HIGH COURT OF DELHI

Commissioner of Income-tax

v.

Best Plastics (P.) Ltd.

T. S. THAKUR AND J. M. MALIK, JJ.

IT APPEAL NO. 951 OF 2005

APRIL 5, 2006

Section 119 read with section 280A of the Income-tax Act, 1961 - Central Board of Direct Taxes - Instructions to subordinate authorities - Assessment year 1995-96 - Assessee’s return was taken up for scrutiny in violation of CBDT circular according to which if returned income is 30 percent more than income of earlier assessment year, assessee’s case should not be scrutinised under Instruction No. 1922 dated 9.3.1995 - Whether since circulars issued by CBDT are binding on officers of department, assessment order passed pursuant to such scrutiny was to be set aside - Held, yes

FACTS

The assessee’s return was taken up for scrutiny in violation of the CBDT circular according to which if the returned income is 30 per cent, more than the income of the earlier assessment year, the case of the assessee should not be scrutinised under Instruction No. 1922 dated March 9, 1995 which extended the operation of the circulars to the assessment year 1995-96 also. The assessment order passed by the Assessing Officer pursuant to such scrutiny set aside by the Commissioner (Appeals).

On revenues’ appeal u/s 260A

HELD

The Commissioner (Appeals) and the Tribunal relying upon a decision of the Supreme Court in the case of Commissioner of Customs v. Indian Oil Corpn. Ltd. [2004] 267 ITR 272/136 Taxman 491 held that the circulars issued by the CBDT are binding on the officers of the department no substantial question of law arose for consideration. In the light of the settled legal position emanating from the judgment of the Supreme Court. Accordingly the appeal was to be dismissed. [para 3]

CASE REVIEW:

Commissioner of Customs v. Indian Oil Corpn. Ltd. [2004] 267 ITR 272 (SC) - Followed and UCO Bank v. CIT [1999] 237 ITR 889.