Shri Radhashyam Mal, Purba Medinipur V. ITO, Ward - 4, Haldia, Purba Medinipur

ITA 164/KOL/2012

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8062 (ITAT-KOLKATA)
• Duration Of Justice: 8 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2012
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 01-02-2012
• Court: TRIBUNAL
• Department Lawyers: R K SAHA
• Assessee Lawyers: M GHOSH; N KUNDU
• Section: 143(3); 142(1)

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL, BEN CH A, KOLKATA () BEFORE , ,, , , SHRI MAHAVIR SINGH, JUDICIAL MEMBER. /AND . .. . ! ! ! !. .. . , '# SHRI C.D.RAO, ACCOUNTANT MEMBER $ $ $ $ / ITA NO . 164/KOL/2012 %& '(/ ASSESSMENT YEAR : 2004-05 (*+ / APPELLANT ) SHRI RADHASHYAM MAL,PURBA MEDINIPUR (PAN:AEAPM 6682 A) (,-*+/ RESPONDENT ) I.T.O., WARD-4, HALDIA. *+ . / '/ FOR THE APPELLANT: SHRI M.GHOSH, ADVOCATE & SHRI N.KUNDU, ADVOCATE ,-*+ . / '/ FOR THE RESPONDENT: SHRI R.K.SAHA, JCIT (SR.DR) 0%1 . !# /DATE OF HEARING : 10.10.2012. 2' . !# /DATE OF PRONOUNCEMENT : 12.10.2012. '3 / ORDER . .. . ! ! ! !. .. . , '# PER SHRI C.D.RAO, AM THE ABOVE APPEAL IS FILED BY ASSESSEE AGAINST ORDER DATED 03.11.2011 OF THE LD. CIT-(A)-XXXIII, KOLKATA PERTAINING TO A.YR. 2004-0 5. 2. THOUGH THE ASSESSEE HAS RAISED SEVERAL GROUNDS IN THE GROUNDS OF APPEAL ATTACHED TO THE MEMORANDUM OF APPEAL, THE LD. COUNS EL APPEARING ON BEHALF OF ASSESSEE BY REFERRING TO GROUND NO.2 CONTENDED THAT THE LD. CIT(A) IS NOT JUSTIFIED IN CONFIRMING THE ACTION OF AO. THE RELEVANT GROUND NO .2 RAISED BY ASSESSEE READS AS UNDER :- `2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CAS E THE LD. CIT(A) HAS ERRED IN CONFIRMING THE VALIDITY OF SELECTION OF SCRUTINY PR OCEDURES IGNORING THE INSTRUCTION OF C.B.D.T. VIDE NO.10/2004 DATED 20.09.2004 WHEREIN C .B.D.T. DIRECTED TO COMPLETE THE 2 SELECTION OF SCRUTINY PROCEDURES WITHIN 3 MONTHS FR OM THE DATE OF FILING THE RETURN OF INCOME DURING FINANCIAL YEAR 2004-05. 2.1. HE FURTHER RELIED ON THE DECISION OF THE CO-OR DINATE BENCH IN THE CASE OF AJANTA FINANCIAL SERVICES PVT. LTD. VS ITO,WARD-4(3),KOLKA TA VIDE ITA NO.1426/KOL/2011 DATED 21.05.2012. THEREFORE, HE REQUESTED TO ALLOW THE APPEAL OF ASSESSEE BY QUASHING THE ASSESSMENT ORDER WHICH IS NOT IN ACCORDANCE WIT H THE CBDT CIRCULAR NO.10/2004 DATED 20 TH SEPTEMBER, 2004. 