JUDGMENT
1. The Income-tax Appellate Tribunal, New Delhi, has referred the following two questions of law under Section 256(1) and (2) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), for the opinion of this court :
"1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that there were no material before the Commissioner of Income-tax to justify his finding that the assessment made under Section 143(1) was erroneous in so far as it was prejudicial to the interests of the Revenue ?
2. Whether the Tribunal's order is wrong on facts and in law in taking into consideration incorrect fact and the facts not relevant to the case and in ignoring relevant facts and findings in the order under appeal ?"
2. The reference relates to the assessment years 1983-84 to 1985-86.
3. Briefly stated the facts giving rise to the present reference are as follows :
The return of income for the assessment years in question were filed by the respondent/assessee in the status of an individual on March 17, 1986, along with the return for the assessment year 1983-84. She had filed a statement of income in respect of her business started from April 15, 1981, and also furnished the details for the accounting period ending March 31, 1982. The returns were processed under Section 143(1) of the Act and the assessment was completed on March 14, 1986. The Commissioner of Income-tax on examination of assessment records was of the opinion that the assessment orders passed under Section 143(1) of the Act had been made without making any enquiry into the factum of loans and other items and, therefore, they were erroneous and prejudicial to the interests of the Revenue. He accordingly after giving an opportunity of hearing, set aside the assessments and directed for making de novo assessments. Feeling aggrieved, the respondent preferred separate appeals before the Tribunal. The Tribunal relying upon Circular No. 176, dated August 28, 1987, had set aside the order passed under Section 263 of the Act. The Tribunal was further of the opinion that on close perusal of the statement of income filed with the returns, the action of the Commissioner was totally unjustified.
4. We have heard Sri Shambhu Chopra, learned standing counsel for the Revenue. Nobody has appeared on behalf of the respondent/assessee.
5. It may be mentioned here that in Circular No. 176 dated August 28, 1987, the Board had given instructions to all Commissioners of Income-tax to the effect that no remedial action is necessary in summary assessment cases, as the revenue loss, if any, is consciously suffered by the Government to utilise resources for scrutiny and investigation of larger cases. In such cases the Commissioner of Income-tax should only inform the audit that the cases are completed under the summary assessment scheme. Accordingly, action under Section 263 of the Act was not to be taken. It is well settled that the circulars issued by the Board are binding upon the authorities and, therefore, in any view of the matter, the Commissioner was not justified in initiating proceedings under Section 263 of the Act in respect of the assessments completed under Section 143(1) of the Act.
6. We accordingly answer the first question in the affirmative, i.e., in favour of the assessee and against the Revenue and the second question in the negative, i.e, in favour of the assessee and against the Revenue. There will be no order as to costs.