IN THE HIGH COURT OF SIKKIM AT GANGTOK
(CIVIL EXTRA ORDINARY JURISDICTION)
DATED : 05.10.2010
CORAM
HON’BLE MR. JUSTICE P.D. DINAKARAN, CHIEF JUSTICE
Writ Petition (C) No. 44 of 2009
Shri Chhabil Dass Agarwal,
S/o late Dipchand Agarwal,
R/o Singtam Bazar,
P.O. & P.S. Singtam,
East Sikkim.
…Petitioner
-versus-
1. The Union of India,
Through the Secretary,
Ministry of Finance,
Government of India,
North Block, New Delhi.
2. The Commissioner of Income Tax,
West Bengal – I, Ayakar Bhawan,
7, Chowringhee Square, Calcutta-69.
At present:
(Range II, Siliguri & Sikkim),
Income Tax Department,
Aayakr Bhavan, Matigara,
Siliguri, West Bengal-734010.
3. The Deputy Commissioner of Income Tax,
Circle – I, Siliguri, Central Revenue Building,
Hakimpara, Siliguri, District Darjeeling2
At present:
(Circle - II, Siliguri & Sikkim),
Income Tax Department,
Aayakr Bhavan, Matigara,
Siliguri, West Bengal-734010.
4. The Assistant Commissioner of Income Tax,
Circle – I, Siliguri, Central Revenue Building,
Hakimpara, Siliguri, District Darjeeling
At present:
Gangtok Circle, Ministry of Finance,
Department of Revenue,
Bhanupath, Gangtok-737 101.
5. The Chairman, Central Board of Direct Taxes,
Government of India, North Block,
New Delhi-110001.
6. The State of Sikkim,
Through the Chief Secretary,
Government of Sikkim,
Gangtok-737 101.
7. The Income Tax Officer,
Income and Sales Tax Department,
Government of Sikkim, Gangtok-737 101.
…Respondents.
For the petitioner : Mr. A.K. Upadhyaya, Sr. Advocate
with Mr. Ashim Chhetri, Advocate
For the respondents : Mr. A. Moulik, Sr. Advocate with
Mr. N.G. Sherpa, Advocate for
respondents No. 1 to 5.
Mr. J.B. Pradhan, Addl. Advocate
General and Mr. S.K. Chettri,
Assistant Government Advocate
for respondents No. 6 and 7. 3
JUDGMENT
Dinakaran, CJ
1. The assessee is the writ petitioner. The relevant
Assessment Years are 1995-1996 and 1996-1997. The assessee
has challenged the order of assessment dated 11.12.2009 on the
file of the 4
th
respondent, namely, Assistant Commissioner of
Income Tax, Circle – I, Siliguri, confirming, the earlier
assessment orders dated 09.07.2001 and 28.03.2001 for the
Assessment Years 1995-1996 and 1996-1997 respectively based
on the best judgment order passed under Sections 144/147 of
the Income Tax Act, 1961.
2. The impugned assessment order dated 11.12.2009 is
passed in continuation of the Orders of this Court dated
15.07.2009 in W.P.(C) Nos. 31 and 38 of 2001.
3. A perusal of the said Order dated 15.07.2009 in
W.P.(C) Nos. 31 and 38 of 2009 reveals that the said writ
petitions were originally disposed of by an Order dated
21.07.2005, which reads as hereunder:
“In the result, the writ petition is closed on
withdrawal with a direction to the parties to maintain
status quo with regard to the matter till the final decision
in the matter is taken by the Committee concerned.
However, it is made clear that the Committee shall
expedite the matter and dispose of the same, thus taking 4
a decision in the matter as early as possible, preferably
within 3 (three) months from the date of receipt of this
order.
……………………………………. The parties are given
liberty to approach this Court if they are aggrieved by
the decisions of the Committee, if so advised. …………….”
4. Concededly the issue, then, was: whether the income
of the non-Sikkimese residing in Sikkim is taxable? As the said
question was referred to a Committee and the decision of the
Committee was pending, this Court passed an Order dated
21.07.2005, as referred to above.
5. However, as being mentioned, the said writ petitions
No.31 and 38 of 2001 were taken for further hearing on
27.04.2006 and this Court passed an Order dated 27.04.2006 in
W.P.(C) Nos. 31 and 38 of 2001, which reads as hereunder:
“[1] ……………………………………………………..