3. ON THE OTHER HAND, THE LD. DR APPEARING ON BEHAL F OF THE REVENUE HAS SUPPORTED THE ORDERS OF LD. CIT(A) AND FURTHER FILED WRITTEN SUBMISSIONS WHICH ARE AS UNDER :- SEC 119(1) PROVIDES IN UNMISTAKABLE TERMS THAT EVE RY OFFICER AND PERSON EMPLOYED IN THE EXECUTION OF THE ACT SHALL OBSERVE AND FOLLOW T HE ORDERS, INSTRUCTIONS AND DIRECTIONS OF THE BOARD. STILL, A DEPARTMENTAL CIRCULAR IS NOT LAW. IT MAY B E BINDING ON THE INCOME TAX AUTHORITIES BUT THE APPELLATE AUTHORITY, THE TRIBUNAL OR THE HI GH COURT IS NOT BOUND TO TAKE A JUDICIAL NOTICE OF A CIRCULAR. - BENGAL IRON CORPORATION V. CTO, (1993) 90 STC 47, 56 (SC). EVEN AN ASSESSING OFFICER IS NOT TO AVAIL OF ANY AD MINISTRATIVE INSTRUCTIONS ETC. BUT IS TO ACT JUDICIALLY IN A PARTICULAR ASSESSMENT PROCEEDIN GS SOLELY GUIDED BY THE PROVISIONS OF LAW. - KUMARA RAJAH OF VENKATAGIRI V. ITO (1968) 70 1TR772 (AP) SUCH EXECUTIVE INSTRUCTIONS DO NOT CLOTHE ANY PERSO N WITH VESTED RIGHTS, WHEN THEY ARE OF NON-STATUTORY CHARACTER. VIOLATION OF SUCH INSTR UCTIONS CANNOT FORM THE SUBJECT MATTER OF A LIS IN A CIVIL COURT OR IN A PROCEEDING FOR TH E ISSUE OF A PREROGATIVE WRIT. SUBORDINATES WHO OFFENDS SUCH INSTRUCTIONS ONLY LAY THEMSELVES OPEN TO DISCIPLINARY ACTION THAT MAY BE TAKEN AGAINST THEM. NARASIMHA SE TTY V. DY. CTO, (1963) 14 STC 94 (MAD). THIS IS SO BECAUSE IT IS WELL SETTLED THAT M ANDAMUS DOES NOT LIE TO ENFORCE DEPARTMENTAL MANUALS OR INSTRUCTIONS NOT HAVING ANY STATUTORY FORCE WHICH DO NOT GIVE RISE ANY LEGAL RIGHT IN FAVOUR OF THE PETITIONER- J . R. RAGHUPATY V. STATE OF A.P., AIR 1988 SC 1681, 1691. AS TO THE BINDING FORCE OF THE NON STATUTORY GUIDELINES, REFERENCE MAY BE MADE TO NARENDRE KUMAR MAHESWARI V. UNION OF INDIA-(1990) (SUPP) SCC 440, 509-10 (SC). IT MAY BE THAT CERTAIN ADMINISTRATIVE INSTRUCTIONS ARE IN THE NATURE OF GUIDELINES AND THEY DO NOT HAVE STATUTORY FORCE.- UNION OF INDIA V. S. L. ABBAS, JT 1993(3) SC 678, 680. IF THE LAW REQUIRES THAT A CERTAIN TAX TO BE COLLEC TED, IT CANNOT BE GIVEN UP, AND ANY ASSURANCE THAT IT WOULD NOT BE COLLECTED, WOULD NOT BIND THE GOVERNMENT, WHENEVER IT CHOSE TO COLLECT IT. THERE IS NO ESTOPPEL AGAINST A STATUTE- MATHRA PRASAD & SONS V. STATE OF PUNJAB, (1962) 13 STC 180 (SC). A CIRCULAR ISSUED BY THE BOARD WOULD BE BINDING ON ALL OFFICERS AND PERSONS EMPLOYED IN THE EXECUTION OF THE ACT, BUT NO INSTRUCTION OR CIR CULAR CAN GO AGAINST THE PROVISIONS OF THE ACT.- STATE BANK OF TRAVANCORE V. CTT, (1986) 1 58 ITR1 02 (SC). EXECUTIVE INSTRUCTIONS CAN SUPPLEMENT A STATUTE OR COVER AREA S TO WHICH THE STATUTE DOES NOT EXTEND. BUT THEY CANNOT RUN CONTRARY TO STATUTORY PROVISION S OR WHITTLE DOWN THEIR EFFECT- STATE OF MADHYA PRADESH V. G. S. DALI & FLOUR MILLS (1991 ) 187 ITR 478, 499 (SC). 