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of <h1>Assessing officers under section 7 must follow binding higher judicial decisions; local precedents prevail and conflicts resolve in assessee's favour</h1> HC held that an assessing officer making provisional assessments under s.7 must follow decisions of the HC within whose jurisdiction he operates and the ... Construction of s. 7 of the Companies (Profits) Surtax Act, 1964 - Provisional Assessment - binding nature of court decisions on the assessing officer - HELD THAT:- Where there is a conflict between different High Courts, he must follow the decision of the High Court within whose jurisdiction he is (functioning), but if the conflict is between decisions of other High Courts, he must take the view which is in favour of the assessee and not against him. Similarly, if the ITAT has decided a point in favour of the assessee, he cannot ignore that decision and take a contrary view, because that would equally prejudice the assessee. He can, however, reject claims which are clearly and indisputably untenable and about which a different view is not rationally possible. In our opinion, the ITO in making an assessment under s. 7 of the said Act is clearly bound by the decision of single judge or a Division Bench of the court within whose jurisdiction he is operating as well as, of course, a decision of the Supreme Court. The mere fact that an appeal has been preferred against such decision or is pending can make no difference whatever to the binding nature of that decision, so far as the ITO is concerned. In view of this, although it is not necessary, we may make it perfectly clear that the decision appealed against shall continue to be binding on all ITOs operating within the jurisdiction of this court for the purposes of making provisional assessments under s. 7 of the said Act, unless a contrary view is taken by a Division Bench of this court or the Supreme Court. Issues involved: Interpretation of section 7 of the Companies (Profits) Surtax Act, 1964 and the binding nature of court decisions on the assessing officer.Interpretation of Section 7 of the Companies (Profits) Surtax Act, 1964:The appeal concerned the construction of section 7 of the Companies (Profits) Surtax Act, 1964. The court admitted the appeal as there was no prior judgment on the interpretation of this section. However, the court expressed agreement with the interpretation given by the trial judge. The trial judge outlined six key features of a provisional assessment under section 7 and emphasized that the assessing officer is not authorized to reject the return or refuse to accept the factual or legal position shown therein. The court further clarified that the assessing officer must follow decisions of the Supreme Court, High Courts, and ITAT, and cannot ignore decisions in favor of the assessee unless the claims are clearly untenable.Binding Nature of Court Decisions on Assessing Officer:The court emphasized that the assessing officer is bound by decisions of single judges, Division Benches of the court within their jurisdiction, and the Supreme Court, even if appeals are pending against those decisions. The court declared that the decision under appeal would remain binding on all assessing officers within the court's jurisdiction for making provisional assessments under section 7, unless a different view is taken by a Division Bench of the court or the Supreme Court. This ensures consistency and adherence to legal precedents in the assessment process.
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