2004 (8) TMI 99

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....struction No. 1935 dated March 12, 1996? 2. Whether, on the facts and in the circumstances of the case, the Tribunal is correct in holding that the Assessing Officer ought not to have taken up the case for scrutiny?" The relevant facts are mentioned hereinbelow: The respondent is engaged in the business of construction. She constructed a complex during the assessment years 1993-94 to 1996-97. On completion of the project in the assessment year 1996-97, the assessee, after taking into consideration the profit offered in the assessment years 1993-94 and 1994-95, offered the balance profit for taxation in the assessment year 1996-97. The Assessing Officer rejected the books of account maintained by the assessee, referred the matter to....

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....e income declared was at least 30 per cent, more than the income declared in 1995-96, therefore, the assessment itself was bad. The Tribunal accepted this contention. However, learned counsel for the appellant submits that these instructions were not binding on the Tribunal or court or were not available for execution to any judicial authority. There is no dispute about the circular having been issued, which reads as under: "749A. Scrutiny assessment guidelines for assessment year 1996-97. The Income-tax Department has decided not to select returns for the assessment year 1996-97 for detailed scrutiny if the total income declared is at least 30 per cent, more than the total income declared for the assessment year 1995-96. The followin....

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....llow such orders, instructions and directions of the Board. Provided that no such orders, instructions or directions shall be issued (a) so as to require any income-tax authority to make a particular assessment or to dispose of a particular case in a particular manner; or (b) so as to interfere with the discretion of the Appellate Assistant Commissioner in the exercise of his appellate functions'. Under sub-section (2) of section 119, without prejudice to the generality of the Board's power set out in sub-section (1), a specific power is given to the Board for the purpose of proper and efficient management of the work of assessment and collection of revenue to issue from time to time general or special orders in respect of any class of inco....

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.... this judgment, which is clear from the paragraph quoted above, held in no uncertain terms that: (a) the authorities responsible for administration of the Act shall observe and follow any such orders, instructions and directions of the Board; (b) such instructions can be by way of relaxation of any of the provisions of the section specified therein or otherwise; (c) the Board has power, inter alia, to tone down the rigour of the law and ensure a fair enforcement of its provisions by issuing circulars in exercise of its statutory powers under section 119 of the Income-tax Act; (d) the circulars can be adverse to the Income-tax Department, but still, are binding on the authorities of the Income-tax Department, but cannot be bindin....