Assurance by the then Deputy Prime Minister. - Income Tax - 977/CBDT

INSTRUCTION NO. 977/CBDT Dated : July 13, 1976 Attention is invited to Board's Instruction No. 95 dated the 21st August, 1969 in which a reference has been made to the assurance given by the then Deputy Prime Minister which is reproduced hereunder:- "Where the income determined on assessment was substantially higher than the returned income, say, twice the latter amount or more, the collection of tax in dispute should be held in abeyance till the decision on the appeal provided there were no lapses on the part of the assessees". 2. In the above referred instruction the Board desired that the powers of staying recovery upto the decision of first appeal in cases of the type mentioned by the then Deputy Prime Minister, should be exercised by the Inspecting Assistant Commissioner/Commissioner of Income-tax. 3. In the case of Commissioner of Income-tax (Recovery) New Delhi Vs. Official Liquidator. M/s Golcha Properties (Private) Limited (in liquidation) decided on 6th December, 1973, the Rajasthan High Court had an occasion to examine Instruction No. 95. The High Court granted stay till the decision of appeal by the Appellate Assistant Commissioner holding that any instruction issued u/s 119(1) of Income-tax Act, 1961 by the Board has a binding force. 4. It is possible that following the above decision, many assessees may try to seek stay where the assessed income was substantially higher than the returned income. 5. Although the general proposition communicated by the High Court that instructions issued u/s 119(1) by the Board have a binding force is well settled, the Board have, on the facts and circumstances of the case, not accepted the decision justifying stay. An appeal to the Supreme Court has been filed. 6. It will be seen that the assurance of the then Deputy prime Minister provides for a stay only if there were no lapses on the part of the assessees. There is no discussion in the judgment of the Rajasthan High Court on this point. It, therefore, appears that at the argument stage, this aspect of the Instruction No. 95 was perhaps not argued before the High Court. 7. The Board would like to clarify that the above instruction becomes operative only in such cases which fall within the four corners of the assurance. It will not be applicable in cases where there have been lapses on the part of the assessees.