The jurisdiction of the Assessing Officer under Section 143(2) of the Income Tax Act is statutory and not subject to administrative guidelines, allowing for valid assessments despite alleged procedural violations.

JUDGMENT

Sanjeev Kumar, J.

1. This appeal under Section 260A of the Income Tax Act, 1961 [“the Act”] arises out of an order dated 22nd July, 2009 passed by the Income Tax Appellate Tribunal, Amritsar [“ITAT”] in ITA No.478(ASR)/2008 titled M/s Reshi Construction Co. v. The Income Tax Officer, Ward 4, Srinagar, whereby the appeal of the appellant-assessee against the order of Commissioner, Income Tax (Appeals), Jammu dated 14th July, 2008 has been dismissed.

2. Vide order dated 23rd May, 2013, the instant appeal was admitted to hearing on the following substantial questions of law:-

A. Whether Hon’ble ITAT erred in law in upholding the validity of the jurisdiction assumed by the Assessing Officer to pass the assessment order, more so by disregarding the settled principle that there can be no estoppel against law.

B. Whether Hon’ble ITAT erred in law in upholding the addition of undisclosed investment by passing a non speaking order.

C. Whether Hon’ble ITAT erred in law in upholding the addition on account of “Addition to fixed assets” when such assets are appearing in the balance sheet.

D. Whether the order passed by Hon’ble Tribunal is in accordance with law.

3. The appellant is a partnership firm against whom an assessment for the assessment year 2005-06 was framed by ITO, Ward No.4, Srinagar [“Assessing Officer”] as against the income of Rs.2,21,148/-. The aforesaid order of assessment of the appellant was framed by the Assessing Officer after selecting the case for scrutiny as per the guidelines laid down in action plan for the year 2006-07 as contained in Clause 2(q) thereof. The Assessing Officer made an aggregate addition of Rs.20,28,885/- as unexplained income on the ground that plant and machinery shown in the balance sheet on 31st March, 2004 was to the tune of Rs.21,58,400/- whereas the same was shown as on 1st April, 2004 by a figure which exceeded by Rs.13,29,206/-. Additionally, the Assessing Officer made an addition of Rs.6,99,679/- on account of plant and machinery added by the assessee during the year under appeal. The Assessing Officer, thus, made a total addition of Rs.20,28,855.00 (13,29,206 +6,99,679).

4. Feeling dissatisfied and aggrieved by the assessment made by the Assessing Officer, the appellant filed an appeal before the Commissioner of Income Tax (Appeals), Jammu [“CIT(A)”] raising a plea that the assessment order was framed in violation of the CBDT guidelines and, therefore, null and void. The CIT(A) confirmed the assessment order and aforesaid additions made by the Assessing Officer vide order dated 14th July, 2008. The appellant took the matter before ITAT, Amritsar by way of an appeal registered as ITA No.478(ASR)/2008. Vide judgment and order impugned, the ITAT has dismissed the appeal and upheld the order of CIT(A), Jammu. It is this order the appellant is aggrieved of and is before us by way of instant appeal.

5. The impugned order of the ITAT is challenged by the appellant primarily on the ground that the CIT(A) as well as ITAT failed to appreciate that assumption of jurisdiction by the Income Tax Assessing Officer for framing an assessment order under Section 144 of the Act did not have the sanction of law, in that, the case of the appellant was selected for scrutiny by issuing notice under Section 143(2) of the Act in gross violation of CBDT guidelines. It is argued that in terms of Clause 2(q) of the CBDT guidelines, the case for scrutiny is selected only when there is addition to the capital. Similarly, under Clause 2(o) of CBDT guidelines, the case of an assessee for scrutiny can be selected and assessment could be framed under Section 144 of the Act only in cases of the contractors whose gross contractual receipts exceed rupees one crore and if total profit declared was less than 5% of gross contractual receipts.

6. It is submitted that the profit of the appellant for the accounting year in question was only Rs.7,92,508/-, which, in any case, was more than 5% and, therefore, Clause 2(o) of CBDT g