M/s. Crystal Phosphastes Ltd, V. ACIT,

ITA 3630/DEL/2009

• Counselvise Citation: 363020114 RSA 2009
• Duration Of Justice: 3 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-11-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 31-10-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 25-08-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DEEPAK SEHGAL
• Assessee Lawyers: GAUTAM JAIN
• Keywords: Business expenditure; Question of law
• Section: 144; 11; 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B NEW DELHI BEFORE SHRI B.R. MITAL : JUDICIAL MEMBER & SHRI B.R. JAIN : ACCOUNTANT MEMBER ITA NO. 3630/DEL/2009 ASSTT. YR: 2006-07 M/S CRYSTAL PHOSPHATES LTD., VS. ASSTT. COMMISSIO NER OF VILLAGE & P.O. NATHPUR, INCOME-TAX, SONEPAT CIRC LE, DISTT. SONEPAT. SONEPAT. PAN: AABCC1978R ITA NO. 4002/DEL/2009 ASSTT. YR: 2006-07 ASSTT. COMMISSIONER OF VS. M/S CRYSTAL PHOSPHATE S LTD., INCOME-TAX, SONEPAT CIRCLE, VILLAGE & P.O. NATHPUR , SONEPAT. DISTT. SONEPAT. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY : SHRI GAUTAM JAIN CA RESPONDENT BY: SHRI DEEPAK SEHGAL SR. DR O R D E R PER B.R. JAIN.: THESE CROSS APPEALS, FROM THE ORDER DATED 20-7-200 9 OF LD. CIT(A), ROHTAK, RAISE FOLLOWING GROUNDS IN RESPECTIVE APPEA LS: ITA NO. 3630/DEL/09 ( ASSESSEES APPEAL) : 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS ERRED BOTH IN LAW AND ON FACTS IN UPHOLDING THE ASSUMPTION OF JURISDICTION OF THE LEARNED ASSISTANT COMMISSION ER OF INCOME TAX TO INITIATE PROCEEDINGS U/S 143(2) OF TH E ACT AND, FRAME ASSESSMENT U/S 144 OF THE ACT DESPITE THE FAC T THAT ITA 3630/DEL/09 & 4002/DEL/09 M/S CRYSTAL PHOSPHATES LTD. 2 INITIATION OF PROCEEDINGS WAS NOT IN ACCORDANCE WIT H CLAUSE (V)(B) OF PARA 2 OF THE INSTRUCTION ISSUED BY CENTR AL BOARD OF DIRECT TAXES FOR SELECTION OF CASES FOR CORPORATE A SSESSEE IN FINANCIAL YEAR 2007-08. 1.1. THAT THE FINDING OF THE LEARNED COMMISSIONER O F INCOME TAX (APPEALS) THAT THE APPELLANT HAD ACQUIESCED TO THE NOTICE ISSUED BY THE AO AND HAS SOUGHT ADJOURNMENT; FOR CH ALLENGING THE JURISDICTION OF THE AO THE APPELLANT SHOULD HA VE APPROACHED THE HIGHER JUDICIARY FOR REDRESSAL OF IT S GRIEVANCE THERE IS NO FORCE IN THE VERSION OF THE APPELLANT T HAT IT HAD WAITED TILL THE DISPOSAL OF ITS PETITION BY THE ADD L. CIT AND CIT AND THE ASSESSMENT ORDER IN ITS CASE WAS PASSED ON 24-12-2008, IS MISCONCEIVED BOTH IN LAW AND ON FACTS AND THEREF ORE COULD NOT VALIDLY BE ADOPTED THE BASIS TO SUSTAIN THE ASS UMPTION OF JURISDICTION. 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) HAS ERRED BOTH IN LAW AND ON FACTS IN UPHOLDING THE DISALLOWANCE OF INTEREST INCURRED AND CLAIMED BY TH E APPELLANT COMPANY ON LEASE AMOUNT OF RS. 4 LACS WITHOUT APPRE CIATING THE FACTS OF THE CASE OF THE APPELLANT COMPANY. 3. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) HAS ERRED BOTH IN LAW AND ON FACTS IN DISALLOWING A SUM OF RS. 42,530/- REPRESENTING THE EXPENDITURE INCURRED BY T HE FIELD STAFF ON THE MARRIAGE OCCASION OF DEALERS ETC. WHICH WAS IN LAW ELIGIBLE BUSINESS EXPENDITURE AND HAD TO BE ALLOWED AS SUCH. 4. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) HAS ERRED BOTH IN LAW AND ON FACTS IN SUSTAINING T HE DISALLOWANCE OF SUM OF RS. 5,11,538/- RESPECT OF FO REIGN TRAVELING EXPENSES INCURRED BY THE APPELLANT COMPAN Y AS AGAINST DISALLOWANCE OF RS. 5 LACS MADE BY THE ASSESSING OF FICER. 5. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) HAS ERRED BOTH IN LAW AND ON FACTS IN UPHOLDING THE DISALLOWANCE OF RS. 1,64,890/- REPRESENTING EXPENDI TURE ON FEES AND SUBSCRIPTION. ITA 3630/DEL/09 & 4002/DEL/09 M/S CRYSTAL PHOSPHATES LTD. 3 6. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) HAS ERRED BOTH IN LAW AND ON FACTS IN UPHOLDING THE ADHOC ADDITION OF RS. 25 LACS OUT OF SELLING AND DISTRIBU TION EXPENSES AND MANUFACTURING EXPENSES CLAIMED BY THE APPELLANT COMPANY. ITA NO. 4002/DEL/09 ( REVENUES APPEAL): 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) HAS ERRED IN LAW AND FACTS IN DELETING THE A DDITION OF RS. 93,18,740/- ON ACCOUNT OF UNSECURED LOANS FROM TWO PERSONS NAMELY M/S BRL FINLEASE LTD. AND M/S CENTUM FINANCE LTD. AS THE ASSESSEE HAS NOT FURNISHED CONFIRMATION OF T HESE TWO TRANSACTIONS AND FAILED TO PROVE THE GENUINENESS AN D CREDITWORTHINESS OF THESE TWO COMPANIES BEFORE THE A.O. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN LAW AND FACTS IN DELETING THE A DDITION OF RS. 60,000/- ON ACCOUNT OF INTEREST CHARGED ON INVESTME NT IN SHARES (UNQUOTED), WHICH WAS MADE BY THE ASSESSING OFFICER UNDER THE PROVISIONS OF SECTION 14A OF THE INCOME-T AX ACT, 1961. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN LAW AND FACTS IN DELETING THE A DDITION OF RS. 18,58,373/- ON ACCOUNT OF INTEREST CHARGED ON ADVAN CES TO SUPPLIES AND SECURITY DEPOSITS WHICH WAS MADE BY TH E A.O. UNDER THE PROVISIONS OF SECTION 14A OF THE INCOME-T AX ACT, 1961. 2. FIRST WE PROCEED TO DEAL WITH THE LEGAL GROUND R ELATING TO ASSUMPTION OF JURISDICTION, RAISED IN GROUND NO. 1 & 1.1 OF AS SESSEES APPEAL. THE ASSESSEE IN GROUND NOS. 1 & 1.1. OF ITS APPEAL HAS CHALLENGED THE JURISDICTION TO INITIATE PROCEEDINGS WHICH ARE CONTRARY TO THE I NSTRUCTIONS ISSUED BY THE CBDT FOR SELECTION OF CASES FOR CORPORATE ASSESSEE IN F.Y. 2007-08. ITA 3630/DEL/09 & 4002/DEL/09 M/S CRYSTAL PHOSPHATES LTD. 4 2.1. FACTS IN BRIEF ARE THAT FOR THE ASSESSMENT YEA R UNDER CONSIDERATION THE ASSESSEE FILED RETURN OF INCOME ON 28-11-2006 DECLA RING INCOME OF RS. 