ITO, Haridwar V. Shri Vijay Kumar, Haridwar

ITA 5844/DEL/2010

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1730 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 7 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 22-06-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 22-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J P CHANDREKAR
• Assessee Lawyers: DR RAKESH GUPTA; ASHWANI JUNEJA
• Section: 143(3); 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : H : NEW DELHI BEFORE SHRI I.C. SUDHIR, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ITA NO . 5844 /DEL/201 0 ASSESSMENT YEAR: 2005 - 06 INCOME TAX OFFICER, VS. SH. VIJAY KUMAR, S/O - SH. GANGA WARD - 3, HARIDWAR RAM SARVAN NATH NAGAR, OPP - DAYA NIKETAN, HARIDWAR. (PAN: ADPPK0341R ) (APPELLANT) (RESPONDENT) APPELLANT BY : SH. J.P. CHANDREKAR, SR. DR RESPONDENT BY: SH. (DR.) RAKESH GUPTA, FCA & SH. ASHWANI JUNEJA, FCA DATE OF HEARING: 25.06.2015 DATE OF PRONOUNCEMENT: 12.08.2015 ORDER PER INTURI RAMA RAO, A.M. : THIS IS AN APPEAL FILED BY THE REVENUE FOR THE ASSESSMENT YEAR 2005 - 06 AGAINST THE ORDER OF CIT(A) DATED 15.09.2010 RAISING THE FOLLOWING GROUND OF APPEAL: I. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS THAT THE A.O. HAS NOT CORRECTLY SELECTED THE CASE OF A.Y. 2005 - 06 ON THE BASIS OF GUIDELINES ISSUED BY THE CBDT IN F.Y. 2006 - 07 IN WHICH A.O. IS BOUND TO SCRUTINY ALL THE ASSESSMENTS PERTAINING TO SURVEY CONDUCT ED U/S 133A OF THE I.T. ACT. II. THE LD. CIT(A) HAS EARNED IN LAW AND ON FACTS THAT THE LETTER & SPIRIT OF THE GUIDELINES ISSUED BY THE CBDT IN F.Y. 2006 - 07 REGARDING SELECTION OF CASES FOR SCRUTINY HAS BEEN RESTRICTED ONLY TO THE FINANCIAL YEAR IN WHICH SURV EY WAS CONDUCTED WHILE PERUSAL OF GUIDELINES ISSUED FOR FURTHER YEARS REVEAL THAT GUIDELINES CHANGED ONLY LATER TO INCLUDE ONLY THE FINANCIAL YEAR IN WHICH SURVEY WAS CONDUCTED I.E. 2009 - 10 ONWARDS. 2 III. WHETHER CIT(A) WAS CORRECT IN DECLARING THE ORDER NULL & VOID WHEN THE CASE WAS SELECTED UNDER COMPULSORY SCRUTINY AS PER GUIDELINES ISSUED BY THE CBDT IN F.Y. 2006 - 07 TO SELECT THE CASE UNDER SCRUTINY AND ALSO AS THE PAPERS/DOCUMENTS RELATING THE ASSESSMENT YEAR 2005 - 06 WERE IMPOUNDED DURING THE SURVEY CONDUCT ED U/S 133A OF THE I.T. ACT, 1961 IN WHICH UNACCOUNTED TRANSACTIONS WERE FOUND. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE RESP ONDENT ASSESSEE IS INDIVIDUAL. HE IS ENGAGED IN THE BUSINESS OF TRADING OF BIDI & MATCH BOXES. THE RESPONDENT ASSESSED FILED THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2005 - 06 ON 31.10.2005, DECLARING TOTAL INCOME OF RS. 2,39,437/ - / - . SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY ASSESSMENT BY IS SUING NOTICE UNDER SECTION 143 (2 ) OF THE INCOME - TAX ACT, 1961 (FOR SHORT THE A CT ) ON 30 TH AUGUST, 2006 AND FINALLY THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT VIDE ORDER DATED 31.12.2007 AT A TOTAL INCOME OF R S. 23,54,532/ - , AFTER MAKING SOME DISALLOWANCE . BEING AGGRIEVED, APPEAL WAS FILED BEFORE THE CIT(A) WHO VID E ORDER DATED 15 TH SEPTEMBER, 2010, HELD THAT THE ASSESSMENT MADE WAS IN VIOLATION OF GUIDELINES PRESCRIBED FOR SELECTION OF THE SCRUTINY ASSESSMENT AND THEREFORE THE ASSESSMENT WAS DECLARED NULL AND VOID. BEING AGGRIEVED, THE REVENUE IS BEFORE US WITH THE PRESENT APPEAL. 3. IT WAS ARGUED BY LEARNED SR. DR THAT THE CIT(A) OUGHT NOT HAVE CANCELLED THE ASSESSMENT BECAUSE THOUGH THE ASSESSMENT WAS MADE IN VIOLATION OF THE GUIDELINES PRESCRIBED FOR SCRUTINY ASSESSMENT, INASMUCH AS, THE GUIDELINES WERE ONLY IN TERNAL INSTRUCTION FOR THE PURPOSES AND USE OF THE DEPARTMENTAL OFFICERS THESE ARE EVEN BINDING ON THE ASSESSING OFFICER. 3 4. ON THE OTHER HAND, THE LEARNED AUTHORIZED REPRESENTATION ARGUED THAT THE ORDER PASSED BY THE CIT(A) IS IN CONFORMITY WITH THE RULI NGS OF TRIBUNALS, THE HIGH COURTS AND THEREFORE, THE ORDER OF CIT(A) SHOULD BE UPHELD. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IN THIS CASE, THE SHORT QUESTION WHICH WE SHOULD ANSWER IS WHETHER THE ASSESSM ENT MADE IN VIOLATION OF THE GUIDELINES PRESCRIBED FOR SELECTION OF THE SCRUTINY CASES IS VOID OR NOT. IN THIS CASE , ADMITTEDLY THE CASE WAS TAKEN FOR SCRUTINY ASSESSMENT ON THE GROUND OF SURVEY CONDUCTED IN THE ASSESSEE S CASE AND IS NOT A CASE OF SELECTI VE SCRUTINY FOR WHICH THE PRIOR APPROVAL OF CCIT IS REQUIRED. AS PER THE GUIDELINES ISSUED FOR THE FINANCIAL YEAR 2006 - 07, A CASE CAN BE TAKEN FOR SCRUTINY IN THE MATTER WHERE THE SURVEY WAS CONDUCTED , WHICH MEANS THAT THE GUIDELINES ARE APPLICABLE ONLY IN RESPECT OR THE YEAR IN WHICH SURVEY WAS CONDUCTED , OR OTHERWISE THE ASSESSING OFFICER HAS TO SEEK THE PRIOR APPROVAL OF THE CCIT. ADMITTED LY, IN THIS CASE THERE WAS NO SUCH PRIOR APPROVAL OF THE CCIT AND THE SURVEY WAS CONDUCTED ON 1 ST SEPTEMBER, 2005 I.E . RELEVANT TO THE ASSESSMENT YEAR 2006 - 07. THERE ARE NO OTHER GUIDELINES WHICH ARE APPLICABLE TO THE ASSESSEE S CASE, INASMUCH AS, THE PROFIT RETURNED BY HIM I S HIGHER THAN THE EARLIER YEARS, WHICH FACTS HAS NOT BEEN DISPUTED BY THE DEPARTMENTAL REPRESENTA TIVE. THE ASSESSING OFFICER HAD IN FACT CONFIRMED VIDE HIS LETTER NO. 1032, DT. 18.01.2010 , COMMUNICA TED TO THE CIT(A), THAT THE CASE HAS BEEN SELECTED AS PER COMPULSORY SCRUTINY, AS PER