3 A CIRCULAR OF THE BOARD ISSUED UNDER SECTION 119 CA NNOT OVERRIDE OR DETRACT FROM THE ACT, INASMUCH AS WHAT SECTION 119 HAS EMPOWERED IS TO ISSUE ORDERS, INSTRUCTIONS OR DIRECTIONS FOR THE PROPER ADMINISTRATION OF THE ACT OR FOR SUCH OTHER PURPOSES SPECIFIED IN SUB SECTION (2) OF THAT SECTION. SUCH AN ORDER, INSTRUCTION OR DIRECTION CANNOT OVERRIDE THE THE PROVISIONS OF THE ACT; THAT WOULD BE DESTRU CTIVE OF THE KNOWN PRINCIPLES OF LAW AS THAT WOULD REALLY AMOUNT TO GIVING POWER TO A DE LEGATED AUTHORITY TO EVEN AMEND THE PROVISIONS OF LAW ENACTED BY PARLIAMENT KERALA FINA NCIAL CORPORATION V. CIT, (1994) 210 1TR129, 135 (SC). THE ORDERS, INSTRUCTIONS AND DIRECTIONS OF THE CBDT CONTEMPLATED BY SECTION 119(1) MAY CONTROL THE EXERCISE OF THE POWER OF THE OFFICE RS OF THE DEPARTMENT IN MATTERS ADMINISTRATIVE BUT NOT QUASI JUDICIAL. THE PROVISO TO SECTION 119(1) DOES NOT IMPLY THAT THE BOARD MAY GIVE ANY DIRECTIONS OR INSTRUCTIONS T O THE AO OR TO CIT IN EXERCISE OF HIS QUASI JUDICIAL FUNCTIONS SIRPUR PAPER MILLS LTD V . CWT (1970) 77 ITR 6 (SC). THEREFORE, HE REQUESTED TO UPHELD THE ACTION OF LD. CIT(A). 4. AFTER HEARING THE RIVAL SUBMISSIONS AND ON CAREF UL PERUSAL OF MATERIALS AVAILABLE ON RECORD, THE OBSERVATIONS OF LD.CIT(A) ON THE ISSUE OF IGNORING THE SELECTION OF SCRUTINY PROCEEDINGS AS PER THE INSTRU CTION OF CBDT NO.10/2004 DATED 20.09.2004 ARE AS UNDER :- 3.3 I HAVE CAREFULLY CONSIDERED THE ADDITIONAL GRO UND TAKEN BY THE APPELLANT. IT IS AN UNDISPUTED FACT THAT THE RETURN WAS FILED ON 13-10- 2004 AND FIRST NOTICE U/S.143(2) WAS ISSUED ON 11-07- 2005. THUS AT FIRST SHY, IT DOES A PPEAR THAT THE SELECTION WAS CONTRARY TO THE BOARDS INSTRUCTION. HOWEVER IT IS TO BE NOTED THAT BOARD ISSUES INSTRUCTIONS FOR SELECTION OF CASES FOR SCRUTINY EVERY YEAR. AS THE CASE WAS FINALLY TAKEN UP FOR SCRUTINY DURING THE F.Y 2005-06, INSTRUCTIONS REGARDING SELE CTION OF CASES IN F.Y 2005-06 WERE ALSO PURSUED. IT IS SEEN THAT THESE FORMED PART OF THE DOCUMENT OF CENTRAL ACTION PLAN FOR F.Y 2005-06 WHEREIN VARIOUS CRITERIA FOR SELECT ION OF CASES WERE PRESCRIBED. THE OPENING SENTENCE OF THE RELEVANT SECTION READS IN SUPERSESSION OF THE EARLIER INSTRUCTIONS ON THE ABOVE SUBJECT THE BOARD HEREBY LAYS DOWN THE FOLLOWING PROCEDURE FOR SELECTION OF RETURN/CASES NON-CORPORATE ASSESSE E FOR SCRUTINY DURING THE CURRENT F.Y. I.E.2005-06(EMPHASIS SUPPLIED). IT MAY BE MENTIONE D THAT