Re-assessment on the basis of CBDT circular not justified

PrintPDF

HIGH COURT OF GUJARAT

Arvind Polycot Ltd.

v.

Chandra Ram

SPECIAL CIVIL APPLICATION NO. 2385 OF 2001

AUGUST 27, 2012

 

The CBDT, through its circular, could have brought certain aspects to the notice of the Assessing Officer, insofar as assessment was concerned. It had to be the opinion of the Assessing Officer alone which would prevail. In that view of the matter, the circular of CBDT may be a trigger, on the basis of which, the Assessing Officer may himself be satisfied that income chargeable to tax in a given case had escaped assessment. Such a circular by itself, cannot be the tangible material required for Assessing Officer to hold a belief that income chargeable to tax had escaped assessment.

Such tangible material may be something that the Assessing Officer did not notice at the time of original assessment either because the material did not form a part of the record itself or was not brought to his notice. In any case, the present circular of the CBDT would not satisfy such a test. This is neither the sole test to be applied nor did the CBDT provide so in the circular in question. Thus, on the basis of some general observations and discussion on principles for treating an expenditure either revenue or capital in nature, the Assessing Officer cannot claim to have been in possession of tangible material to hold a belief that income chargeable to tax had escaped assessment.