3,97,17,920/-. THE CASE WAS SELECTED FOR SCRUTINY B Y WAY OF NOTICE DATED 17-10-2007 U/S 143(2) OF THE ACT UNDER THE CBDT IN STRUCTIONS CONTAINED IN SCRUTINY GUIDELINES CLAUSE 2(V)(B), WHICH PROVIDES AS UNDER: 2. THE FOLLOWING CATEGORIES OF CASES SHALL BE COMPU LSORILY SCRUTINIZED:- .. . (V)(B) ALL CASES IN WHICH AN APPEAL IS PENDING BEFO RE THE CIT(APPEALS) AGAINST AN ADDITION/ DISALLOWANCE OF R S. 5 LAKHS OR ABOVE, OR THE DEPARTMENT HAS FILED AN APPEAL BEF ORE THE ITAT AGAINST THE ORDER OF THE CIT(APPEALS) DELETING SUCH AN ADDITION/ DISALLOWANCE AND AN IDENTICAL ISSUE IS AR ISING IN THE CURRENT YEAR. HOWEVER, AS IN (I) ABOVE, THE QUANTUM CEILING MAY NOT BE TAKEN INTO ACCOUNT IF A SUBSTANTIAL QUESTION OF LAW IS INVOLVED. 2.2. THE ASSESSEE, DURING THE COURSE OF ASSESSMENT PROCEEDINGS VIDE LETTER DATED 7-12-2007 CHALLENGED THE ASSUMPTION OF JURISD ICTION ON THE GROUND THAT NO ADDITION/ DISALLOWANCE EXCEEDING RS. 5 LACS WAS MADE IN EARLIER YEAR, WHICH WAS PENDING IN APPEAL BEFORE THE CIT(A). FURT HER, THERE WAS NO IDENTICAL ISSUE ARISING IN THE CURRENT YEAR AS ARIS ING IN EARLIER YEAR. HOWEVER, ADD. CIT VIDE ORDER DATED 25-11-2008 AND THE CIT VI DE ORDER DATED 15-12- 2008 REJECTED THE CONTENTION OF THE ASSESSEE AND HE LD THAT NOTICE ISSUED WAS IN ACCORDANCE WITH LAW ON THE GROUND THAT IN ASSESS MENT YEAR 2004-05, ADDITION AGGREGATING TO RS. 5,60,207/- WERE MADE IN ORDER OF ASSESSMENT WHICH WAS PENDING IN APPEAL BEFORE CIT(A). 3. IN FIRST APPEAL, THE CIT(A), HOWEVER, HELD THAT THE NOTICE ISSUED WAS VALID SINCE APPELLANT HAD ACQUIESCED TO THE NOTICE ISSUED BY AO AND SOUGHT ITA 3630/DEL/09 & 4002/DEL/09 M/S CRYSTAL PHOSPHATES LTD. 5 ADJOURNMENT. HE HAS HELD THAT THE ASSESSEE COULD HA VE APPROACHED THE HIGHER JUDICIARY FOR REDRESSAL OF ITS GRIEVANCE THAT JURI SDICTION ASSUMED BY THE AO WAS NOT VALID. 4. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE STAT ED THAT JURISDICTION COULD BE ASSUMED ONLY IF AN ADDITION/ DISALLOWANCE OF RS. 5 LACS OR MORE WAS PENDING IN APPEAL BEFORE THE CIT(A) AND SUCH IDENTI CAL ISSUE ALSO ORIGINATED IN THE YEAR UNDER CONSIDERATION. IT WAS STATED THAT THERE WAS NO ADDITION/ DISALLOWANCE OF RS. 5 LACS IN A.Y. 2004-05 AND MORE OVER THERE WAS NO SUCH IDENTICAL ISSUE ARISING IN THE YEAR UNDER CONSIDERA TION. IN SUPPORT LD. COUNSEL REFERRED TO FOLLOWING ORDER OF THE ITAT: (I) SMT. NAYANA P. DEDHIA VS. ACIT 86 ITD 398 (HYD), AF FIRMED BY HIGH COURT IN THE CASE OF CIT VS. SMT. NAYANA P. DE DHIA 270 ITR 572 (AP. (II) AGGARWAL FARM EQUIPMENTS VS. ITO 148 TAXMANN 33 (MA G.); (III) SUNITA FINLEASE LTD. VS. DCIT 118 TTJ 263 (BILLASPU R) 4.1. IT WAS FURTHER SUBMITTED THAT MERE PARTICIPATI ON IN PROCEEDINGS CANNOT CONFER JURISDICTION AS HAS BEEN HELD BY HONBLE GUJ ARAT HIGH