CBDT scrutiny instructions are binding, and assessment made in breach of them raised no substantial question of law.

CBDT circulars and instructions were treated as binding on income-tax authorities in scrutiny selection, so a case taken up in breach of the exclusion norm for sample scrutiny could not be sustained. The stated instruction excluding cases showing income at least 30 per cent above the earlier year was applied for the relevant assessment year, and the assessment and appellate orders were found contrary to that regime. On that basis, no substantial question of law survived, and the appeal was dismissed.

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Issues: Whether the assessment could be sustained when the case had been taken up for scrutiny in breach of the CBDT circular/instructions governing exclusion from sample scrutiny, and whether any substantial question of law arose for consideration.

Analysis: The circulars and instructions of the CBDT were treated as binding on the income-tax authorities. The scrutiny selection was contrary to the stated norm that cases showing income at least 30 per cent more than the earlier year were to be kept of sample scrutiny, and the instruction extending that exclusion for the relevant assessment year was applied. In view of the settled position that such circulars govern departmental action, and since the assessment order and the appellate orders proceeded contrary to that regime, no substantial question of law survived.

Conclusion: The assessment could not be sustained and the appeal was dismissed.

Ratio Decidendi: CBDT circulars and instructions binding on departmental must be followed in scrutiny selection, and an assessment made in breach of such binding instructions does not raise a substantial question of law warranting interference.

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