2002 (8) TMI 273 - AT - Income Tax

Tribunal Upholds Assessee's Voluntary Disclosure, Bars Scrutiny Assessment

Smt. Nayana P. Dedhia. Versus Assistant Commissioner Of Income-Tax.

Smt. Nayana P. Dedhia. Versus Assistant Commissioner Of Income-Tax. - ITD 086, 398, TTJ 084, 233, Issues Involved:1. Legitimacy of the scrutiny assessment despite the assessee's compliance with the 30% Voluntary Disclosure Scheme.2. Validity of the additions made by the Assessing Officer based on the scrutiny assessment.Summary:Issue 1: Legitimacy of the scrutiny assessment despite the assessee's compliance with the 30% Voluntary Disclosure SchemeThe main ground of appeal was that the Assessing Officer erred in taking up the assessment for scrutiny despite the assessee offering business income above 30% as advertised by the Income-tax department. The assessee argued that a press-release dated 12th March 1996, issued by the Income-tax Department, stated that returns for the assessment year 1996-97 should not be selected for detailed scrutiny if the total income declared was at least 30% more than the total income declared for the assessment year 1995-96, provided certain conditions were met. The assessee claimed to have satisfied these conditions and thus contended that the assessment should not have been taken up for scrutiny.The CIT(A) rejected this claim, stating that the powers vested in an Assessing Officer u/s 143 of the Act entitle them to take up any case for scrutiny if deemed necessary. The CIT(A) noted inconsistencies in the assessee's income declarations over the years and justified the scrutiny on these grounds.The Tribunal, however, held that the assessee deserved to succeed. It was noted that the assessee satisfied the conditions mentioned in the press-release, and the authenticity of the press-release was not questioned. The Tribunal found the argument that the press-release was not published or circulated in the prescribed manner u/r 111B too technical to be accepted. It was deemed unreasonable to expect the assessee to prove the display of the instructions on the notice board of the Assessing Officer. The Tribunal concluded that the Revenue authorities were bound to honor the instructions of the C.B.D.T. contained in the press-release and that the Department was bound by the principle of promissory estoppel not to take up the case for scrutiny.Issue 2: Validity of the additions made by the Assessing Officer based on the scrutiny assessmentGiven the Tribunal's decision on the first issue, it was held that the Assessing Officer was not justified in taking up the case for scrutiny and making the impugned assessment. Consequently, the Tribunal set aside the impugned orders of the Revenue authorities on this ground alone and did not delve into the merits of the other grounds raised by the assessee regarding the additions made in the assessment.Conclusion:In the result, the assessee's appeal was allowed, and the scrutiny assessment and the resultant additions were set aside.