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TMI Blog2010 (10) TMI 508X X X X Extracts X X X X X X X X Extracts X X X X ..... were made on best judgment - It is apparent on the face of the records that Section 10(26AAA) of the Income-tax Act, 1961 as well as Instruction No. 8 of 2008 dated 29-7-2008 issued by the CBDT have come into force w.e.f. 01-4-1990 even before the disposal of the Writ Petitions (C) No. 31 and 38 of 2001 by order dated 15-7-2009 - t is a settled law, that instruction of CBDT issued under section 199(2) of the Income-tax Act, 1961 are binding on the income-tax authorities, even if they deviate from the provisions of the Act, so long as they seek to mitigate the rigour of a particular section for the benefit of the assessee (Vide: UCO Bank v. CIT [ 1999 (5) TMI 3 - SUPREME COURT] ) - It is the settled law that benevolent circulars (Instruction No. 8 of 2008 dated 29-7-2008) providing administrative relief to the assessee have to be given effect to even if they are issued subsequent to the decision (best judgment orders dated 9-7-2001 and 28-3-2001) by an authority under the Act (Vide: Bajaj v. CIT 1996 (8) TMI 98 - PUNJAB AND HARYANA HIGH COURT] - The writ petition is ordered accordingly - 44 OF 2009 - - - Dated:- 5-10-2010 - P.D. DINAKARAN, JJ, JUDGMENT Dinakaran, CJ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s involved in this Writ Petition is under consideration in Writ Petition No. 13 of 2006. (4) Let this Writ Petition be listed under heading to be Mentioned on 15-5-2006 along with Writ Petition No. 13/2006." 6. By virtue of Section 4 of the Finance Act, 2008, section 10 (26AAA) of Income-tax Act, 1961 was inserted, which reads as hereunder: "4. In section 10 of the Income-tax Act, - (a) after clause (26AA) as omitted by the Finance Act, 1997, the following clause shall be inserted and shall be deemed to have been inserted with effect from the 1st day of April, 1990, namely: - (26AAA) in case of an individual, being a Sikkimese, any income which accrues or arises to him- (a) from any source in the State of Sikkim; or (b) by way of dividend or interest on securities; Provided that nothing contained in this clause shall apply to a Sikkimese woman who, on or after the 1st day of April, 2008, marries an individual who is not a Sikkimese. Explanation. For the purpose of this clause, "Sikkimese" shall mean - (i) an individual, whose name is recorded in the register maintained under the Sikkim Subjects Regulation, 1961 read with the Sikkim Subject Ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment year, no assessment or reassessment shall be made with regard to the income- (i) income from any source in the State of Sikkim; or (ii) income by way of dividend or interest on securities. (b) In case any proceedings have been initiated for assessment year 2007-08 or any preceding assessment year for not filing the return of income, such proceedings shall be dropped. (c) In case any assessment or reassessment proceeding has been initiated for assessment year 2007-08 or any preceding assessment year and assessment orders have not been passed, the aforesaid income shall be accepted as per the return. (d) For the assessment year 2008-09 and subsequent assessment years, assessment or re-assessment, if required, shall be made in accordance with the provisions of the Income-tax Act, 1961. 3. These instructions shall apply only to non- Sikkimese individuals residing in the State of Sikkim. F.NO. 153/19/2007-TPL (Vandana Ramachandran) Under Secretary to the Govt. of India." (emphasis supplied) 9.1 It is with this backdrop of the case, the Assessing Officer, 4th respondent passed the impugned assessment order dated 11-12-2009 against the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purview of Board s Instruction No. 8 of 2008 dated 29-7-2008. Your contention as reflected in your petitions dated 7th August 2009 and 09th Nov. 2009 is therefore, not tenable and cannot be acceded to on the following grounds - 7. Board s Instruction No. 8/2008 dated 29-7-2008 states that clause (26AAA) of sec. 10 of the IT. Act, 1961 exempts from tax in respect of income arising or accruing to a Sikkimese individual in relation to income accruing to him/her from (a) any source in the State of Sikkim; or (b) by way of dividend or interest on securities. 8. Para 2(a) of the Instruction states that for assessment year 2007-08 or any preceding assessment years, no assessment or reassessment shall be made with regard to the income (a) from any source in the State of Sikkim, or (b) income by way of dividend or interest on securities. 9. Para 2(b) of the Instructions states that in case any proceedings have been initiated for assessment year 2007-08 or any preceding assessment year for not filing the return of income, such proceedings shall be dropped. 