SALBONI HATCHERIES Vs. UNION OF INDIA UOI

JUDGEMENT

(1.) This is a writ application challenging a demand notice dated October 13, 1997, issued by respondent No. 5.

(2.) The grievance of the writ petitioners is that petitioner No. 1 furnished its return of income for preceding assessment year 1994-95 showing a taxable income of Rs. 82,980 and the same was assessed under Section 143(1)(a) of the Income-tax Act on a taxable income of Rs. 82,980. In the assessment year 1995-96, the assessee furnished a return of income showing a total income of Rs. 8,99,310, which is higher by more than 30 per cent. of the assessed income of the preceding year. The assessee, petitioner No. 1, paid all the taxes on this returned income. Accordingly, petitioner No. 1 has satisfied all the conditions set out in the said circular issued by the Central Board of Direct Taxes and, therefore, the Assessing Officer is obliged under the law to follow the said instruction and is not under any competent jurisdiction to make a sample scrutiny under Section 143(3), disregarding the said circular. All the conditions precedent to come under those category of assessees whose assessment for the year 1995-96 is to be made as per return submitted and whose returns of (SIC) are being exempted by the said circular from sample scrutiny under Section 143(3) of the Income-tax Act, are being satisfied by petitioner No. 1. The petitioners reasonably expected that the assessment of the petitioner's firm should be completed in terms of the said circulars and/or guidelines for the assessment year 1995-96 as per return submitted by it and not under Section 143(3) of the Income-tax Act.

(3.) The petitioners further submitted that despite such specific circular/instructions and/or guidelines issued by the Central Board of Direct Taxes as referred to above, respondent No. 7 being the Assessing Officer, entrusted to deal with the computation of assessment of income of petitioner No. 1 for the assessment year 1995-96, finally completed the said assessment under Section 143(3) of the Income-tax Act, 1961, by taking recourse to sample scrutiny. The said respondent No. 7 in violation of the said guidelines and/or contrary to the said circular issued by the Central Board of Direct Taxes with regard to procedure to be adopted in the case of such sample scrutiny for the said assessment year, unlawfully assessed the petitioner's return of income for the assessment year 1995-96 under Section 143(3) of the Income-tax Act, 1961.