COURT IN THE CASE OF P.V. DOSHI VS. CIT 113 ITR 22 (GUJ.); AND B OMBAY HIGH COURT IN THE CASE OF INVENTORS INDUSTRIAL CORPORATION LTD. 1 94 ITR 548 (BOM.). IT WAS ALSO SUBMITTED THAT THE FINDING OF THE CIT(A) THAT APPELLANT HAD ACQUIESCED TO JURISDICTION BY SEEKING ADJOURNMENT IN RESPONSE TO NOTICE DATED 28-11- 2007 IS FACTUALLY INCORRECT AS WOULD BE SEEN FROM T HE LETTER DATED 18-1-2008 FILED BEFORE THE ASSESSING OFFICER. ITA 3630/DEL/09 & 4002/DEL/09 M/S CRYSTAL PHOSPHATES LTD. 6 5. THE LD. DR IN REBUTTAL REFERRED TO THE ORDER OF ASSESSMENT FOR A.Y. 2004-05 AND SUBMITTED THAT THE DISALLOWANCE/ ADDITI ON IN AGGREGATE WERE MORE THAN RS. 5 LACS AND SINCE THE ISSUE INVOLVED I N THE YEAR UNDER CONSIDERATION WERE MORE OR LESS THE SAME, THEREFORE , THE NOTICE ISSUED WAS IN TERMS OF THE CBDT INSTRUCTION AND HENCE VALID. 6. IN REPLY, THE APPELLANT STATED THAT WHAT IS TO B E CONSIDERED IS AN ISSUE INDIVIDUALLY AND NOT IN AGGREGATE. THE LANGUAGE OF THE INSTRUCTION IS ADDITION OR DISALLOWANCE WHICH IS TO BE IDENTICAL IN ISSUE. ALL THE WORDS ARE IN SINGULAR FORM AND NOT PLURAL AND HENCE THE CONTENTI ON OF THE LD. DR IS NOT JUSTIFIED. 7. WE HAVE CONSIDERED RIVAL SUBMISSIONS OF THE PART IES AND GONE THROUGH THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE UNDI SPUTED FACTS ARE THAT PROCEEDINGS FOR ASSESSMENT FOR THE YEAR UNDER CONSI DERATION WERE COMMENCED BY ISSUE OF A NOTICE DATED 17-10-2007. TH E AUTHORITIES BELOW HAVE HELD THAT SUCH A NOTICE WAS VALID NOTICE, SINC E THE SAME WAS IN ACCORDANCE WITH CLAUSE (V)(B) OF PARA 2 OF THE INST RUCTION ISSUED BY THE CBDT FOR SELECTION OF CASES FOR CORPORATE ASSESSEE FOR F.Y. 2007-08. THE RELEVANT PORTION OF THE INSTRUCTION HAS ALREADY BEE N REPRODUCED BY US HEREINABOVE. THE ORDER OF ASSESSMENT FOR A.Y. 2004- 05 WHICH HAS BEEN MADE THE BASIS FOR ASSUMPTION OF JURISDICTION, SHOW S THAT THE SAME WAS PASSED U/S 143(3) VIDE ORDER DATED 18-12-2006. ACCO RDING TO ORDER, NO DISALLOWANCE WAS MADE IN EXCESS OF RS. 5 LACS THOUG H AGGREGATE OF ALL THE DISALLOWANCES WAS RS. 5,60,207/-.THE ISSUE, THEREFO RE, ARISES WHETHER THE AO WAS CORRECT IN HOLDING THAT SINCE DISALLOWANCE IN AGGREGATE EXCEEDED RS. 5 LACS, THEREFORE, NOTICE WAS VALID. IN OUR OPI NION, SUCH A CONCLUSION IS ITA 3630/DEL/09 & 4002/DEL/09 M/S CRYSTAL PHOSPHATES LTD. 7 CONTRARY TO THE EXPRESS INSTRUCTIONS OF THE CBDT. I N OUR OPINION, THERE HAS TO BE AN ADDITION OR DISALLOWANCE OF RS. 5 LACS OR MOR E AGAINST WHICH AN APPEAL IS PENDING AND SUCH AN ISSUE MUST ALSO ARISE IN THE YEAR UNDER CONSIDERATION. ALL THESE FACTS MUST BE AVAILABLE TO THE AO ON THE DATE OF ASSUMPTION OF JURISDICTION. THE BURDEN IS ON ASSESSING AUTHORITY TO ESTABLISH THAT JURISDICTION WAS ASSUMED IN ACCORDANCE WITH THE INS