1997 PLP 900 (PTD)

"The appellant's firm has purchased Special National Fund Bonds to the tune of Rs.2,00,

000. Various Circulars issued from the Central Board of Revenue on the subject-matter provide coverage from concealment of income up to 30-6-1984. If quantum of concealment is not adequately covered with the procurement of Special National Fund Bonds, additional asset could be formulated only with the blessings of the Central Board of Revenue. Even prior permission of C.B.R. is condition precedent to issue notice under section 675 for the purpose of reopening of completed assessment. The Assessing Officer did not care for these limitations imposed on his discretion and he blindly formulated assessment at income of Rs.1,92,000 and Rs.1,20,000 in the charge years 1981-82 and 1982-83 without fulfilling the procedural formalities. Circulars Nos. 9 and 12 of 1985 issued on subject-matter of Special National Fund Bonds provide these advantages to the taxpayers. In reality, Special National Fund Bonds were floated to white the black money available in circulation. Since the two assessments in the charge years 1981-82 and 1982-83 have been completed without approval of the C.B.R. the same are not legally maintainable in the said two charge years of 1981-82 and 1982-83."

3. The learned A.R. of the assessee urged that the assessment proceedings under section 65 were violative of the Circular No.9 of 1985 in respect of Special National Fund Bonds in which it has been very explicitly stated: "Reopening of assessment; in case any sums or properties are found not to have been offered for taxation by a taxpayer for and including the period up to the assessment year 1984-85, set-off against income would be allowed for the amount invested by the taxpayer in the purchase of these bonds. Only that amount would be taxed, alongwith all consequential actions, which exceeds the amount invested in the purchase of bonds. Assessments in such cases will be completed with the approval of the Central Board of Revenue. "

4. The learned D.R. on the other hand, conceded that approval of C.B.R. had not been sought and this was procedural irregularity and the case should be set aside and sent back to the I.T.O. with the direction to obtain approval of his orders from the C.B.R.

5. We have examined the facts and circumstances of the case and also the arguments put forth by the learned A.R. and D.R. and we find no merit in the continuation of the D. R. C. B. R. had given ruling on the issue and the assessing officer should have acted in the same. Not having been done so there is no ground for disagreeing with the treatment meted the C.I.T.(A). It is also relevant to bring on record that there are number of decided cases which go in favour of the assessee. We, however, just cited two of them: 1984 PTD (Trib.) 70: Ss.5 & 8

C.B.R. Circular No.3 of 1979, para.5

Self- Assessment Scheme for 1979-80

Instructions by Central Board of Revenue binding on all officers and persons employed in execution of Income Tax Ordinance, 1979

Cases selected for detailed scrutiny Income Tax Officer does not have jurisdiction to make such assessment single handedly

Assessment can only be made jointly by Income Tax Officer and Inspecting Assistant Commissioner of Range

Assessment, held, liable to be annulled in circumstances

Assessment also not sustainable for want of Commissioner of Income-tax, assessed income being more than rupees one lac." Appellate Tribunal (I.T.A. No. 1460/LB of 1982-83): "A bare perusal of the above reproduced provisions of law makes it absolutely clear that the Central Board of Revenue in exercise of the powers vested in it has issued instructions vide Circular No.3 of 1979 which in terms of section. 8 of the Ordinance are binding on all officers and persons employed in the execution of the Ordinance."

6. The departmental appeals being devoid of merit stand rejected: M.B.A./273/Trib.