TMI Blog2024 (4) TMI 494X X X X Extracts X X X X X X X X Extracts X X X X ..... n advanced despite the new section. This circular was held by this Court as binding on the Revenue, though limiting the operation of Section 12(1B) or excluding certain transactions from the ambit of Section 12(1B). It was so held because the circular was considered as issued for the purpose of proper administration of the provisions of Section 12(1B) and the court did not look upon this circular as being in conflict with Section 12(1B). Once, the audit party had recorded the admission of the petitioner with respect to the quantum of duty admitted to be payable by it, that admission recorded in writing may have amounted to a written communication. However, no independent adjudication is required to be made on the point, in view of clarification made by the CBIC. Plainly, the CBIC itself has remedied the situation to include admissions recorded during the course of audit within the meaning of quantified , as defined under Section 121 (r) of the Scheme. Seen in that light, the declaration made by the petitioner was with respect to amount quantified prior to 30.06.2019. Therefore, the petitioner's declaration was maintainable. It ought to have been dealt with on its own merits. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the audit objection) were recorded prior to the cut-off date under the Scheme, i.e. 30.06.2019. Recital to that effect is clearly contained in the said communication dated 15.7.2019 issued by the Deputy Commissioner. Thus, though the communication is of date later than the cut-off date 30.06.2019 at the same time it contains details of admission made by the petitioner recorded before the audit party prior to the cut-off date 30.06.2019. In that context, in paragraph 10 of the Writ Petition, it has been stated as below: 10. That the department rejected the said declaration without granting any personal hearing namely on the basis of final audit report signed on 15.7.2019 stating that the amount payable was not quantified before 30.06.2019. As there is a column to fill final Audit Report number in cases relating to audit, hence the final audit report number with date as 15.07.2019 was filled in the declaration though the fact remains that the amount payable by the petitioner as per audit was already quantified by the auditors prior to 30.06.2019 while concluding the audit of the petitioner on May 2019 and communicated to the petitioner on mobile in order to enable him to deposit the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the indirect tax enactment. 9. On the strength of the above statutory provisions, the declaration made by the petitioner was rejected by the impugned order. It has been thus reasoned that there was no written communication issued to the petitioner with respect to quantify the disputed amount on or before the cut-off date 30.06.2019. 10. The objection raised by the revenue may have merited acceptance if that rejection were to be tested solely on the strength of the language of the statutory provisions noted above. 11. At the same time, it cannot be loss sight, section 133 of the Scheme reads as below: 133. (1) The Central Board of Indirect Taxes and Customs may, from time to time, issue such orders, instructions and directions to the authorities, as it may deem fit, for the proper administration of this Scheme, and such authorities, and all other persons employed in the execution of this Scheme shall observe and follow such orders, instructions and directions: Provided that no such orders, instructions or directions shall be issued so as to require any designated authority to dispose of a particular case in a particular manner. (2) ................................................ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proper determination of income. 10. For this same reason, and to aid proper determination of income, the Central Board of Direct Taxes had issued Circular No. 41(V-6)D of 1952 dated 6th October, 1952. The circular, inter alia, stated that interest accruing to a money lender on loans entered in the suspense account because of the extreme unlikelihood of their being recovered need not be included in the assessee's taxable income if the Income-tax Officer is satisfied that there is really little probability of the loans being repaid. It is considered desirable to extend this principle to banks which, instead of transferring the doubtful debts to a suspense account, credit the interest on such debts to that account provided the Income-tax Officer is satisfied that recovery is practically improbable, This circular was in force till 20th of June, 1978 when the Central Board of Direct Taxes issued a circular dated 20th of June, 1978 withdrawing with immediate effect the earlier circular of 6th of October, 1952. The reason for the withdrawal of the circular of 1952 is set out in the circular of 20th of June, 1978. The reason is stated thus: the Board has been advised that where account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these circulars? Section 119(1) of the Income-tax Act, 1961 provides that, The Central Board of Direct Taxes may, from time to time, issue such orders, instructions and directions to other income-tax authorities as it may deem fit for the proper administration of this Act and such authorities and all other persons employed in the execution of this Act shall observe and follow such orders, instructions and directions of the Board. Provided that no such orders, instructions or directions shall be issued (a) so as to require any income-tax authority to make a particular assessment or to dispose of a particular case in a particular manner; or (b) so as to interfere with the discretion of the Appellate Assistant Commissioner in the exercise of his appellate functions . Under Sub-section (2) of Section 119, without prejudice to the generality of the Board's power set out in Sub-section (1), a specific power is given to the Board for the purpose of proper and efficient management of the work of assessment and collection of revenue to issue from time to time general or special orders in respect of any class of incomes or class of cases setting forth directions or instructions, not bein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ircular of 9th of October, 1984, therefore, provides a test for recognising whether a claim for interest can be treated as a doubtful claim unlikely to be recovered or not. The test provided by the said circular is to see whether, at the end of three years, the amount of interest has, in fact, been recovered by the bank or not. If it is not recovered for a period of three years, then in the fourth year and onwards the claim for interest has to be treated as a doubtful claim which need not be included in the income of the assessee until it is actually recovered. 13. In the case of Navnitlal C. Javeri v. K.K. Sen, Appellate Assistant Commissioner of Income-Tax, 'D' Range, Bombay MANU/SC/0147/1964 : [1965] 56 ITR 198(SC) , the legal effect of such circulars is, inter alia, considered by a Bench of five judges of this Court. Section 2(6A)(e) and Section 12(1B) were introduced in the Income-tax Act by the Finance Act 15 of 1955 which came into force on 1st of April, 1955. The Government, however, realised that the operation of Section 12(1B) would lead to extreme hardship because it would have covered the aggregate of all outstanding loans of past years and would impose an unrea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tructions but so far as the department is concerned, such right is not available. (see Collector of Central Excise v. Usha Martin Industries MANU/SC/0960/1997. In the case of Ranadey Micronutrients v. Collector of Central Excise MANU/SC/0025/1997, this court held that the whole objective of such circulars is to adopt a uniform practice and to inform the trade as to how a particular product will be treated for the purposes of excise duty. The court also held that it does not lie in the mouth of the revenue to repudiate a circular issued by the Board on the basis that it is inconsistent with a statutory provision (emphasis herein italicised in print supplied). Consistency and discipline are, according to this court, of far greater importance than the winning or losing of court proceedings. In the case of Collector of Central Excise v. Jayant Dalal (P) Ltd. MANU/SC/1535/199,7 this court has held that it is not open to the revenue to advance an argument or even file an appeal against the correctness or the binding nature of the circulars issued by the Board. Similar is the view taken by this court in the case of Collector of Central Excise v. Kores (India) Ltd. MANU/SC/1510/1997 5. It ..... X X X X Extracts X X X X X X X X Extracts X X X X
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