COMMISSIONER OF INCOME TAX Vs. NAYANA P DEDHIA

JUDGEMENT

(1.) This is an appeal by the Commissioner of Income Tax, against an order passed by the Tribunal on 20.8.2002. The questions framed by the appellant are; 1. Whether on the facts and in the circumstances of the case the Tribunal is correct in holding that the assessee s case falls under the instructions issued by the Department in Instruction No.1935 dated 12-3-96? 2.Whether on the facts and in the circumstances of the case of 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 herein below:

(2.) 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 project in the assessment year 1996-97, after taking into consideration the profit offered in 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 Departmental Valuation Cell for ascertaining the cost of the construction. The Valuation Cell determined the value of the property at Rs.2,02,15,924/- as against the declared value of Rs.1,43,74,515/-. The assessing officer after making adjustments to the valuation report, completed the assessment under Section 143(3) of the Income Tax Act (Hereinafter referred to as the Act ), by making an addition of Rs.55,93,115/- being the difference in the cost of construction declared by the assessee and as determined by the Valuation Cell. Against the order of the assessing officer, an appeal was preferred by the respondent. The appeal was rejected. Aggrieved by the order of the appellate authority, appeal was preferred before the Income Tax Appellate Tribunal. The Tribunal allowed the appeal. Hence the present appeal by the Department.

(3.) A very short question is involved. Admittedly the Department issued a circular by way of press release on march 12th, 1996. These guidelines were regarding Scrutiny assessment guidelines for assessment year 1996-97 . By these guidelines, it was notified that the Income tax Department had decided not to select returns for the assessment year 1996-97 for detailed scrutiny, if the total income declared is at least 30% more than the total income declared for the assessment year 1995-96. The case of respondent before the Tribunal was that the Department had decided not to have detailed scrutinizes for the assessment year 1996-97 if the income declared was atleast 30% more than the income declared in 1995-96, therefore the assessment itself was bad. The Tribunal accepted this contention. However, the learned Counsel for appellant submits that these instructions were not binding on the Tribunal or Court or were not available for execution to any Judicial authority.