TRUCTIONS OF THE BOARD. ON FACTS, THERE WAS NO DISALLOWANCE OF RS. 5 LACS OR MORE AND IN ANY CASE NO FINDING IS AVAILABLE FROM THE ORDER OF THE AUTHORIT IES BELOW THAT AN IDENTICAL ISSUE HAD ARISEN IN THE YEAR UNDER CONSIDERATION. MOREOVER, IT IS ALSO SEEN THAT EACH OF THE DISALLOWANCES MADE IN A.Y. 2004-05 WERE LUMP SUM DISALLOWANCES, WHICH CANNOT BE SAID TO BE ARISING IN THE SUCCEEDING YEAR. THUS, IN OUR CONSIDERED OPINION, NOTICE ISSUED U/S 143(2) WAS NOT IN TERMS OF THE INSTRUCTIONS ISSUED BY THE CBDT. NOW THE QUE STION THAT ARISES IS THAT SINCE NOTICE ISSUED WAS NOT IN TERMS OF THE INSTRUC TIONS ISSUED BY THE CBDT, CAN IT BE HELD THAT ASSUMPTION OF JURISDICTION WAS ILLEGAL SO AS TO HOLD THE ENTIRE PROCEEDINGS AS INVALID. IN THIS CONTEXT, WE SEEK TO RELY UPON THE JUDGMENT OF HONBLE ANDHRA PRADESH HIGH COURT IN TH E CASE OF CIT VS. SMT. NAYANA P. DEDHIA 270 ITR 572 (AP), AFFIRMING T HE DECISION OF THE TRIBUNAL, BY HOLDING AS UNDER: A VERY SHORT QUESTION IS INVOLVED. ADMITTEDLY, THE DEPARTMENT ISSUED A CIRCULAR BY WAY OF PRESS RELEASE ON MARCH 12, 1996. THESE GUIDELINES WERE REGARDING 'SCRUTINY ASSESSMEN T GUIDELINES FOR ASSESSMENT YEAR 1996-97'. BY THESE G UIDELINES, IT WAS NOTIFIED THAT THE INCOME-TAX DEPARTMENT HAD DEC IDED NOT TO SELECT RETURNS FOR THE ASSESSMENT YEAR 1996-97 FOR DETAILED SCRUTINY, IF THE TOTAL INCOME DECLARED IS AT LEAST 30 PER CENT. MORE THAN THE TOTAL INCOME DECLARED FOR THE ASSESSM ENT YEAR 1995-96. THE CASE OF THE RESPONDENT BEFORE THE TRIB UNAL WAS THAT THE DEPARTMENT HAD DECIDED NOT TO HAVE DETAILE D SCRUTINY FOR THE ASSESSMENT YEAR 1996-97 IF THE INCOME DECLA RED WAS AT ITA 3630/DEL/09 & 4002/DEL/09 M/S CRYSTAL PHOSPHATES LTD. 8 LEAST 30 PER CENT. MORE THAN THE INCOME DECLARED IN 1995-96, THEREFORE, THE ASSESSMENT ITSELF WAS BAD. THE TRIBU NAL ACCEPTED THIS CONTENTION. HOWEVER, LEARNED COUNSEL FOR THE A PPELLANT SUBMITS THAT THESE INSTRUCTIONS WERE NOT BINDING ON THE TRIBUNAL OR COURT OR WERE NOT AVAILABLE FOR EXECUTION TO ANY JUDICIAL AUTHORITY. THERE IS NO DISPUTE ABOUT THE CIRCULAR HAVIN G BEEN ISSUED, WHICH READS AS UNDER : '749A. SCRUTINY ASSESSMENT GUIDELINES FOR ASSESSMEN T YEAR 1996-97. THE INCOME-TAX DEPARTMENT HAS DECIDED NOT TO SELECT RETURNS FOR THE ASSESSMENT YEAR 1996-97 FOR DETAILE D SCRUTINY IF THE TOTAL INCOME DECLARED IS AT LEAST 3 0 PER CENT. MORE THAN THE TOTAL INCOME DECLARED FOR THE ASSESSMENT YEAR 1995-96. THE FOLLOWING FURTHER CONDITIONS SHOULD BE FULFILLED : (A) THE TOTAL INCOME FOR BOTH THE ASSESSMENT YEARS SHOULD EXCEED THE BASIC EXEMPTION LIMIT ; (B) THE TOTAL INCOME FOR THE ASSESSMENT YEAR 1995- 96 SHOULD NOT EXCEED RS. 5 LAKHS ; AND (C) TAX IS FULLY PAID FOR THE ASSESSMENT YEAR 1996- 97 BEFORE THE RETURN IS FILED. IN THESE