[2] This Writ Petition was allowed to be withdrawn with a
direction to the parties to maintain status quo in regard to
the matter till the final decision is taken by the
Committee. Vide Order dated 02.03.2006, on the prayer
made by the State for extension of time as mentioned in
Court’s order dated 21.7.2005 the office was directed to
list the main Writ Petition on 05.06.2006 for necessary
orders.
[3] The issue, which was 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 15.05.2006 along with Writ Petition No.
13/2006.”5
6. By virtue of Section 4 of the Finance Act, 2008,
Section 10 (26 AAA) 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 1
st
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 1
st
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 Rules,
1961 (hereinafter referred to as the “Register of Sikkim
Subjects”), immediately before the 26
th
day of April,
1975; or
(ii) an individual, whose name is included in the
Register of Sikkim Subjects by virtue of the Government
of India Order No. 26030/36/90-I.C.I., dated the 7
th
August, 1990 and Order of even number dated the 8
th
April, 1991; or
(iii) any other individual, whose name does not
appear in the Register of Sikkim Subjects, but it is
established beyond doubt that the name of such
individual’s father or husband or paternal grandfather or
brother from the same father has been recorded in that
register;’”
(emphasis supplied)6
7. Both the Writ Petitions (C) No. 31 and 38 of 2001
were, thus, taken along with the Writ Petition No. 13 of 2006 on
15.07.2009. However, the result was the same, as this Court
by an Order dated 15.07.2009, once again, reiterated the earlier
Order dated 21.07.2005, as hereunder:-
“8. In consideration of the above facts and
circumstances and also upon hearing of the learned
Counsel for the parties, we reiterate the order
dated 21.07.2005 and with a liberty to the parties
to approach this Court6 or any other
appropriate/competent authority or forum for
rederssal of any grievances in this regard.”
8. In the meanwhile, the Central Board of Direct Taxes
(for short, ‘CBDT’), namely 5
th
respondent herein, by exercising
the power conferred on them under Section 119 (2) (a) of the
Income Tax Act, 1961 passed Instruction No. 8 of 2008 dated
29.07.2008, which reads as hereunder:
“ INSTRUCTION NO 8/2008, Dated: July 29, 2008
ORDER UNDER SECTION 119(2)(a) OF
THE INCOME TAX ACT, 1961
Vide Finance Act,2008, a new clause (26AAA) has been
inserted in section 10 of the In come Tax Act, 1961 (‘Act’)
with retrospective effect from assessment year
1990-91. Under the said clause, the following income
accruing or arising to a Sikkimese individual is
exempt from tax-
(a) income from any source in the State of Sikkim; or
(b) income by way of dividend or interest on securities.
For the purpose of the clause, “Sikkimese” has been
defined in the Explanation thereto.7
2. Income accruing or arising to a non-Sikkimese
individual residing in the State of Sikkim continues
to be liable to tax under the Act, in the case of such
individuals, it has been decided that-
(a) For assessment year 2007-08 or any preceding
assessment 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 nonSikkimese 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, 4
th
respondent passed the impugned assessment order
dated 11.12.2009 against the assessee for the Assessment Years
1995-1996 and 1996-1997 confirming the earlier orders of
assessment dated 09.07.2001 and 28.03.2001 based on the best 8
judgment under Sections 144/147 of the Income Tax Act, 1961,
respectively holding that the writ petitioner-assessee is liable to
pay the income tax demanded, and has also reserved the right to
levy interest under Section 220(2) of the Income Tax Act, 1961
for default in payment of tax separately,
9.2 The impugned order of assessment dated 11.12.2009
reads as under:
“ OFFICE OF THE ASSISTANT COMMISSIONER OF
INCOME TAX, GANGTOK CIRCLE
(Ministry of Finance, Department of Revenue)
BHANUPATH, GANGTOK : SIKKIM
No. ACIT/Cir-Gangtok/2009-10/920 Dated:11/12/2009
To
Sri Chhabil Das Agarwal,
Singtam Bazar,
East Sikkim.
Subject: Writ Petitions I No. 38 & 31 of 2001
In the case of –
Shri Chhabil Dass Agarwal Vs. UOI &
Others
Ref: Your reminder letter No. Nil dated
07/11/2009
Received on 09/11/2009.
****
Kindly refer to the above.
