Clarifications of Board's Instruction No. 885. - Income Tax - 920/CBDT

INSTRUCTION NO. 920/CBDT Dated : February 11, 1976 References have been received from some Commissioners of Income-tax seeking clarifications on points arising out of the Board's Instruction No. 885 referred to above. These have been examined in consultation with the Ministry of Law. The queries raised are serially answered as under:- Query No. 1- Whether the assessments already completed following the decision of the Madras High Court in the case of Carborundum Co. should be revised in the light of the Board's Instruction No. 885 dated 27-9-1975? Reply- Even though the course of revising the assessments already completed in the light of the Board's Instruction No. 885 dated 27-9-1975 could have been followed, it may not be safe and advisable to follow such a course. The appropriate course would be to leave the initiative to the assessees or the aggrieved parties. Query No.2- If the assessments referred to in (1) above are in appeal, whether the appeals should be conceded by Department? Reply- The safest way out of the situation would appear to be request the appellate authority to keep the appeals pendings till the decision of the Supreme Court in the appeal pending against the judgment of the Madras High Court in Carborundum's case. Where references are pending in the High Court, the High Court would, in all probability, grant such a request. If for any reason, the High Court is not inclined to grant such request, the matter may be fought out. In such a contingency, we shall be having the benefit of another judgment from a different High Court. Query No.3- Whether the pending assessments should be completed following the Board's Instruction No. 885. Reply- Till the judgment of the Supreme Court in the case of Carborundum Co. is received, the existing practice may be continued (i.e. Instruction No. 885 should be followed). The Department has referred the matter to the Ministry of Law for obtaining the opinion of the Attorney General. Therefore, if the opinion of the Attorney General is received prior to the judgment of the Supreme Court, the matter shall have to be looked into afresh in the light of the opinion which may be given by the Attorney General). Query No.4- In cases where proceedings u/s 147 had been initiated prior to the issue of the Board's Instruction No. 885 whether such proceedings should be dropped and whether such an action would amount to contravention of the Madras High Court decision? Reply- The appropriate course would appear to be to keep the proceedings in abeyance. If, however, it is not possible to do so on account of the reason that the action would get barred by limitation or for any other good reason, the assessment may be completed in accordance with the decision of the Madras High Court in Carborundum's case, and the recovery of excess amount found due may be kept in abeyance.