COMMISSIONER OF INCOME TAX Vs. SUNITA FINLEASE LTD

JUDGEMENT

(1.) The revenues appeal under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal, Bilaspur Bench, Bilaspur (in short "the Tribunal") has been admitted on the following substantial question of law:

(2.) Briefly stated, the facts of the case as projected in the memo of appeal, are that the Assessee filed his return of income on 29-10-2004 declaring total income at Rs. nil. The return was processed/assessed under Section 143(1) of the Income Tax Act, 1961 (in short "the Act, 1961") and the same was selected for scrutiny and assessment was completed on 15-12-2006, on a total income of Rs. 41,26,844. A total sum of Rs. 27,12,120 was disallowed on the ground of excessive premium paid to key-man insurance policy out of an amount of Rs. 90,40,402.

(3.) The appeal preferred by the Assessee was further dismissed by the Commissioner of Income-tax (Appeals). However, the Tribunal accepting the submission of the Assessee that scrutiny of the case has been done in violation of Instruction No. 9/2004 dated 20-9-2004 issued by the Central Board of Direct Taxes (for brevity "the Board") allowed the appeal. It has been further held that the Boards instructions are binding on all the revenue authorities and therefore, selection for scrutiny of the case has not been done as per the Boards instructions referred to, and the assessing officer erred in assuming the jurisdiction under Section 143(2) of the Act in contravention of the Boards instructions in completing the assessment under Section 144, which is bad in law.