The above Writ Petitions have been disposed of by
the Hon’ble High Court of Sikkim, Gangtok vide Hon’ble
Court’s order dated 15/07/2009 with the observation
that the new clause (26AAA) inserted in Section 10 of the
I.T. Act, 1961 of the has apparently taken care of the
grievance of the assessee as projected in the above
Writ Petitions thereby giving liberty to the assessee to
approach the competent authority or forum, including
the Hon’ble High Court if the assessee is aggrieved in any
manner.
Relying on the order of the Hon’ble High Court
dated 15/07/2009, you had, vide a petition dated 7
th
August, 2009 addressed to the DCIT, Cir-Gangtok, Sikkim 9
sought cancellation of order u/s 144/147, tax
demand and withdrawal of penalty proceedings in
view of Instruction No. 8/2008 dated 29.07.2008
and the Order of the Hon’ble High Court of Sikkim dated
15/09/2009.
Subsequently, you were requested to appear
and explain your case vide letter No.
ITO/Gangtok/2009-10/739 dated 17/09/2009 fixing
compliance for hearing on 24/09/2009. In response
you appeared on 24/09/2009 and sought
adjournment till the end of November, 2009 on the
ground that you have recently undergone major
prostate surgery and has been advised complete rest
for 2 months. You also took the plea that you have not
been able to contact your representative who is based in
Kolkata. However, your case has to be considered
within the purview of Board’s Instruction No. 8 of
2008 dated 29/07/2008. Your contention as
reflected in your petitions dated 7
th
August 2009 and
09
th
Nov. 2009 is therefore, not tenable and cannot be
acceded to on the following grounds –
7. Board’s Instruction No. 8/2008 dated 29/07/2008
states that clause (26AAA) of sec. 10 of the I.T.
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 2I of the Instruction states that in case any
assessment or re-assessment proceedings has
been initiated for 2007-08 or any preceding
assessment year and assessment orders have not
been passed, the aforesaid income shall be
accepted as per the return.10
11. Para 2(d) of the Instruction states that for the AY
2008-09 and subsequent assessment years,
assessment or re-assessment, if required, shall be
made in accordance with the provisions of the I.T.
Act, 1961.
12. Para 3 of the Instruction states that these
instructions shall apply only to non-Sikkimese
individuals residing in the State of Sikkim.
In the instant case, you will be assessed as a
non-Sikkimese individual and hence your income is not
exempt within the meaning of section 10 (26AAA) of the
I.T. Act, 1961.
Order u/s 144/147 of the I.T. Act, 1961 for Ays
1995-96 and 1996-07 was passed on 09/07/2001 and
28/03/2001 respectively. Since the assessment u/s
144/147 of the I.T. Act, 1961 were completed long
before the amendment inserting clause (26AAA) in
Section 10 of the I.T. Act, 1961 was made vide
Finance Act, 2008, your plea for cancellation of
orders u/s 144/147, withdrawal of tax demand and
dropping of penalty proceedings do not stand the
test of Board’s Instruction No. 8/2008 dated
29/07/2008. Your case does not fall under the
parameter of Para 2(a), 2(b), 2(c) or 2(d) of the
Instruction 8 /2008 dated 29/07/2009 as
proceedings u/s 144/147 of the I.T. Act, 1961was
completed long before the insertion of clause
(26AAA) in section 10 of the I.T. Act, 1961.
In view of the above, you are liable to pay the
demand as indicated below-
3. Assessment Year 1995-96: Rs,2,45,87,625
4. Assessment Year 1996-97: Rs. 6,05,474
Total : Rs.2,51,93,099
Interest u/s 220(2) of the I.T. Act, 1961
for default of tax will be computed separately.
You are therefore, requested to pay the
outstanding demand within seven days of the receipt of
this letter failing which appropriate recovery measures as
per law will be initiated against you.
