1988 (8) TMI 127 - AT - Income Tax

Summary

Issues:
Assessment of extra shift allowance on plant and machinery without proper enquiry by IAC(A) for assessment years 1981-82 and 1982-83 leading to erroneous assessments prejudicial to Revenue's interest.

Analysis:
The CIT found that the IAC(A) allowed extra shift allowance on plant and machinery without proper enquiry into whether and for what period the machinery worked, leading to erroneous assessments prejudicial to Revenue's interest for the assessment years 1981-82 and 1982-83.

A show cause notice was issued to the assessee, who relied on CBDT circulars to support their claim for extra shift allowance without determining the actual working days of the machinery. The AAC set aside the assessments and directed the IAC(A) to conduct proper enquiries to determine the actual working of the machinery. The assessee appealed against these decisions.

The assessee argued that extra shift allowance should be allowed irrespective of actual working days, citing CBDT circulars and various Tribunal decisions. They contended that circulars in force during the assessment year should be applied, and no further enquiry was necessary as all relevant information was provided during assessment proceedings.

The Departmental Representative supported the CIT's decision, emphasizing the lack of enquiry by the AO into the actual working of the machinery. The Tribunal considered the rival submissions and the relevant facts on record, noting the binding nature of CBDT circulars issued under Section 119.

Referring to past judgments, the Tribunal upheld the assessee's contention that extra shift allowance should be allowed without determining actual working days of the machinery. They found that the AO had received relevant details and particulars supporting the claim for extra shift allowance for both assessment years.

Consequently, the Tribunal concluded that the CIT was not justified in invoking Section 263 for the assessment years 1981-82 and 1982-83, as the assessments were not erroneous or prejudicial to the Revenue's interest. The impugned orders by the CIT were cancelled, and the appeals by the assessee were allowed.