CASES THE TAXPAYERS WILL NOT BE REQUIRED T O ATTEND INCOME-TAX OFFICES IN CONNECTION WITH THEIR ASSESSM ENTS. HOWEVER, SOME OF THESE CASES WILL BE SCRUTINIZED IF THERE IS POSITIVE INFORMATION OF TAX EVASION OR THERE IS A LARGE CLAIM OF REFUND.' THE CONDITIONS LAID DOWN IN THE CIRCULAR ARE ALSO FULFILLED BY THE RESPONDENT AND THERE IS NO DISPUTE ON THAT A LSO. NOW, THE ONLY QUESTION, WHICH NEEDS AN ANSWER IS, AS TO WHAT IS THE STATUS OF THESE CIRCULARS. THE CIRCULAR HAD ADMITTEDLY BEE N ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES UNDER SECTION 119 (1) OF THE ACT. WHAT IS THE SCOPE OF SUCH CIRCULARS SHOULD NOT DETAIN US BECAUSE OF THE AUTHORITATIVE PRONOUNCEMENT OF THE H ON'BLE ITA 3630/DEL/09 & 4002/DEL/09 M/S CRYSTAL PHOSPHATES LTD. 9 SUPREME COURT REPORTED IN UCO BANK V. CIT [1999] 23 7 ITR 889. THE SUPREME COURT NOTED (PAGE 895) : 'WHAT IS THE STATUS OF THESE CIRCULARS ? SECTION 11 9(1) OF THE INCOME-TAX ACT, 1961, PROVIDES THAT, 'THE CENTR AL 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 AN D 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 ORDE RS, INSTRUCTIONS OR DIRECTIONS SHALL BE ISSUED (A) SO A S TO REQUIRE ANY INCOME-TAX AUTHORITY TO MAKE A PARTICUL AR 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-SEC TION (2) OF SECTION 119, WITHOUT PREJUDICE TO THE GENERALITY OF THE BOARD'S POWER SET OUT IN SUB-SECTION (1), A SPECIFI C 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 GE NERAL OR SPECIAL ORDERS IN RESPECT OF ANY CLASS OF INCOME S OR CLASS OF CASES, SETTING FORTH DIRECTIONS OR INSTRUC TIONS, NOT BEING PREJUDICIAL TO ASSESSEES, AS TO THE GUIDELINE S, PRINCIPLES OR PROCEDURES TO BE FOLLOWED IN THE WORK RELATING TO ASSESSMENT. SUCH INSTRUCTIONS MAY BE BY WAY OF RELAXATION OF ANY OF THE PROVISIONS OF THE SECTI ONS SPECIFIED THERE OR OTHERWISE. THE BOARD THUS HAS PO WER, INTER ALIA, TO TONE DOWN THE RIGOUR OF THE LAW AND ENSURE A FAIR ENFORCEMENT OF ITS PROVISIONS, BY ISSUING CIRC ULARS 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 ADVANTAGE UNDER THE ACT IS GIVEN THE RIGHT TO F ORGO ITA 3630/DEL/09 & 4002/DEL/09 M/S CRYSTAL PHOSPHATES LTD. 10 THE ADVANTAGE WHEN REQUIRED TO WIELD IT IN A MANNER IT CONSIDERS JUST BY RELAXING THE RIGOUR OF THE LAW OR IN OTHER PERMISSIBLE MANNERS AS LAID DOWN IN SECTION 119. TH E POWER IS GIVEN FOR THE PURPOSE OF JUST, PROPER 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 UND UE HARDSHIP MAY NOT BE CAUSED TO THE ASSESSEE AND THE FISCAL LAWS MAY BE CORRECTLY APPLIED. 