THE ABOVE DOCUMENT I.E CENTRAL ACTION PLAN 2005-06 CAME OUT IN MAY 2005 I. E MUCH AFTER THE INSTRUCTION 10 DATED 20-09-2004 RELIED UPON BY THE APPELLANT. THER EFORE THE SAID INSTRUCTION WAS SUPERSEDED BY THE PROCEDURE FOR SELECTION PRESCRIBE D IN CENTRAL ACTION PLAN FOR F.Y.2005-06. IT MAY BE MENTIONED THAT IN THE CENTRA L ACTION PLAN IT IS NOWHERE MENTIONED THAT IT IS APPLICABLE ONLY IN RESPECT OF THE RETURNS FILED DURING THE CURRENT F.Y. THEREFORE THE NATURAL INFERENCE IS THAT IT WAS APPL ICABLE TO ALL THE RETURN AVAILABLE FOR SELECTION BEFORE THE ASSESSING OFFICER INCLUDING TH E RETURNS FILED IN THE PRECEDING YEAR WHERE THE STATUTORY LIMITATION FOR ISSUE OF NOTICE U/S.143(2) HAD NOT EXPIRED. SINCE THE ASSESSING OFFICER WAS SATISFIED THAT THE APPELLANT S CASE WAS REQUIRED TO BE TAKEN UP FOR SCRUTINY, HE AFTER FOLLOWING DUE PROCEDURE, INCLUDI NG OBTAINING APPROVAL OF CHIEF COMMISSIONER, SELECTED THE CASE FOR SCRUTINY AND IS SUED NOTICE U/S.143(2). THUS WHILE SELECTION OF APPELLANTS RETURN FOR SCRUTINY, PRIMA FACIE, APPEARS TO BE AGAINST INSTRUCTION NO.10 DATED 20-09-05, ON CLOSER EXAMINATION IT IS S EEN THAT IT WAS IN ACCORDANCE WITH THE SUBSEQUENT INSTRUCTION ISSUED BY THE CENTRAL BO ARD OF DIRECT TAXES IN F.Y.2005-06. 4 IN FACT THE INSTRUCTION RELIED UPON BY THE APPELLAN T WAS NO LONGER IN EFFECT AT THE TIME OF SELECTION, HAVING BEEN SUPERSEDED BY THE SUBSEQUENT INSTRUCTION. THEREFORE IT IS HELD THAT THERE WAS NO IRREGULARITY IN SELECTION OF APPELLANT S CASE FOR SCRUTINY BY THE ASSESSING OFFICER AS THE SAME WAS NOT CONTRARY TO THE BOARDS INSTRUCTION PREVAILING ON THE RELEVANT POINT OF TIME. THE ADDITIONAL GROUND IS ACCORDINGLY REJECTED. 4.1. THOUGH THE LD. CIT(A) HAS CONTENDED THAT THE C ENTRAL ACTION PLAN FOR 2005-06 CAME OUT IN MAY, 2005 I.E. MUCH AFTER THE INSTRUCTI ON NO.10 DATED 20 TH SEPTEMBER, 2004 FOR THE FINANCIAL YEAR 2005-06. IT IS NOWHERE MENTIONED THAT IT IS APPLICABLE ONLY IN RESPECT OF THE RETURN FILED DURING THE FINANCIAL YEAR 2005-06. HOWEVER NEITHER THE LD. CIT(A) NOR THE LD. DR APPEARING ON BEHALF OF THE RE VENUE HAS CONTENDED THAT THE CENTRAL ACTION PLAN IS IN SUPPRESSION OF THE INSTRU CTION NO.10 OF THE CBDT DATED 20 TH SEPTEMBER, 2004. THEREFORE BY PLACING RELIANCE ON T HE DECISION OF HONBLE CHATTISGARH HIGH COURT IN THE CASE OF SUNITA FINLE ASE LTD. (SUPRA) WE DO NOT FIND ANY REASON TO DEVIATE FROM THE DECISION TAKEN BY TH E COORDINATE BENCH IN THE CASE OF AJANTA FINANCIAL SERVICES PVT.LTD. (SUPRA) WE SET A SIDE THE ORDERS OF THE REVENUE AUTHORITIES AND ALLOW THE APPEAL OF ASSESSEE. 