10. Para 21 of the Instruction states that in case any assessment or re-assessment proceedings has been initiated fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the ground that his case is not falling under any of the clarifications referred to in para 2(a), (b), (c) and (d) of the Instruction No. 8 of 2008 dated 29-7-2008, as his income for the Assessment Years 1995-96 and 1996-97 were already initiated and assessed as early as 09-7-2001 and 28-3-2001 based on best judgment ; (ii) that the Assessing Officer has committed an illegality in confirming the earlier orders of assessment dated 9-7-2001 and 28-3-2001 for the Assessment Years 1995-96 and 1996-97 respectively which were made on best judgment ; (iii) that the case of the writ petitioner-assessee could not be equated to any of the failure mentioned under section 144 of the Indian Income-tax Act, 1961 warranting a best judgment assessment; (iv) that the case of the assessee differs from the cases of failure mentioned under section 144 of the Income-tax Act, 1961, on account of the insertion of Section 10(26 AAA) of the Income-tax Act, 1961, read with Instruction No. 8 of 2008 dated 29-7-2008 issued by the CBDT which provides certain benevolent relief to the non-Sikkimese residing in the State of Sikkim, in as much as the Instruction No. 8 of 2008 dated 29-7-2008 issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nto the statute, which is not expressly provided in the fiscal law; (iv) that straining and stretching the provisions of the tax laws beyond its limit, by exercising the power of judicial review under Article 226 of the Constitution of India, is not permissible; and (v) that the Assessing Officer has rightly rejected the contention of the writ petitioner-assessee and confirmed the earlier assessment orders dated 9-7-2001 and 28-3-2001 for the Assessment Years 1995-96 and 1996-97 respectively as the case of the writ petitioner-assessee is not governed under the instruction No. 8 of 2008 dated 29-7-2008. 12. I have given my careful consideration to the submissions of both the sides. 13. The resultant effect in the impugned proceedings dated 11-12-2009 is nothing but confirming the earlier orders of the best judgment passed on 9-7-2001 and 28-3-2001 for the assessment years 1995-96 and 1996-97 respectively. 14. It is apparent on the face of the records that Section 10(26AAA) of the Income-tax Act, 1961 as well as Instruction No. 8 of 2008 dated 29-7-2008 issued by the CBDT have come into force w.e.f. 01-4-1990 even before the disposal of the Writ Petitions (C) No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a particular section for the benefit of the assessee (Vide: UCO Bank v. CIT 237 ITR 889). Thus, the circulars and instructions issued by the C.B.D.T. exercising the power under section 119(2)(a) of the Income-tax Act, 1961 is not only binding on the department i.e. Assessing Officer, but they can also deviate from certain statutory provisions; and such deviation is permitted, where they are made for just and fair administration of law. The Instruction No. 8 of 2008 dated 29-7-2008 undoubtedly mitigates the rigour of the statutory provisions of the Act. In that view of the matter it is not open for the department to raise contention which is contrary to the intention of the circular or instruction validly issued by CBDT (Vide: CIT v. Abdul 248 ITR 744 and 753). Therefore, in my considered opinion the question of stretching the provision beyond its limit, as provided by Instruction No. 8 of 2008 dated 29-7-2008 by the CBDT, does not arise. 19. The impugned assessment order dated 11-12-2009 of the Assessing Officer is illegal and violative of principles of natural justice as the Assessing Officer had confirmed the earlier orders of the best judgment dated 9-7-2001 and 28-3-2001 fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2008 of CBDT and that they do not cover the case of the petitioner as his assessment had already been initiated and completed, even before the insertion of section 10(26AAA) and Instruction No. 8 of 2008 dated 29-7-2008 came into force, over looking the fact that the said section 10(26AAA) of the Income-tax Act, 1961 and the Instruction No. 8 of 2008 dated 29-7-2008 are given retrospective effect from 1-4-1990. 21. That apart, the Assessing Officer had committed an error in holding that the Instruction No. 8 of 2008 dated 29-7-2008 is not applicable to the case of the petitioner-assessee, as his assessments are already completed, because the said Instruction No. 8 of 2008 dated 29-7-2008 is applicable even in the case of reassessment, in view of the word reassessment used in Paras 2(a) and 2(c) of the Instruction No. 8 of 2008 dated 29-7-2008, providing certain benefits of income tax with regard to the income accruing or arising to a non-Sikkimese individual residing in the State of Sikkim. The question of re-assessment would arise only after assessment. Therefore, to hold that in the case of the petitioner-assessee, assessment proceeding had already been initiated and asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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