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 C IRCULARS BINDING ON THE TAXING AUTHORITIES.' THE SUPREME COURT, IN THIS JUDGMENT, WHICH IS CLEAR FROM THE PARAGRAPH QUOTED ABOVE, HELD IN NO UNCERTAIN TERMS THAT : (A) THE AUTHORITIES RESPONSIBLE FOR ADMINI STRATION OF THE ACT SHALL OBSERVE AND FOLLOW ANY SUCH ORDERS, INSTR UCTIONS AND DIRECTIONS OF THE BOARD ; (B) SUCH INSTRUCTIONS CAN BE BY WAY OF RELA XATION OF ANY OF THE PROVISIONS OF THE SECTION SPECIFIED THEREIN OR OTHERWISE ; (C) THE BOARD HAS POWER, INTER ALIA, TO TON E DOWN THE RIGOUR OF THE LAW AND ENSURE A FAIR ENFORCEMENT OF ITS PRO VISIONS BY ISSUING CIRCULARS IN EXERCISE OF ITS STATUTORY POWE RS UNDER SECTION 119 OF THE INCOME-TAX ACT ; (D) THE CIRCULARS CAN BE ADVERSE TO THE INC OME-TAX DEPARTMENT, BUT STILL, ARE BINDING ON THE AUTHORITI ES OF THE INCOME-TAX DEPARTMENT, BUT CANNOT BE BINDING ON THE ASSESSEE, IF THEY ARE ADVERSE TO THE ASSESSEE ; (E) THE AUTHORITY, WHICH WIELDS THE POWER F OR ITS OWN ADVANTAGE UNDER THE ACT, HAS A RIGHT TO FORGO THE A DVANTAGE WHEN REQUIRED TO WIELD IT IN A MANNER IT CONSIDERS JUST BY RELAXING THE RIGOUR OF THE LAW BY ISSUING INSTRUCTI ONS IN TERMS OF SECTION 119 OF THE ACT. THIS JUDGMENT LEAVES NO ROOM TO DOUBT THA T THE TRIBUNAL ITA 3630/DEL/09 & 4002/DEL/09 M/S CRYSTAL PHOSPHATES LTD. 11 WAS RIGHT IN HOLDING THAT THE INCOME-TAX AUTHORITIE S COULD HAVE NOT SELECTED THE CASE FOR DETAILED SCRUTINY IN VIEW OF THE CIRCULAR ISSUED BY THE BOARD. 7.1. CIT(A) HAS PROCEEDED TO SUPPORT THE INITIATION OF PROCEEDINGS BY HOLDING THAT SINCE THE APPELLANT HAD ACQUIESCED TO THE JURISDICTION BY SEEKING ADJOURNMENT IN RESPONSE TO NOTICE DATED 28-11-2007, THEREFORE ACTION OF THE AO WAS VALID. WE FIND FROM THE RECORD THAT IN RESPO NSE TO NOTICE DATED 28- 11-2007 THE APPELLANT HAD FILED LETTER DATED 18-1-2 008 WHEREIN IT WAS STATED AS UNDER: WITH REFERENCE TO YOUR LETTER DT. 07-01-08,IT IS R ESPECTFULLY SUBMITTED AS UNDER: THAT THE JURISDICTION OVER ABOVE CASE WAS WITH ACIT SONEPAT CIRCLE, SONEPAT AND THE CASE WAS FIXED FOR 09-01-08 AND AS SUCH REPLY TO YOUR NOTICE DT. 28-11-07 COULD NOT BE FILE D DUE TO MISUNDERSTANDING. THE ASSESSEE WAS NEVER INFORMED T HAT JURISDICTION OVER THIS CASE HAS BEEN TRANSFERRED TO YOUR HONOUR. HOWEVER, THE ABOVE MISUNDERSTANDING IS REGRETTED. REGARDING REPLY TO YOUR QUERIES, THE CASE FIXED FOR 18-01-08 WAS ADJOURNED TO 24-01-08 ON THE REQ8UEST OF THE UN DERSIGNED. MADAM, BEFORE THE ASSESSMENT PROCEEDINGS ARE TAKEN UP, THE UNDERSIGNED ONCE AGAIN REQUEST YOUR GOOD SELF TO KI NDLY DISPOSE OFF THE OBJECTIONS DT. 07-12-07 FILED IN YOUR GOOD OFFICE ON 14- 12-07 )(PHOTOCOPY ATTACHED FOR READY REFERENCE) AND OBLIGE. 