Sd/-
(Anju Sherpa)
DCIT, Cir-Gangtok, SIKKIM”
(emphasis supplied)11
10. Mr. A.K. Upadhyaya, learned Senior Counsel
appearing for the writ petitioner-assessee contends:-
(i) that the impugned order is violative of principles
of natural justice, because, even though the writ petitionerassessee requested for an opportunity of being heard, he
was not given a fair and reasonable opportunity 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 29.07.2008, as his income
for the Assessment Year 1995-96 and 1996-97 were
already initiated and assessed as early as 09.07.2001 and
28.03.2001 based on ‘best judgment’;
(ii) that the Assessing Officer has committed an
illegality in confirming the earlier orders of assessment
dated 09.07.2001 and 28.03.2001 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; 12
(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 29.07.2008 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 29.07.2008 issued by
CBDT, exercising its power under section 119(2) of the
Income Tax Act, 1961 is binding on the Assessing Officer;
(v) that Section 10(26AAA) of the Act, as well as the
Instruction No.8 of 2008 dated 29.07.2008 have
retrospective effect from 01.04.1990 and, therefore,
reconfirming the earlier assessment orders passed on
09.07.2001 and 28.03.2001, ignoring the Instruction No. 8
of 2008 dated 29.07.2008 of the CBDT is arbitrary and
unreasonable;
(vi) that the refusal of the benefit under Instruction
No. 8 of 2008 dated 29.07.2008 to the writ petitionerassessee alone is also discriminatory, because the
assessment proceedings initiated against similarly placed
persons are dropped; and13
(vii) that, in any event, the Assessing Officer failed to
appreciate that the writ petitioner-assessee is also entitled
for the benefit of the Instruction No.8 of 2008 dated
29.07.2008 of the CBDT.
11. Per contra Mr. A. Moulik, learned Senior Counsel
appearing for the respondent-revenue contends:
(i) that Section 10(26 AAA) of the Income Tax Act,
1961 does not provide any benefits to the non-Sikkimese
individual;
(ii) that even though, Instruction No.8 of 2008
dated 29.07.2008 provides certain benefits to the nonSikkimese residing in the State of Sikkim namely, viz.:-
(a) For assessment year 2007-08 or any
preceding assessment 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 14
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,
the case of the petitioner does not come under either of the
said cases, as rightly viewed and held by the Assessing
Officer in the impugned proceedings dated 11.12.2009;
(iii) that it may not be proper for this Court to read
into 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 15
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 09.07.2001
and 28.03.2001 for the Assessment Years 1995-96 and
1996-97 respectively as the case of the writ petitionerassessee is not governed under the instruction No. 8 of
2008 dated 29.07.2008.
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 judgement passed on 9.07.2001 and 28.03.2001 for the
assessing 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 29.07.2008 issued by the CBDT have come
into force w.e.f. 01.04.1990 even before the disposal of the Writ
Petitions(C) No.31 and 38 of 2001 by order dated 15.07.2009. 16
15. Both the petitioner-assessee as well as respondentsrevenue were under impression that Section 10(26AAA) of the
Income Tax Act, 1961 would apply to the case of the petitionerassessee, a non-Sikkimese residing in the State of Sikkim and
the same is evident from Para 51 of the order dated 15.07.2001,
which reads hereunder:-
“5. According to Mr. Moulik, since the
relevant provision is amended as noted above, the
grievance of the petitioner so projected in the
writ petition appears to have been well taken
care of and if the petitioner is aggrieved in
any manner, he may have the liberty to
approach the competent authority or forum
including this Court as was already observed
in the order dated 21.07.2005 whereby parties
were given liberty to approach this Court.”
(emphasis supplied)
16. Accordingly, the writ petitioner-assessee filed a
petition dated 07.08.2009 for cancellation of the demand of tax
and for withdrawal of penalty proceedings in view of the
Instruction No.8 of 2008 dated 29.07.2008. The Assessing
Officer, however, by the impugned proceedings dated
11.12.2009 held that:-
(i) Section 10(26AAA) of the Income Tax Act, 1961 is not
at all attracted to the case of the petitioner-assessee, a nonSikkimese, and, therefore, the petitioner-assessee cannot seek
any benefit under Instruction No. 8 of 2008 dated 29.7.2008 nor
seek the withdrawal of penalty proceedings; and 17
(ii) the case of the petitioner is also not governed by the
Instruction No.8 of 2008 dated 29.07.2008 issued by the CBDT
as neither of the clarification provided in sub-clauses (a), (b), (c)
and (d), referred thereunder would cover the petitioner’s case,
because assessment proceedings of the petitioner-assessee were
already initiated and his income for the Assessment Years 1995-
96 and 1996-97 were already assessed by best judgment orders
dated 09.07.2001 and 28.03.2001.
17. It is true that this Court in the case of fiscal laws,
particularly relating to withdrawal of tax demand and dropping of
penalty proceedings under the Income Tax provisions, has its
own limitation.
