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2010 (10) TMI 508 - HC - Income TaxBest judgement assessment - It is with this backdrop of the case, the Assessing Officer, passed the impugned assessment order dated 11-12-2009 against the assessee for the Assessment Years 1995-1996 and 1996-1997 confirming the earlier orders of assessment dated 9-7-2001 and 28-3-2001 based on the best judgment under section 144/147 of the Income-tax Act, 1961, respectively holding that the writ petitioner-assessee is liable to pay the Income-tax demanded, and has also reserved the right to levy interest under section 220(2) of the Income-tax Act, 1961 for default in payment of tax separately Board’s Instruction No. 8/2008 dated 29-7-2008 states that clause (26AAA) of sec. 10 of the IT. Act, 1961 exempts from tax in respect of income arising or accruing to a Sikkimese individual in relation to income accruing to him/her from (a) any source in the State of Sikkim; or (b) by way of dividend or interest on securities - Assessing Officer has committed an illegality in confirming the earlier orders of assessment dated 9-7-2001 and 28-3-2001 for the Assessment Years 1995-96 and 1996-97 respectively which were made on ‘best judgment - It is apparent on the face of the records that Section 10(26AAA) of the Income-tax Act, 1961 as well as Instruction No. 8 of 2008 dated 29-7-2008 issued by the CBDT have come into force w.e.f. 01-4-1990 even before the disposal of the Writ Petitions (C) No. 31 and 38 of 2001 by order dated 15-7-2009 - t is a settled law, that instruction of CBDT issued under section 199(2) of the Income-tax Act, 1961 are binding on the income-tax authorities, even if they deviate from the provisions of the Act, so long as they seek to mitigate the rigour of a particular section for the benefit of the assessee (Vide: UCO Bank v. CIT [1999 (5) TMI 3 - SUPREME COURT] ) - It is the settled law that benevolent circulars (Instruction No. 8 of 2008 dated 29-7-2008) providing administrative relief to the assessee have to be given effect to even if they are issued subsequent to the decision (best judgment orders dated 9-7-2001 and 28-3-2001) by an authority under the Act (Vide: Bajaj v. CIT 1996 (8) TMI 98 - PUNJAB AND HARYANA HIGH COURT] - The writ petition is ordered accordingly
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