TaxTMI 
TaxTMI 
2012 (8) TMI 778
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....sued by the Assessing Officer. 3. The brief facts are that the petitioner, an incorporated company engaged in the business of trading of telecom products and also providing consultancy services, had entered into the understanding with another service provider which had a valid telecom license. This was to provide services in designing, marketing and servicing of the brand "Virgin Mobile Products". The petitioner claims that its relationship with its distributors is on principal to principal basis under which the property in goods are transferred by it to the distributors through valid invoices by charging applicable VAT. For the concerned assessment year, the AO after a survey conducted on 18.11.2011 in terms of Section-133A of the Incom....
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.... demand immediately failing which coercive measures shall be taken to recover the demand. Yours faithfully" 6. It is contended that the impugned order is in flagrant violation of the principles of natural justice besides not disclosing any application of mind. Learned counsel contended that Section 220 (6) of the Income Tax Act pre-supposed an application of mind by the concerned authority invested with the power, when it talked of use of discretion. Counsel also relied on a Division Bench ruling of this Court in KLM Royal Dutch Airlines and Anr. v. Deputy Director of Income Tax, (2011) 332 ITR 224 (Delhi) in support of the contention that the order should be a composite one and specifically deal with various elements such as existenc....
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..... The Board desire that the above observations may be brought to the notice of all the ITOs working under you and the powers of stay of recovery in such cases up to the stage of first appeal may be exercised by the IAC/CIT. XXX XXX XXX" 8. Similarly, counsel relied upon the Circular No.530 dated 6.3.1989 which reads as follows: - "Circular No.530 dated 6th March 1989 Exercise of discretion under S. 220(6) of the IT Act, 1961 to treat the assessee as not being in default in respect of the amounts disputed in first appeal pending before Dy. CIT (A)/CIT(A) "1. Under section 220(6) of the I.T. Act, 1961 where an assessee has presented an appeal u/s 246 of the Act before the Deputy Commissioner (Appeals) or the Commissioner (Appea....
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....rther, where it is subsequently found that the assessee has not co-operated in the early disposal of appeal or where a subsequent pronouncement by a higher appellate authority or Court alters the situation referred to in para 2 above, the Assessing officer will no longer be bound by the instructions and will exercise his discretion independently." 9. The last Circular which was relied upon is No.589 dated 16.1.1991. The relevant part of that Circular reads as follows: - "Circular No.589 dated 16th January, 1991 Exercise of discretion under S. 220(6) of the IT Act, 1961 to treat the assessee as not being in default in respect of the amounts disputed in first appeal pending before Dy. CIT (A)/CIT(A) "XXX XXX XXX 3. Representati....
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....rranted on the facts before him. The Instructions relied upon only reinforce the element of discretion; by no means can it be construed as limiting the choice of the AO who may have a greater latitude in taking into account other circumstances depending on the facts of the given case. It is a cardinal principle of construction that when a legislation confers power, its amplitude cannot be cut down by instructions or rules or regulations made by subordinate authorities. Instructions and Rules can only supplement but can never supplant or limit the width of the statutory powers. In this case, the AO - as is evident from a reading of the impugned order - has not applied his mind at all to the facts much less considered what are the circumstanc....