2006 (4) TMI 53 - HC - Income Tax

Assessment Assessee case taken up for scrutiny in violation of board instruction by the AO and passed the assessment order Commissioner setting aside the assessment in the light of instruction and also uphold by tribunal Held justified

Summary

Issues: Violation of CBDT circular leading to scrutiny of assessee's return.

Paragraph 1: The judgment discusses how the Commissioner of Income-tax and the Income-tax Appellate Tribunal relied on Supreme Court decisions to establish that circulars issued by the Central Board of Direct Taxes (CBDT) are binding on Income-tax Department officers. The Supreme Court cases of Commissioner of Customs v. Indian Oil Corporation Ltd. [2004] 267 ITR 272 and UCO Bank v. CIT [1999] 237 ITR 889 were referenced to support this position.

Paragraph 2: The respondent-assessee's return was subjected to scrutiny in violation of a CBDT circular. The circular stated that if the returned income is 30% more than the income of the previous assessment year, the assessee's case should not be scrutinized. The circular's operation was extended to the assessment year 1995-96. The Commissioner set aside the assessment order passed by the Assessing Officer based on this violation, a decision that was upheld by the Tribunal on appeal.

Paragraph 3: The Tribunal's decision to uphold the Commissioner's order was based on the legal position established by the Supreme Court judgments mentioned earlier. The judgment concludes that no substantial question of law arises for consideration, and therefore, the appeal is dismissed.