7.2. FURTHER IN LETTER DATED 7-12-2007 FILED ON 14- 12-2007 THE APPELLANT HAD STATED THAT: SIR, IN ASSESSMENT YEAR 2004-05 YOUR GOOD SELF HAD MADE DISALLOWANCES ON THE ALLEGED GROUND THAT VOUCHERS W ERE NOT PRODUCED BEFORE YOU. HOW ONE CAN IMAGINE THAT VOUCH ERS FOR THIS YEAR ALSO WILL NOT BE PRODUCED UNLESS ONE IS A STROLOGER. ALTHOUGH COMPLETE BOOKS OF ACCOUNTS ALONG WITH VOUC HERS FOR ITA 3630/DEL/09 & 4002/DEL/09 M/S CRYSTAL PHOSPHATES LTD. 12 A/Y 2004-05 WERE PRODUCED BEFORE YOUR GOOD SELF. TH US NO IDENTICAL ISSUE WAS INVOLVED IN THIS CASE. SINCE TH E PROCEEDINGS WERE INITIATED ILLEGALLY AND IN GROSS VIOLATION OF CBDT INSTRUCTIONS, THE SAME SHOULD BE FILED IN VIEW OF J UDGMENT OF ITAT JABALPUR BENCH IN THE CASE OF AGGARWAL FARM EQUIPMENTS VS. ITO REPORTED AT 148 TAXMAN PAGE 33. 7.3. FROM THE AFORESAID LETTER, IT IS EVIDENT THAT APPELLANT HAD CHALLENGED THE INITIATION OF PROCEEDINGS EVEN PRIOR TO LETTER DATED 18-1-2008 AND EVEN IN LETTER DATED 18-1-2008 IT WAS REQUESTED TO DISPOSE OFF THE OBJECTIONS RAISED EARLIER. THUS, IT CANNOT BE HELD THAT THE APPELLANT HAD ACQUIESCED TO THE JURISDICTION. 7.4. WE MAY ALSO REFER TO THE JUDGMENT OF HONBLE D ELHI HIGH COURT IN THE CASE OF DR. NALINI MAHJAN VS. CIT 257 ITR 123 AND T HAT OF HONBLE SUPREME COURT IN THE CASE OF L. HIRDAY NARAIN 78 IT R 26 (SC), WHEREIN IT HAS BEEN HELD THAT CERTAIN THINGS WHICH ARE REQUIRE D TO BE DONE IN PRESCRIBED MANNER TO BE DONE IN THE SAME MANNER. 7.5. THUS, ONCE THE CBDT HAS ISSUED INSTRUCTIONS FO R ASSUMPTION OF JURISDICTION FOR SELECTION OF CASES OF CORPORATE AS SESSES FOR SCRUTINY AND ASSESSMENT THEREOF, THE SAME HAVE TO BE FOLLOWED I N LETTER AND SPIRIT BY THE AO . THE BURDEN LIES ON THE AUTHORITY ASSUMING JURI SDICTION TO SHOW AND ESTABLISH THAT SUCH INSTRUCTIONS HAVE DULY BEEN CO MPLIED AND SATISFIED IN LETTER AND SPIRIT. HOWEVER, IN THE INSTANT CASE, FO R THE REASONS STATED ABOVE, INSTRUCTIONS ISSUED BY THE CBDT ARE NOT SHOWN TO HAVE BEEN SATISFIED FOR ASSUMPTION OF JURISDICTION. THUS, WE ARE IN AGREEM ENT WITH THE CONTENTION RAISED BY THE APPELLANT THAT NOTICE ISSUED U/S 143( 2) OF THE ACT FOR ASSUMPTION OF JURISDICTION WAS NOT IN TERMS OF THE INSTRUCTIONS OF THE CBDT. ITA 3630/DEL/09 & 4002/DEL/09 M/S CRYSTAL PHOSPHATES LTD. 13 HENCE, BOTH THE NOTICE AND THE ASSESSMENT FRAMED AR E HELD TO BE WITHOUT VALID JURISDICTION AND STAND QUASHED AS SUCH. 7.6. SINCE WE HAVE QUASHED THE NOTICE AS WELL THE AS ASSESSMENT, WE DO NOT CONSIDER IT NECESSARY TO RENDER ANY DECISION ON MERITS OF THE OTHER GROUNDS RAISED IN BOTH THESE APPEALS, AS THE NECESS ARY CONSEQUENCE THEREOF SHALL FOLLOW IN THE LIGHT OF JUDGMENT RENDERED BY T HE HONBLE CALCUTTA HIGH COURT IN THE CASE OF RAWATMAL HARAKCHAND VS. CIT 12 9 ITR 346 (CAL.). 8. IN THE RESULT, ASSESSEES APPEAL STANDS ALLOWED AND THAT OF THE DEPARTMENT IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON _______-11-2012. (B.R. MITTAL) (B.R. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: ______-11-2012. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR