The Hon’ble Sri Justice G.narendarand.the Hon’ble Sri Justice v. Gopala Krishna Rao

IN THE HIGH COURT OF ANDHRA PRADESH ::(Special Original Jurisdiction) AMARAVATI MONDAY ,THE EIGHTH DAY OF JULYTWO THOUSAND AND TWENTY FOUR PRESENT A< THE HONOURABLE SRI JUSTICE G.NARENDAR THE HONOURABLE SRI JUSTICE VENUTHURUMALLI GOPALAKRISHNA RAO WRIT PETITION NO: 33071 OF 9ni7 Between: Mynampati Sri Maruthi Rama Prasad (HUF)Flat No.; F4, Sal TejaFlat No.; F4, Sal TejaApartments,Balusumudi, Bhimavaram-534 202, AndhraPradesh.534 202, AndhraPradesh.Represented by its Karla: Mr, M.S M, Rama Prasad, S/oSriM.SriRanganayakuluRanganayakulu ...PETITIONER AND 1. The Deputy Commissionerof IncomeTax,Bangalore,CentralizedTax,Bangalore,CentralizedProcessing Centre, Post Bag No.:1, Electronic CityPostOffice,Bangalore - 560 100.Bangalore - 560 100. 2. The Income Tax Officer, Ward 2, Bhimavaram,Aayakar Bhavan, J.PRoad, Bhimavaram - 534 201.Road, Bhimavaram - 534 201. 3. The Commissioner of Income Tax, Centralised Processing Centre, PostBag No.: 1, Electronic City Post Office, Bangalore - 560 100.Bag No.: 1, Electronic City Post Office, Bangalore - 560 100. ...RESPONDENTS Petition under Article 226 of the Constitution of Indiapraying that in- the circumstances stated in the affidavit filed therewiththe High Court maybe pleased to issue a Writ, Order or Direction one in the nature of Mandamusdeclaring the action of the 1 st Respondent, dated 07.08.2017, in invalidatingthe Returnof Incomefiled by thePetitionerin FormITR4,fortheAssessment Year 2016-17 on10.09.2017 asbadinlaw,arbitrary,mechanical, violative of principles of natural justice and without jurisdictionand consequently set aside the same after directing the Respondents toconsider the Return of Income filed by the Petitioner. LA. NO: 1 OF 2017tWPMP. NO: 41145 OF 2017) Petition under Section 151 CPCpraying thatin the circumstancesstated in the affidavit filediin support of the petition, the High Court may bepleased to stay all further proceedings, pending disposalof the above WritPetition. Counsel for the PetitionerSRI. A V A SIVA KARTIKEYACounsel for the RespondentsB NARASIMHA SARMA' Counsel for the RespondentsVIJAY KUMAR PUNNA The Court made the following: ORDER THE HON’BLE SRI JUSTICE G.NARENDARAND.THE HON’BLE SRI JUSTICE V. GOPALA KRISHNA RAO Writ Petition No.33071 of 2017 ORDER: (per Hon’ble Sri Justice G.Narendar) iHeard thelearned Counselfor thePetitioner andthelearnedStandingCounselforIncome-TaxDepartment,appearingfortheRespondents. 2.The writ petition is preferred impugning the communication[dated]07.08.2017, whereby the Assessing Officer (for short,[“the][ A.O.”)][ has]assessed the returns filed by the petitioner-assessee[as][ a invalid return,]by placing reliance on the provisions of Explanation[(f)][ to][ sub-section][ (9)]of Section 139 of the Income Tax Act, 1961 (for short,[“the][ Act”)][ read][ in]conjunction with Section 44AA of the Act.‘ 3.The facts in a nutshell are that, the Petitioner[claims][ to][ be][ a][ H.U.F.]represented by the Kartha viz., Mynampati Sri Maruthi[Rama][ Prasad and]that they have been regularly filing their returns[of][ income][ as][ H.U.F.][ and]which returns includes rental income,agricultural[income and income]from business of fish culture. That as is the practice,[the][ assessee][ filed]their returns of income for the assessment year 2016-2017[vide][ e-filing]on28.07.2016 and whileso, they availed of the special[provisions][ and]declared their returns in Form ITR-IV, as prescribed[under][ the][ Act.]The 3.The facts in a nutshell are that, the Petitioner[claims][ to][ be][ a][ H.U.F.]represented by the Kartha viz., Mynampati Sri Maruthi[Rama][ Prasad and]that they have been regularly filing their returns[of][ income][ as][ H.U.F.][ and]which returns includes rental income,agricultural[income and income]from business of fish culture. That as is the practice,[the][ assessee][ filed]their returns of income for the assessment year 2016-2017[vide][ e-filing]on28.07.2016 and whileso, they availed of the special[provisions][ and]declared their returns in Form ITR-IV, as prescribed[under][ the][ Act.]The returns filed by the Petitioner were acknowledged by theRespondentby way of receipt of return of income.Thereafter, the 1®' Respondent,after assessment, was pleased to consider the returns[as][ defective][ one]for not being in-compliance with the provisionsof Proviso (f) to subsection (9) of Section 139 of the Act r/w. Section[44AA][ of][ the][ Act.]Inthese circumstances, the instant Writ Petition came to be filed impugningthe endorsement, dated 07.08.2017, under which the[return]of incomefiled by the Petitioner came to be returned as being[defective][ and][ not][ in]compliance with the provisions of the Act. 4.The learned Counsel for the Petitioner would invite the attention ofthis Court to the provisions of Section 44AA, Section[44AB][ and][ Section]44AD of the Act.The same are re-produced for the sake[of][ convenience]and which read as under: “44AA. Maintenance of accounts by certain persons carryingon profession or business.- (1) Every person carrying on legal,medical, engineering or architectural profession or the professionof accountancy or technical consultancy or interior[decoration][ or]any other profession asisnotified by the Boardin[the]OfficialGazette shall keep and maintain such books of account[and][ other]documents as may enable the Assessing Officer to compute[his]total income in accordance with the provisions of this[Act.] (2) Every person carrying on business or profession not being aprofession referred to in sub-section (1) shall,- (i)if his income from business or profession exceeds[one]lakh twenty thousand rupees or his total sales, turnover[or]grossreceipts,asthecasemaybe,inbusinessor profession exceed or exceeds ten lakhs rupees in any[one]of the three years immediately preceding the previousyear; or (ii) where the business or profession is newly set[up][ in][ any]previous year, if his income from business or professionislikely to exceed one lakh twenty thousand rupees orhistotal sales, turnover or gross receipts, as the case[may][ be,]in business or profession are orislikely to exceedtenlakhs rupees, during such previous year; or(iii) where theprofits and gains from the businessaredeemed to be the profits and gains of the assessee[under]section 44-AE or section 44-BB or section 44-BBB, as[the]case maybe, and the assessee has claimed his income tobe lower than the profits or gains so deemed to be[the]profits and gains of his business, as the case maybe.during such previous year; or (iv) where the provisions of sub-section (4) of section 44ADare applicable in his case and his income exceeds themaximumamount which is not chargeable to income-tax inany previous year, keep and maintain such books of account and other documentsas mayenable the Assessing Officer to compute his total incomein accordance with the provisions of this Act. Provided that in the case of a person being an individual[or]a Hindu undivided family, the provisions of clause[(i)][ and][ clause](ii) shall have effect, as if for the words, “one lakh[twenty][ thousand]rupeesthe words “two lakh fifty thousand rupees” had beensubstituted: Provided further that in the case of a person beinganindividual or a Hindu undivided family, the provisions[of][ clause][ (i)]and clause(ii) shall have effect, asif for the words“tenlakh ^ rupeesthewords“twentyfivelakhrupeeshadbeensubstituted. keep and maintain such books of account and other documentsas mayenable the Assessing Officer to compute his total incomein accordance with the provisions of this Act. Provided that in the case of a person being an individual[or]a Hindu undivided family, the provisions of clause[(i)][ and][ clause](ii) shall have effect, as if for the words, “one lakh[twenty][ thousand]rupeesthe words “two lakh fifty thousand rupees” had beensubstituted: Provided further that in the case of a person beinganindividual or a Hindu undivided family, the provisions[of][ clause][ (i)]and clause(ii) shall have effect, asif for the words“tenlakh ^ rupeesthewords“twentyfivelakhrupeeshadbeensubstituted. (3) The Board may, having regard to the nature of the[business][ or]profession carried on by any class of persons, prescribe[by][ rules,]the books of account and other documents (including[inventories,]wherever necessary)to be kept andmaintainedundersubsection(1)or sub-section(2), the particulars to[be]containedtherein and the form and the manner in which and the[place][ at]which they shall be kept and maintained. (4) Without prejudice to the provisions of sub-section(3), theBoard may prescribe, by rules, the period for which[the][ books][ of]account and other documents to be kept and maintained[under]sub-section (1) or sub-section (2) shall be retained. 44AB.Auditof accountsofcertainpersonscarryingonbusinessorprofession -Everyperson(a)carryingonbusiness shall,if his total sales, turnover or gross[receipts,][ as][ the]case may be, in business exceed or exceeds one crore[rupees][ in]any previous year [***]; Provided that in the case of a person whose— (a).... (b)... get his accounts of such previous year audited by an[accountant]before the specified date and furnish by that date[the][ report][ of]such audit in the prescribed form duly signed and verified[by][ such]accountantandsettingforthsuchparticularsasmaybeprescribed: Provided that this section shall not apply to the person,whodeclaresprofitsandgainsforthepreviousyearinaccordance with the provisions of sub-section (1) of[section][ 44AD] andhis total sales, turnover or gross receipts, as the[case][ may]be,inbusiness does not exceed two crore rupeesin suchprevious year; 44AD. Special provision for computing profits and gamsofbusiness on presumptive basis. - (1) Notwithstanding[anything]to the contrary contained in sections 28 to 43-C, in[the][ case][ of][ an]eligible assessee engaged in an eligible business,[a][ sum][ equal][ to]cent of the total turnover or gross receipts of theeightperassessee in the previous year on account of such businessor, asthe case may be, a sumhigher than the aforesaid sum claimed toshall be deemed tohave been earned by the eligible assesseeof such business chargeable to tax underbe the profits and gainsthehead "Profits and gains of business or professionH Provided that this sub-section shall have effect asif for thewords “eight per cent.”, the words “six per cent,hadbeensubstituted, in respect of the amount of total turnover[or][ gross]receipts which is received by an account payee chequeoranaccount payee bank draft oruseof electronic clearing systemthrough a bank account or through such other electronicmode asor before the duemaybe prescribed during the previous yearsub-section (1) of section 139 in respect of thatdate specified inprevious year. (2)... (3)... (4)... (5)Notwithstanding anything containedin the foregoingof this section, an eligible assessee to whom theprovisionsof sub-section(4) are applicable and whose totalprovisionsincomeexceeds the maximum amount which is not chargeabletoincome-tax, shall berequired to keep and maintain such books ofaccount and other documents as required under sub-section , of section 44-AA and get them audited and furnisha report ofsuch audit as required under section 44-AB. (6) The provisions of this section, notwithstanding anythingcontained in the foregoing provisions, shall not apply[to][ -] (i) a person carrying on profession as referred toin subsection (1) of section 44AA;section (1) of section 44AA; (2)... (3)... (4)... (5)Notwithstanding anything containedin the foregoingof this section, an eligible assessee to whom theprovisionsof sub-section(4) are applicable and whose totalprovisionsincomeexceeds the maximum amount which is not chargeabletoincome-tax, shall berequired to keep and maintain such books ofaccount and other documents as required under sub-section , of section 44-AA and get them audited and furnisha report ofsuch audit as required under section 44-AB. (6) The provisions of this section, notwithstanding anythingcontained in the foregoing provisions, shall not apply[to][ -] (i) a person carrying on profession as referred toin subsection (1) of section 44AA;section (1) of section 44AA; (II) a person earning income in the nature of commissionorbrokerage; orbrokerage; or (iii) a person carrying on any agency,business. Explanation, - For the purposes of this section,- ,(a) "eligible assessee' means,- (i)anindividual.HinduundividedfamilyoraHinduundividedfamilyorapartnership firm, who is a resident, but not a limitedliability partnership firm as defined under clause (n)of sub-section (1) of section 2 of the Limited LiabilityPartnership Act, 2008 (6 of 2009); andliability partnership firm as defined under clause (n)of sub-section (1) of section 2 of the Limited LiabilityPartnership Act, 2008 (6 of 2009); and(ii)who has not claimed deduction under any of thesections10-A,10-AA,10-B,10-BA or deductionunder any provisions of Chapter Vl-A under theheading"C.-Deductionsinrespectofcertainincomesin the relevant assessment year;sections10-A,10-AA,10-B,10-BA or deductionunder any provisions of Chapter Vl-A under theheading"C.-Deductionsinrespectofcertainincomesin the relevant assessment year; (b) "eligible business' means,- (i)any business except the business of plying, hiringorleasing goods carriages referred to in section 44-AE; andany business except the business of plying, hiringorleasing goods carriages referred to in section 44-AE; and (ii)whosetotalturnoverorgrossreceiptsintheorgrossreceiptsintheprevious year does not exceed an amount of twocrore rupees.”crore rupees.” Following provisos shall be inserted after sub-clause (ii) ofclause (b) of Explanation to section 44AD by the FinanceAct, 2023, w.e.f. 1.4. 2024: Provided that where the amount or aggregate of theamounts received during the previous year,in cash,[does]not exceedfive per cent of the total turnover or grossreceipts of such previous year, this sub-clause shall[have]effect asif for'the words "two crore rupees", the[words]"three crore rupees" had been substituted; Provided further that for the purposes of thefirstproviso, the receipt of amount or aggregate of amounts bya cheque drawn on a bank or by a bank draft, which[is][ not]account payee, shall be deemed to be the receipt in[cash.”] 5)He would then take the Court to the provisions of Section[119][ of]the Act, which reads as under:the Act, which reads as under: “119. Instructions to subordinate authorities.- (1)[The]Boardmay,fromtimetotime,issuesuchorders,instructionsanddirections to other income-tax authorities asit may[deem]fit forthe proper administration of this Act, and such authorities andallother persons employed in the execution of this Act[shall][ observe]and follow such orders, instructions and directions[of][ the][ Board:]Providedthat nosuchorders,instructionsordirectionsshall be issued- (a) so as to require any incorpe-tax authority to makeaparticular assessment or to dispose of a particular[case]inaparticular manner; or(b) so as tointerfere withthediscretionof the[***]Commissioner(Appeals)intheexerciseofhisappellatefunctions. (2) Without prejudice to the generality of the foregoing power,- (a)... (b) the Board may,ifit considersit desirable or expedientso to do for avoiding genuine hardshipin any caseor classof (a) so as to require any incorpe-tax authority to makeaparticular assessment or to dispose of a particular[case]inaparticular manner; or(b) so as tointerfere withthediscretionof the[***]Commissioner(Appeals)intheexerciseofhisappellatefunctions. (2) Without prejudice to the generality of the foregoing power,- (a)... (b) the Board may,ifit considersit desirable or expedientso to do for avoiding genuine hardshipin any caseor classof casesby generalor specialorder,authorise any income-taxauthority,notbeinga Commissioner(Appeals)toadmitanapplication or claim for any exemption, deduction,[refund][ or][ any]other relief under this Act after the expiry of the period specifiedby or under this Act for making such application or[claim][ and][ deal]with the same on merits in accordance with law;authority,notbeinga Commissioner(Appeals)toadmitanapplication or claim for any exemption, deduction,[refund][ or][ any]other relief under this Act after the expiry of the period specifiedby or under this Act for making such application or[claim][ and][ deal]with the same on merits in accordance with law; (c) the Board may,if it considersit desirable or[expedient]so to do for avoiding genuine hardshipin any caseor class ofcasesby general or special order for reasons to be specifiedtherein, relax any requirement contained in any of[the][ provisions]of Chapter IV or Chapter Vl-A, where the assessee has[failed to]comply with any requirementspecifiedin suchprovisionforclaiming deduction thereunder, subject to the following[conditions,]namely:- (i)the default in complying with such requirement wasdueto circumstancesbeyondthecontrolof theassessee; anddueto circumstancesbeyondthecontrolof theassessee; and (ii)the assessee has complied with such requirementbefore the completion of assessment in relation tothepreviousyearinwhichsuchdeductionisclaimed:before the completion of assessment in relation tothepreviousyearinwhichsuchdeductionisclaimed: Provided that the Central Government shallcause every order issued under this clause to belaid before each House of Parliament. 3. r * *]” B)Lastly, the learned Counsel for the Petitioner would[place][ reliance] on acircular No.05/2010, issued by the Board and titled[as explanatory]notes to the provisions of the Finance (No.2) Act,[2009,][ and][ therein,][ he]would lead the Court to paras.21.2(e) and 21.2(f),[which][ read as][ under:]notes to the provisions of the Finance (No.2) Act,[2009,][ and][ therein,][ he]would lead the Court to paras.21.2(e) and 21.2(f),[which][ read as][ under:] “21.2.Thesalient features of the new presumptivetaxation scheme are as under: (a).,. (b)... (c),.,. (d)... (e) An assesseeopting for the above scheme is exemptedfrom maintenanceof books of accounts related to such businessasrequired under section 44AA of the Income-tax Act.(f) An assessee with turnover below Rs.40 lakhs, whoshows an incomebelow the presumptive rate prescribed underin case his total income exceeds the taxablethese provisions,inmaintain books of accounts and also get themlimit, required, toaudited. (g) of Section 44AA,SectionHe would submit that the provisions7)44AB and Section44AD deal with presumptive income and that by theBoard has been pleased to create a separateCircular No.5 of 2010, theincome/earning from business etc., does notclass of assesses, whoseof such class ofexceed Rs.40 Lakhs in the revenue year and in respectdeemed it fit to exempt them from the rigors ofassessees, the Board hasexemption from producing their books oftheprovision by providingof audit; that theaccounts along with the return of income for the purposeassessment being contrary to the explanatory notesunder theimpugnedwarrants intervention and thel-inance(No.2) Act of 20,09, the sameHe would further contend that theimpugned endorsement be set aside119 of the Act clearly mandate that all authoritiesprovisions of Section (g) of Section 44AA,SectionHe would submit that the provisions7)44AB and Section44AD deal with presumptive income and that by theBoard has been pleased to create a separateCircular No.5 of 2010, theincome/earning from business etc., does notclass of assesses, whoseof such class ofexceed Rs.40 Lakhs in the revenue year and in respectdeemed it fit to exempt them from the rigors ofassessees, the Board hasexemption from producing their books oftheprovision by providingof audit; that theaccounts along with the return of income for the purposeassessment being contrary to the explanatory notesunder theimpugnedwarrants intervention and thel-inance(No.2) Act of 20,09, the sameHe would further contend that theimpugned endorsement be set aside119 of the Act clearly mandate that all authoritiesprovisions of Section areboundtoobserveandfollowallsuchorders,instructionsanddirectionsissuedbytheBoardandtheexplanatorynote,moreparticularly,para.21.2(e)and21.2(f)shouldnotbecontrarytotheexceptions as set out in the proviso to sub-section (1) of Section 119 ofthe Act, the Returning Officer-1®' Respondent was bound to obey thedictate of the circular as noted supra. 8)Per contra, the learned Standing Counsel appearingfor the1Respondent would make a valiant attempt to take the Court to proviso[ (f)]to sub-section (9) of Section 139 of the Act to contend that the productionof.all books of accounts are mandatory.He would also[take][ the][ Court]through the provisions of Section 44AD and would vehemently[contend]that there is no exception to the mandate of the law and that being thepositionobtainingasonthe, dateof assessment,theendorsementholding the returns as defective does not warrant any[interference.] Cnaspecific query asto theefficacyof thecircular[and]thebinding nature of the same, he would fairly admit the position. 10)Inviewoftheabove,theshortquestionthatarisesforoansideration is: WhethertheAssessingCfficererredinnotextendingtothePetitioner, the benefit of Circular No.5 of 2010? Vi 11 GN, J. & VGKR, J.W.P,No.33071 of 2017 11)The provisions of sub-section (1) of Section 119 of the Act havemakeit amply clear that the Board may issue such orders,[instructions]and directions, etc., from time to time to other income-tax authorities andsuch authorities and ail other persons employed in[the][ execution][ of][ the]Act shall observe and follow such orders, instructions and directions ofthe Board.makeit amply clear that the Board may issue such orders,[instructions]and directions, etc., from time to time to other income-tax authorities andsuch authorities and ail other persons employed in[the][ execution][ of][ the]Act shall observe and follow such orders, instructions and directions ofthe Board. 12)It is not in dispute that the Circular No.5 of 2010 has been issuedby the Board andin the absence of any authority to the contrary, theauthority/officer was boundto obey the mandateof[the]circularandParagraph21(2)(t)clearly exemptsanassessee whooptsforthescheme from maintenance of books of accounts related to such businessas required under Section 44AA of the Act.The failure[of][ the][ A.O.]toadherewiththe mandateof thecircular orin other words exemptiongranted with the circular, is wholly unsustainable. 13)The law in this regard is no more res Integra.The Hon'ble ApexCourt as in the case of CCE & Service Tax v. Merino Panel ProductLtd., (2023) 2 see 597 was pleased to held in paras.19, 20, 21, 23, 25 &26,whicharereproducedhereunderforthesakeofbrevityandconvenience: “19.However,whatneedstobeadditionallyascertainediswhether the appellant actedin contravention of its[own]circular.The reason for thisis that while citation of an incorrect provision > maynot,byitself,leadtoaninvalidationof theshow-causenotice,but contraventionof a bindingcircular that[mandates]aparticular methodology to be followed might. The power[under][ the]CEAfor issuanceof such administrative/executivedirectionsiscontainedin Section 37-B. The binding nature of suchcircularshas long been acknowledged by this Court. 13)The law in this regard is no more res Integra.The Hon'ble ApexCourt as in the case of CCE & Service Tax v. Merino Panel ProductLtd., (2023) 2 see 597 was pleased to held in paras.19, 20, 21, 23, 25 &26,whicharereproducedhereunderforthesakeofbrevityandconvenience: “19.However,whatneedstobeadditionallyascertainediswhether the appellant actedin contravention of its[own]circular.The reason for thisis that while citation of an incorrect provision > maynot,byitself,leadtoaninvalidationof theshow-causenotice,but contraventionof a bindingcircular that[mandates]aparticular methodology to be followed might. The power[under][ the]CEAfor issuanceof such administrative/executivedirectionsiscontainedin Section 37-B. The binding nature of suchcircularshas long been acknowledged by this Court. 20. In Paper Products Ltd. v. CCE (1999) 7 SCC 84][the][ settled]position on this point of law was noted in the following passage(SCC p. 87, para 4) “4. The question for our consideration in these appeals[is];what is the true nature and effect of the circulars issued bythe Boardin exercise of its power under Section 37-B[of]the Central Excise Act, 1944? This question is no more[res]integra in view of the various judgments of this Court.[This]Courtin a catena of decisions has held that the circularsissued under Section 37-B of the said Act are bindingonthe Department and the Department cannot be permittedto take a stand contrary to the instructions issued by theBoard. These judgments have also held that the positionmay bedifferent withregardtoan assessee whocancontest the validity or legality of such instructions[but][ so][ far]astheDepartmentisconcerned,suchrightisnotavailable.” 21. Therationalebehindtherequirementfor the Revenuetoabide byits own administrative directions and interpretationofdifferent parts of the CEA and CEVR, was commented uponinRanadey Micronutrients v. CCE[ (1996) 10 SCC 387]: (SCC p.392, paras 15-16) “15.Therecanbenodoubtwhatsoever,inthecircumstances,thattheearlier andlatercircularswereissued by the Board under the provisions of Section 37-B,and the fact that they do not so recite does not mean[that]theydonotbindCentralExciseofficersorbecomeadvisoryin character. There can be no doubt whatsoeverthat after 21-11-1994, excise duty couldbe levieduponmicronutrients only under the provisions of Heading[31.05]as “other fertilisers”.If the later circularis contrary[to][ the] terms of the statute,it must be withdrawn. While the[later]circular remainsin operation the Revenueis bound[by]itand cannot be allowed to plead that it is not valid.16. We reject the submission to the contrary made by[the]learned counsel for the Revenue andin the affidavit[by]M.K.Gupta, working as Directorin the Department ofRevenue, Ministry of Finance.'One should have thoughtthatanofficer of theMinistryof Finance wouldhavegreater respect for circulars such as these issued[by][ the]Board, which also operates under the aegis of the MinistryofFinance,foritistheBoard whichis,bystatute,entrustedwiththetaskof classifyingexcisablegoodsuniformly. The whole objective of such circulars is[to][ adopt]a uniform practice and to inform the trade as to howaparticular product will be treated for the purposes[of][ excise]duty.It doesnotliein the mouthof the Revenuetorepudiate a circular issued by the Board on the basis[that]itis inconsistent with a statutory provision. Consistency[and]discipline are of far greater importance than the winningorlosing of court proceedings.”23. While the Department's hands are tied with regardtoitsCirculars, no such prohibition operates on courts and[tribunals.]Itis incumbent upon the adjudicatory bodies to ascertain[the][ correct]position of law unencumbered by the Revenue's interpretationascrystallised in its administrative directions. A Constitution[Bench]of this Courtin CCE v. Dhiren Chemicals Industries[[(2002)][ 2]see127] while interpreting an exemptionnotificationissuedunder the CEA, had noted in para 11 of its judgment[that]; (SCCp. 130) 11. ...regardless of the interpretation that we have[placed]onthe said phrase [‘‘appropriate”],if there are circularswhich have been issued by the Central Board of Exciseand Customs which place a different interpretation[upon]the said phrase, that interpretation will be binding[upon][ the]Revenue.” 25. Following this, the position of law which materialised[was][ that]the Revenue was at liberty to issue circulars on the[interpretation]or applicationof different provisionsbutcourts andtribunals would give effect to the decisions of the Supreme Court[as][ the]law of the land. Another Constitution Bench of this[Court][ in][ CCE]V,Ratan Melting & Wire Industries [(2008) 13 SCC 1] drew[a][ line]in the sand with regard to any future confusion on[this][ point,]indefinitive terms and held as follows(SCC p. 4, para 7) “7. Circulars and instructions issued by the Board[are]nodoubt binding in law on the authorities under the respectivestatutes, but when the Supreme Court or the High Courtdeclares the law on the question arising for consideration,it would not be appropriate for the Court to direct[that][ the]circularshouldbegiveneffecttoandnottheviewexpressed in a decision of this Court or the High Court.