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TMI Blog2008 (6) TMI 633X X X X Extracts X X X X X X X X Extracts X X X X ..... ased on the directives of the CIT, in fact the assessment orders do not indicate any other reason other than the directions mentioned by the CIT also could not dispute that the Department was bound by the Circulars. We find that the ITO had passed revised assessment order based on the revised return at 8 per cent. The said order is solely based on the directives given by the earlier CIT and the same could not be revised by the subsequent CIT exercising the power u/s 263. Over and above, we do not find any error or anything unsustainable in law. On the contrary, it appears that the second CIT consistently took a view that 8 per cent would be a fair percentage and a third CIT could not consider the same as 'erroneous' or 'unsustainable in law'. In fact both the notices which were issued u/s 263 as well as revised assessment orders passed by the CIT are totally unsustainable in law for the aforesaid reasons. Hence, all the seven notices issued u/s 263 as well as seven assessment orders passed by the CIT stand quashed and set aside. Accordingly, rule is made absolute with no order as to costs. - Dr. S. Radhakrishnan and Anand Vasant Nirgude, JJ. For Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs 1987-88 and 1988-89 by the Department contending that the percentage should be 10 per cent of receipts and not 8 per cent. However, the Tribunal had decided that the assessment should be at 8 per cent. The Department had accepted the same and they have not filed any Appeal with regard to the assessment years 1987-88 and 1988-89. As far as assessment year 1989-90 is concerned, it was computed at 8 per cent of the receipts and was accepted by the Department and an assessment order was passed by the Assessing Officer at 8 per cent under Section 143(3) of the Income Tax Act. No Appeal has been preferred by the Department against the said order also. Similarly for the assessment years 1990-91 to 1995-96, it was accepted by the Department at 8 per cent of the receipts and assessment order was accordingly passed under Section 143(3) and no appeal was preferred against the same by the Department. 5. As far as assessment years 1996-97 to 1998-99 i.e., for 3 years are concerned, the assessee had approached the Settlement Commission and the Settlement Commission had accepted computation at 8 per cent of the receipts. For further more seven years, i.e., 1999-2000 to 2005-06 an assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... withstanding anything contained in Sub-section (2), an order in revision under this section may be passed at any time in the case of an order which has been passed in consequence of, or to give effect to, any finding or direction contained in an order of the Appellate Tribunal, (National Tax Tribunal) the High Court or the Supreme Court. Explanation.-In computing the period of limitation for the purposes of Sub-section (2), the time taken in giving an opportunity to the assessee to be reheard under the proviso to Section 129 and any period during which any proceeding under this section is stayed by an order or injunction of any Court shall be excluded. 7. Mr. Mistry, the learned counsel appearing on behalf of the petitioner also pointed out, that subsequently in the Income Tax Act, Section 44AD has been added which deals with construction work, like that of the petitioner and the percentage which has been laid down statutorily is of 8 per cent for the purpose of assessment. 8. Mr. Mistry also pointed out that the assessment orders were passed by the Assessing Officer 4th Wealth Tax Officer, BSD(S), Bombay dated 5-1-1988 for the assessment year 1980-81 and identical orders ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the earlier order of the Commissioner of Income Tax and had accepted 8 per cent to be the correct percentage. 11. During the course of hearing, we requested Mr. Sahadevan, the learned Counsel appearing for the respondents to produce the copy of the aforesaid letter dated 30-11-1987, which was fairly conceded and produced before us. On a perusal of the aforesaid letter, it is very clearly mentioned that the matter was discussed by the petitioner with the earlier Commissioner of Income Tax, Mumbai City-II, Mumbai and after discussion, the petitioner had filed revised return of income on 8 per cent of gross receipts and 8 per cent was agreed to by the then Commissioner of Income Tax. The letter also remarks that the assessee had declared the profit at 8 per cent under the Amnesty Scheme after discussion with the Commissioner of Income Tax, and no further verification was necessary. The said letter also indicates that the profit ought to be computed at 8 per cent and computation of 9 per cent would not be fair and justifiable, accordingly the subsequent Commissioner of Income Tax who re-verified and directed the IAC BSD(S) Range, Mumbai to advise Income Tax Officer suitably. The a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r with power to re-examine the accounts and determine the income himself at a higher figure. 13. Mr. Mistry also referred to a judgment of the Hon'ble Supreme Court in that behalf with regard to the expression 'erroneous' in the case of CIT v. Max India Ltd. [2007] 295 ITR 282 : 166 Taxman 188, wherein the Hon'ble Supreme Court had categorically held that the phrase 'prejudicial to the interests of the revenue' under Section 263 of the Income Tax Act, 1961 has to be read in conjunction with the expression 'erroneous' order passed by the Assessing Officer. The Hon'ble Supreme Court emphasised that an erroneous order prejudicial to the revenue should be unsustainable in law. 14. Mr. Mistry also contended that as per the CBDT Circular, whenever an assessee approaches under the Amnesty Scheme and thereafter the assessment has been passed, the same cannot be again reopened or challenged. In that behalf, he brought to our notice a decision of the Hon'ble Supreme Court in the case of UCO Bank v. CIT [1999]237 ITR 889 (SC) , wherein, the Hon'ble Supreme Court had clearly held that the circular issued by the CBDT would be binding on the reve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax, after re-verification, by his letter dated 30-11-2007 agreed with the said 8 per cent. Mr. Sahadevan also does not controvert that the Department had accepted 8 per cent to be the fair percentage for computation of income for 19 years right from 1980-81 to 2004-05. Mr. Sahadevan could not point out any error in law or anything unsustainable in law based on the material. 17. Having heard both the learned counsels for the parties, we must record our appreciation that Mr. Sahadevan very fairly obtained the letter dated 30-11-1987, which is very crucial in this matter. We have perused the same and in fact the xerox copy of the same also has been taken on record, which clearly indicates that the petitioner had approached under the Amnesty Scheme and after discussion with the Commissioner of Income Tax, it was agreed that rate of taxable income should be 8 per cent instead of 4 per cent and accordingly he was directed to file revised return at 8 per cent. Even thereafter, the second Commissioner of Income Tax, on scrutiny and verification found that the earlier decision of the Commissioner of Income Tax at 8 per cent to be fair and justifiable and accordingly, had issued directio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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