PARA 2 ( B ) OF ACTION P LAN, 2006 - 07. THEREFORE, IT PROVES THAT THE CASE WAS SELECTED FOR SCRUTINY IN VIOLATION 4 OF THE GUIDELINES PRESCRIBED FOR SELECTION OF THE SCRUTINY CASES. THEN THE QUESTION THAT CROPS UP AS TO WHETHER THIS KIND OF ASSESSMENT CAN HELD TO BE VALID IN LAW. THE GUIDELINES ISSUES BY CBDT ARE ALWAYS IN PUBLIC DOMAIN AND ISSUED PURSUANT TO THE STATUTORY POWER CONFERRED UNDER THE PROVISIONS OF SECTION 119 OF THE ACT. IT IS EQUALLY SETTLED LAW THAT CBDT INSTRUCTIONS AND GUIDELINES ARE BIND ING ON THE AUTHORITIES EMPLOYED IN THE EXECUTION OF THE PROVISIONS OF THE AC T I.E. ASSESSING OFFICER ETC. IT IS ALSO SETTLED PRINCIPLE THAT THE BENEVOLENT CIRCULARS WHICH RELAX THE VIGOUR OF THE LAW CAN BE ENFORCED BY THE ASSESSEE. THE RELIANCE IN THIS REGARD CAN BE PL ACED ON THE DECISIONS OF THE HON BLE SUPREME COURT IN THE CASES OF NAVNITAL C. JAVERI VS. K.K. SEN, APPELLATE ASSTT. COMMISSIONER OF INCOME TAX, 56 ITR 198 (SC) AND ELLERMAN LINES LTD. VS. CIT, [1971] 82 ITR 913 . THE HON BLE SUPREME COURT IN THE CASE OF UNION OF INDIA VS. AJADI BACHAO ANDONAL, 263 ITR 706 HELD THAT S O LONG AS A CIRCULAR CONTAINS ORDERS, INSTRUCTIONS OR DIRECTIONS PERTAINING TO PROPER ADMINISTRATION OF THE ACT THIS IS RELATABLE TO THE SOURCE OF POWER I.E. SECTION 119 . IN THE CASE OF BENEVOLENT CIRCULARS IT IS NOT OPEN TO THE DEPARTMENT TO RAISE A CONTE NTION WHICH IS CONTRARY TO THE CIRCULARS AND INSTRUCTIONS VALIDLY IS SUED BY THE BOARD AS HELD IN THE CASE OF J. B. BODA AND COMPANY PVT. LTD. VS. CBDT (SC), 223 ITR 271 (SC). T HEREFORE , THE ISSUE OF NOTICE UNDER THE PROVISIONS OF SECTION 2 OF SECTION 143 IS A CONDITION PRECEDENT FOR FRAMING A VALID ASSESSMENT ORDER AND THIS IS A JURISDICTIONAL ISSUE WHEN THE VERY NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED CONTRARY TO THE PROVISIO NS OF THE CBDT GUIDELINES ETC., THE ASSESSMENT 5 ORDER FRAMED PURSUANT TO SUCH NOTICE , IN OUR CONSIDERED OPINION, IS NULL AND VOID. WE ARE FORTIFIED IN THIS VIEW BY THE DECISION OF HON BLE SUPREME COURT IN THE CASE OF CIT VS. BEST PLASTICS PVT. LTD., 295 ITR 256 (DEL.) AND CIT VS SMT. NAYANA P. DEDHIA, 270 ITR 572 (AP) AND THEREFORE, WE HAVE NO HESITATION IN QUASHING THE ASSESSMENT ORDER DATED 3 1. 12.2007 AND ACCORDINGLY DISMISS THE GROUNDS OF APPEAL FILED BY THE REVENUE. ACCORDING, THE APPEAL FILED BY THE RE VENUE IS DISMISSED. 6. IN THE RESULT, THE APPEAL IS DISMISSED. THE DECISION IS PRONOUNCED IN THE OPEN COURT ON 12 TH AUGUST , 2015. SD/ - SD/ - ( I.C. SUDHIR ) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 12 TH AUGUST , 2015. RK/ - COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI