Commissioner of Income Tax vs Best Plastics P. Ltd.

The Commissioner of Income Tax and the Income Tax Appellate Tribunal have both relied upon a decision of the Supreme Court in Commissioner of Customs, Calcutta Vs. Indian Oil Corporation Ltd. and Another, to have that the circulars issued by the Central Board of Direct Taxes (CBDT) binding on the officers of the Income Tax department. To the same effect is the decision of the Supreme Court in UCO Bank, Calcutta Vs. Commissioner of Income Tax, West Bengal, .

The respondent-assessed''s return was in the instant case taken up for scrutiny in violation of the Central Board of Direct Taxes 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 assessed should not be scrutinised under Instruction No. 1922 dated March 9,1995, extended the operation of the circulars to the assessment year 1995-96 also as is evident from the following paragraphs appearing in the same:

Under Board''s Instruction No. 1917 dated June 3, 1994, certain categories of cases were kept outside the scope of sample scrutiny during the financial year 1994-95. On such category consisted of those assesseds who declared a total income for the assessment year 1994-95 that was more by 30 per cent, of the total income returned for the assessment year 1993-94 subject to the conditions that:

(a) the income for both the assessment years exceeded the basic exemption limit;

(b) the total income for the assessment year 1993-94 was Rp. 5 lakhs or less; and

(c) the tax was fully paid for the assessment year 1994-95 before the return was filed.

Suggestions have been received to extend this scheme for the assessment year 1995-96 also. After considering them, it has been decided that the above norm of exclusion from sample scrutiny could be extended for the assessment }rear 1995-96 also in such cases where the following criteria are satisfied:

(i) the income returned for the assessment year 1995-96 is at least 30 per cent, more than the total income returned for the assessment year''1994-95.

The assessment order passed by the assessing officer has in the light of the above been set aside by the Commissioner which order has been upheld by the Tribunal in appeal. No substantial question of law arises for our consideration in the light of the settled legal position emanating from the aforementioned judgments of the Supreme Court. This appeal accordingly fails and is hereby dismissed.