[So]farastheclarifications/circularsissuedbytheCentralGovernment and of the State Government are concernedthey represent merely their understanding of the statutoryprovisions. They are not binding upon the court. It[is][ for][ the]Court to declare what theparticular provision of statutesays andit is not for the Executive. Looked at from[another]angle,acircularwhichiscontrarytothestatutoryprovisions has really no existence in law.” 26. The other aspect of the dispute deals with whether[the][ plain]wording of Rule 9 of the CEVR abrogates the Circular[in][ any][ way.]On this point, a very recent decision of this Court[by][ a three-]Judge Bench in C/Tv. Ahmedabad Urban Development Authority[(2023) 4 SCC 561] has provided an interpretation of[various][ past]decisions,includingtheConstitutionBenchinRatanMelting[(2008) 13 SCC1], andlaid down that(Ahmedabad[Urban]Development Authority case [(2023) 4 SCC 561], SCC[para][ 136)] "136.In the opinion of this Court, the views expressedinKeshavji Ravji[ (1990) 2 SCC 231], Indian Oil Corpn.[(2004) 3 SCC 488] and Ratan Melting & Wire Industries[(2008) 13 SCC 1] (though the last .decision does not[cite]Navnit Lai Jhaveri [(1965)1 SCR 909AIR 1965 SC1375]),reflect the correct positioni.e. that circularsarebinding upon departmental authorities,if they advanceaproposition within the framework of the statutory provision.However,if they are contrary to theplain wordsofastatute, they are not binding.Furthermore, they cannot bind the courts, which have to independently interpret[the]statute,in their own terms. At best,in such a task, theymay be considered as departmental understanding on[the]subject and have limited persuasive value. At the highest,they are binding on tax administrators and authoritiesif■they accord with and are not at odds with the statute; at theworst, if they cut down the plain meaning of a statute, or flyon the face of their express terms, they are to be ignored.” (emphasis in original)” 14.A bare reading of the above would clearly demonstrate the bindingnature of the circulars issued by the Board on the department anditsauthorities and officers.nature of the circulars issued by the Board on the department anditsauthorities and officers. 15.The Writ Petitionis allowed.The impugned endorsement/order,dated 07.08.2017, issued by the 1®* Respondent is set aside.The matterisremittedbacktothe1®’RespondentAssessingAuthorityforassessment/validation of the returns in terms of the explanatory notes tothe provisions of the Finance (No.2) Act, 2009.No costs.dated 07.08.2017, issued by the 1®* Respondent is set aside.The matterisremittedbacktothe1®’RespondentAssessingAuthorityforassessment/validation of the returns in terms of the explanatory notes tothe provisions of the Finance (No.2) Act, 2009.No costs. Consequently, miscellaneous petitions, pendingif any,[shall][ stand]closed. 15.The Writ Petitionis allowed.The impugned endorsement/order,dated 07.08.2017, issued by the 1®* Respondent is set aside.The matterisremittedbacktothe1®’RespondentAssessingAuthorityforassessment/validation of the returns in terms of the explanatory notes tothe provisions of the Finance (No.2) Act, 2009.No costs.dated 07.08.2017, issued by the 1®* Respondent is set aside.The matterisremittedbacktothe1®’RespondentAssessingAuthorityforassessment/validation of the returns in terms of the explanatory notes tothe provisions of the Finance (No.2) Act, 2009.No costs. Consequently, miscellaneous petitions, pendingif any,[shall][ stand]closed. SD/-A VIJAYA BABUASSISTANT/REGISTRAR //TRUE COPY// W'SECTION OFFICER To, 1. TheDeputyCommissionerofIncomeTax,Bangalore,CentralizedProcessingCentre,PostBagNo.:1,ElectronicCityPostOffice,Bangalore - 560 100.ProcessingCentre,PostBagNo.:1,ElectronicCityPostOffice,Bangalore - 560 100. 2. The Income Tax Officer, Ward 2, Bhimavaram, Aayakar Bhavan, J.PRoad, Bhimavaram - 534 201.Road, Bhimavaram - 534 201. 3. The Commissioner of Income Tax, Centralised Processing Centre, PostBag No.: 1, Electronic City Post Office, Bangalore[-][ 560][ 100.]Bag No.: 1, Electronic City Post Office, Bangalore[-][ 560][ 100.] 4.One CC toSRI. A.V.A. SIVA KARTHIKEYA Advocate 5.One CC to SRI. VIJAY KUMAR PUNNA Advocate 5.One CC to SRI. VIJAY KUMAR PUNNA Advocate 6.One CC to SRI. B NARASIMHA SARMA Advocate HIGH COURT DATED:08/07/2024 ORDER WP.No.33071 of 2017 %o0 4 FFRoCo^ Curreni aecuon. y ALLOWING THE WP WITHOUT COSTS