not ticked as ‘Yes’. The reply was filed and it was duly considered in the order passed.

Accordingly, the Hon’ble High Court declined to interfere with the order also on the ground of violation of principles of natural justice. 

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