18. However, it 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 vs 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 18
is permitted, where they are made for just and fair
administration of law. The Instruction No.8 of 2008 dated
29.07.2008 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 vs 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
29.07.2008 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 09.07.2001 and 28.03.2001
for the Assessment Years 1995-96 and 1996-97 respectively,
even though the case of the petitioner-assessee can not be
compared to any of the deliberate defaults mentioned under
Sections 144/147 of the Income Tax Act, 1961 which warrants
the best judgment order.
20. Section 144 provides for passing a ‘best judgment
assessment’ under four deliberate defaults committed by the
assessee. viz. 19
(i) Where the assessee has failed to make the return
required under s 139(1) and has not made a return
under s 139(4) or a revised return under s 139(5);
(ii) where there has been a failure to comply with the
terms of a notice issued under s 142(1) requiring the
assessee to produce accounts or other documents or
information specified therein;
(iii) where the assessee has failed to comply with the
AO’s direction under s 142(2A) for getting the
accounts audited and furnishing the audit report; or
(iv) where the return has been made, and the AO serves
a notice under s 143 (2) upon the assessee requiring
his appearance or the production by him of evidence
in support of his return, but the assessee does not
comply with the terms of the notice.
But, in the instant case the petitioner-assessee has not
committed any of the above defaults but claims certain privileges
and rights conferred on the non-Sikkimese residing in the State
of Sikkim based on Instruction No.8 of 2008 dated 29.07.2008
issued by the CBDT exercising their power conferred under
Section 119(2)(a) of the Income Tax Act, 1961 in consequence of
Section 10(26AAA) of the Income Tax Act, 1961 which came into
force w.e.f. 01.04.1990. Such benevolent reliefs provided to
the petitioner-assessee cannot be rejected by the Assessing
Officer by confirming the earlier best judgement dated
09.07.2001 and 28.03.2001 for the Assessment Years 1995-96
and 1996-97 respectively, even without providing a fair and
reasonable opportunity to the writ petitioner-assessee. The 20
Assessing Officer, therefore, failed to be guided by judicial
consideration and by rules of justice, equity and good conscience
in compliance of principles of natural justice, in spite of the
request of the assessee for adjournment on medical ground; but
had chosen to proceed technically, interpreting Section
10(26AAA) of the I.T. Act. 1961 as well as Instruction No. 8 of
2008 dated 29.07.2008 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 29.07.2008 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 29.07.2008 are given retrospective effect from
01.04.1990.
21. That apart, the Assessing Officer had committed an
error in holding that the Instruction No. 8 of 2008 dated
29.07.2008 is not applicable to the case of the petitionerassessee, as his assessments are already completed, because the
said Instruction No. 8 of 2008 dated 29.07.2008 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 29.07.2008, providing certain benefits of income 21
tax with regard to the income accruing or arising to a nonSikkimese 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 assessment orders had
also been passed based on best judgment as early as 09.07.2001
and 28.03.2001 for the assessment years 1995-96 and 1996-97
respectively and, therefore, the Instruction No.8 of 2008 dated
29.07.2008 of the CBDT is not applicable to the petitionerassessee, is arbitrary, discriminatory and unreasonable. There is
an element of discrimination in refusing the benefits of the
Instruction No.8 of 2008 dated 29.07.2008 to the petitioner
merely because the assessment order had already been initiated
and passed the best judgement orders dated 09.07.2001 and
28.03.2001 for the assessment years 1995-96 and 1996-97
respectively, overlooking the clarification dated 29.07.2008 that
the same is applicable even in the case of re-assessment.
22. It is the settled law that benevolent circulars
(Instruction No. 8 of 2008 dated 29.07.2008) providing
administrative relief to the assessee have to be given effect to
even if they are issued subsequent to the decision (best 22
judgement orders dated 09.07.2001 and 28.03.2001) by an
authority under the Act (Vide: Bajaj vs. CIT 222 ITR 418).
23. Hence, I am convinced to interfere with the impugned
order dated 11.12.2009 for the assessment years 1995-96 and
1996-97 and to quash the same for the reasons stated above.
Accordingly, the same is quashed.
24. However, it is open for the Assessing Officer to
proceed with the matter, if he is so advised, of course, after
getting necessary clarifications from the CBDT as referred to
above.
The writ petition is ordered accordingly. No cost.
(P.D. Dinakaran, CJ)
05.10.10
Index : Yes/No
Internet : Yes/No
Source:highcourtofsikkim.nic.in
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