CBDT circulars binding on tax officers barred penalty where assessed income fell below the prescribed limit.

CBDT circulars granting relief where assessed income fell below the specified monetary limit were treated as binding on the Income-tax Officer and enforceable in favour of the taxpayer. Because the assessed income was Rs. 8,640, the statutory penalty under section 271(1)(c) was considered unwarranted on the facts, and the penalty was deleted.

---

---

Issues: Whether penalty under section 271(1)(c) of the Income-tax Act, 1961 was leviable when the income finally assessed was below Rs. 10,000 and the assessee relied on CBDT circulars granting relief in such cases.

Analysis: The circulars issued by the CBDT were held to be binding on the Income-tax Officer and enforceable in favour of the taxpayer. The assessed income stood at Rs. 8,640, which was below the monetary limit referred to in the circulars. On that basis, and on the facts of the case, the levy of penalty was found unwarranted.

Conclusion: Penalty under section 271(1)(c) was held to be not leviable and was deleted in favour of the assessee.

---