4.2. IN THIS CONNECTION WE CONSIDER IT FIT TO INCOR PORATE THE RELEVANT PORTION OF INSTRUCTION NO.10/2004 DATED 20 TH SEPTEMBER, 2004 OF THE CBDT CIRCULAR IN RESPECT OF SELECTION OF SCRUTINY FOR NON-CORPORATE ASSESSES. P ARA 4 OF THE INSTRUCTION NO.10 DATED 20.09.2004 READS AS UNDER :- 4. THE PROCESS OF SELECTION OF CASES FOR SCRUTINY FOR RETURNS FILED UPTO 31.03.2004 MUST BE COMPLETED BY 15 TH OCTOBER, 2004. FOR RETURNS FILED DURING THE CURREN T FINANCIAL YEAR 2004-05, THE SELECTION OF CASES FOR SCRUTINY WILL H AVE TO BE COMPLETED WITHIN 3 MONTHS OF THE DATE OF FILING OF THE RETURN. AND THE ORDER SHEET ENTRIES WHICH WERE REFERRED BY THE LD.COUNSEL FOR ASSESSEE AND PLACED AT PAGE NO.35 OF THE PAPER BOOK ARE AS UNDER :- 18/11/04 SEEN RETURN FILED ON 13/10/04 SHOWING A T OTAL INCOME OF 77,440/- RETURN PROCESSED U/S 43(1) ON RETUR NED INCOME. SD/- 20/06/05 SELECTED FOR SCRUTINY AS PER APPROVAL OF THE LD.CCIT,KOL-IX VIDE LETTER NO.CCIT/KOL-IX/ SCRUTINY APPROVAL/05- 06/200 DT.14.06.05. SD/- 11/07/05 NOTICE U/S 143(2)(II) & 142(1) ISSUED. SD/- 5 4.3. WE CONSIDER IT FIT TO INCORPORATE THE RELEVANT PORTION OF THE TRIBUNAL ORDER RELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE WHICH IS AS UNDER :- 6. WE FIND THAT THE HONBLE CHATTISGARH HIGH COURT IN SUNITA FINLEASE LTD.S CASE HAS ALSO CONSIDERED THE DECISION OF HONBLE SUPREME COU RT IN THE CASE OF UCO BANK (1999) 237 ITR 889 AND QUOTED FROM PAGE 896 AS UNDER :- SUCH INSTRUCTIONS MAY BE BY WAY OF RELAXATION OF A NY OF THE PROVISIONS OF THE SECTIONS SPECIFIED THERE OR OTHERWISE. THE BOARD THUS HAS PO WER, ITER ALIA, TO TONE DOWN THE RIGOUR OF THE LAW AND ENSURE A FAIR ENFORCEMENT OF ITS PROVISIONS, BY ISSUING CIRCULARS IN EXERCISE OF ITS STATUTORY POWERS UNDER SECTION 119 OF THE INCOME-TAX ACT, WHICH ARE BINDING ON THE AUTHORITIES IN THE ADMINISTRATION OF THE ACT. UNDER SECTION 119(2) (A), HOWEVER, THE CIRCULARS AS CONTEMPLATED THEREIN CANN OT BE ADVERSE TO THE ASSESSEE. THUS, THE AUTHORITY WHICH WIELDS THE POWER FOR ITS OWN AD VANTAGE UNDER THE ACT IS GIVEN THE RIGHT TO FORGO THE ADVANTAGE WHEN REQUIRED TO WIELD IT IN A MANNER IT CONSIDERS JUST BY RELAXING THE RIGOUR OF THE LAW OR IN OTHER PERMISSI BLE MANNERS AS LAID DOWN IN SECTION 119. THE POWER IS GIVEN FOR THE PURPOSE OF JUST, PR OPER AND EFFICIENT MANAGEMENT OF THE WORK OF ASSESSMENT AND IN PUBLIC INTEREST. IT IS A BENEFICIAL POWER GIVEN TO THE BOARD FOR PROPER ADMINISTRATION OF FISCAL LAW SO THAT UNDUE H ARDSHIP MAY NOT BE CAUSED TO THE ASSESSEE AND THE FISCAL LAWS MAY BE CORRECTLY APPLI ED. HARD CASES WHICH CAN BE PROPERLY CATEGORIZED AS BELONGING TO A CLASS, CAN T HUS BE GIVEN THE BENEFIT OF RELAXATION OF LAW BY ISSUING CIRCULARS BINDING ON THE TAXING A UTHORITIES. . 4.4. KEEPING IN VIEW OF THE ABOVE AND THE FACTS RE LATING TO ITA NO.1426/KOL/2011 THIS TRIBUNAL HAS SQUASHED THE ASSESSMENT FRAMED U/ S 143(1) OF THE IT ACT SINCE THE ISSUANCE OF NOTICE U/S 143(2) OF THE ACT IS BEYOND THE DATES SPECIFIED IN INSTRUCTION NO.9 DATED 20 TH SEPTEMBER, 2004. 4.5. AT THIS JUNCTURE WE WOULD LIKE TO CLARIFY THA T INSTRUCTION N0.9/2004 DATED 20 TH SEPTEMBER, 2004 REFERRED BY THE TRIBUNAL IN ITA NO. 1426/KOL/2011IN THE CASE OF AJANTA FINANCIAL SERVICES PVT. LTD. (SUPRA) AS WELL AS THE HONBLE CHATTISGARH HIGH COURT IN THE CASE OF SUNITA FINLEASE LTD. (SUPRA) A RE IN RESPECT OF THE CORPORATE ASSESSES. HOWEVER, IN THE CASE OF THE NON-CORPORATE ASSESSES SIMILAR INSTRUCTION HAS BEEN ISSUED IN INSTRUCTION NO.10 DATED 20.09.2004. IN THIS CASE ALSO AS PER THE ORDER SHEET ENTRIES INCORPORATED IN THE PRECEDING PARAGRA PHS, IT IS OBSERVED THAT THE SELECTION OF SCRUTINY WAS MADE ON 20.06.2005 AND NOTICE U/S 1 43(2)(II) AND 142(1) WAS ISSUED ON 11.07.2005 I.E. BEYOND THE PERIOD OF THE SCRUTIN Y AS SPECIFIED IN INSTRUCTION NO.10/2004 DATED 20.09.2004. THEREFORE, KEEPING IN VIEW OF THE DECISION OF 6 CHATTISGARH HIGH COURT IN THE CASE OF SUNITA FINLEA SE LTD (SUPRA) AS WELL AS TRIBUNALS ORDER IN ITA NO.1426/KOL/2011 IN THE CASE OF AJANTA FINANCIAL SERVICES PVT. LTD.(SUPRA) WE SET ASIDE THE ORDERS OF THE REVENUE AUTHORITIES BY SQUASHING THE ORDER OF THE ASSESSMENT FRAMED U/S 143(3) OF THE ACT SINCE T HE ISSUE OF NOTICE U/S 143(2) OF THE ACT IS BEYOND THE DATED AS SPECIFIED IN CBDT INSTRU CTION NO.10/2004 DATED 20.09.2004. 5. IN THE RESULT THE APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 12.10.2012. SD/- SD/- , , , , MAHAVIR SINGH, JUDICIAL MEMBER . .. . ! ! ! !. .. . , , , , '# '# '# '# , C.D.RAO, ACCOUNTANT MEMBER. ( (( (!# !# !# !#) )) ) DATE: 12.10.2012. R.G.(P.S.) 7 '3 . ,4 5'4'6- COPY OF THE ORDER FORWARDED TO: 1. SHRI RADHASHYAM MAL, PROP.MAL GROUND NUT INDUSTRIES , VILL & PO-RATULIA, PURBA MEDINIPUR, WEST BENGAL. PIN:721139. 2 I.T.O., WARD-4, HALDIA. 3. THE C.I.T. 4. CIT(A)-XXXIII, KOLKATA. 5. THE CIT(DR), KOLKATA BENCHES, KOLKATA -4 ,/ TRUE COPY, '3%0/ BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES 8