A.R. Tiwari, J.
1. At the instance of the applicant/assessee, the Tribunal has stated the case and referred the undernoted question of law, under Section 256(1) of the Income-tax Act, 1961 (for short, 'the Act'), arising out of the order passed on March 20, 1990, in I. T. A. No. 96/(Ind) of 1989 on an application registered as R. A. No. 129/(Ind) of 1990 for our opinion :
'Whether, on the facts and in the circumstances of the case and on a proper construction of Sections 143(1) and 143(2)(b) of the Income-tax Act and Instruction No. 1617, dated May 18, 1985, issued by the Central Board of Direct Taxes, the Tribunal was justified in holding that the assessment completed under Section 143(1) could be reopened under Section 143(2)(b) otherwise than procedure for scrutiny of five per cent. cases laid down in the said instructions ?'
2. Briefly stated, the facts of the case are that the year of assessment is 1985-86. The assessee is a firm. The assessment was initially completed under Section 143(1) of the Act on December 24, 1985, accepting the returned income of Rs. 90,084. The assessment was, however, reopened under Section 143(2)(b) with the previous approval of the Inspecting Assistant Commissioner of Income-tax on proper reasons for fresh assessment, making an addition of Rs. 62,025 in the trading account and by making a disallowance of Rs. 5,000 out of the claim of commission paid. A copy of the order of the Income-tax Officer, dated March 17, 1988, is marked as annexure 'A'. The assessee filed the appeal before the Commissioner of Income-tax (Appeals) who upheld the addition of Rs. 62,025 and partly allowed the appeal reducing the disallowance of Rs. 5,000 to Rs. 2,500. A copy of the order is marked as annexure 'B'. The assessee then filed the appeal before the Tribunal. A preliminary objection as to the validity of the fresh assessment under Section 143(2)(b) was raised with reference to Instruction No. 1617, dated May 18, 1985, of the Central Board of Direct Taxes. According to the said instruction in all the cases other than company and trust cases, with returned income/loss up to rupees one lakh, the assessment should be completed under Section 143(1) of the Act and five per cent. of the cases where the assessments were completed under Section 143(1) of the Act should be taken up for scrutiny on a random sample basis. Further, the said instructions mentioned that the Commissioner of Income-tax should lay down the random number and the Income-tax Officer should complete selection of cases for random scrutiny by August 31 of the year. Relying upon these instructions, it was argued by the assessee before the Tribunal that the assessment under Section 143(1) was final and was open to scrutiny only in the manner provided in the instructions and recourse to Section 143(2)(b) of the Act was not permissible. The Tribunal did not accept the contention and observed that the instructions could not make the provisions contained in Section 143(2)(b) of the Act non-existent. The Tribunal, therefore, dismissed the appeal. Aggrieved, the applicant filed the application under Section 256(1) of the Act. On that application, the Tribunal stated the case and referred the aforesaid question.
3. We have heard Shri Nazir Singh, learned counsel for the applicant/ assessee, and Shri D.D. Vyas, learned counsel for the non-applicant/Department.
4. Shri Nazir Singh contended that the instructions had the force of law and were binding on the authorities. He went on to argue that the instructions clipped the power available under Section 143(2)(b) of the Act. Pointing out our attention to relevant sections for issuance of such instructions, he placed reliance on Jaikishan Gopihishan and Sons v. CIT : [1989]178ITR481(MP) . He also submitted that fresh a instruction, dated April 1, 1987, further fortified the course to be adopted. On these grounds he urged that the Tribunal did not take the correct view. According to him, the case had attained finality and was not liable to be reopened by recourse to Section 143(2)(b) of the Act and that the matter could be reopened only on scrutiny in conformity with the instructions. He, therefore, submitted that the Tribunal committed an error of law in permitting the reopening and fresh assessment to prevail.
5. Shri Vyas, on the other hand, contended that the provision of law is not intended to be superseded by the instructions. He also submitted that additional provision of scrutiny of five per cent. cases on random sample basis had not the result of putting the aforesaid provision contained in Section 143(2)(b) of the Act under eclipse.
6. Section 143(2)(b) of the Act provided as under :
'143. Assessment--(2) Where a return has been made under Section 139, and-- ....
(b) whether or not an assessment has been made under Subsection (1), the Assessing Officer considers it necessary or expedient to verify the correctness and completeness of the return by requiring the presence of the assessee or the production of evidence in this behalf.'
7. Now, this has been superseded by the Taxation Laws (Amendment) Act, 1970, with effect from April 1, 1971, and later on amended by the Finance Act, 1974, with effect from April 1, 1975, the Finance Act, 1976, with effect from April 1, 1976, the Finance (No. 2) Act, 1980, with effect from April 1, 1980, and the Finance Act, 1987, with effect from April 1, 1988. Prior to these, the provisions had stood as noted above.
8. We may usefully quote Herbert Broom's Legal Maxims (at pages 466-467) :
'Qui haeret in litera haeret in cortice (Co. Litt. 283 b.)- 'In interpreting an Act of Parliament, likewise, it is not always a true line of construction to decide according to the strict letter of the Act ; but, subject to the remarks already made, the courts may consider what is its fair meaning, and expound it differently from the letter, in order to preserve the intent. The meaning of particular words, indeed, in statutes, as well as in other instruments, is to be found not so much in a strict etymological propriety of language, nor even in popular use, as in the subject or occasion on which they are used, and the object that is intended to be attained.''
9. The object intended to be attained is thus required to be kept in focus. In our view, apart from possible recourse to the aforesaid provision, it was considered necessary to issue the instructions so as to net five per cent. cases for scrutiny as well on random sample. Legally speaking these instructions are in aid and not for destruction of the provision permitting reopening of the assessment. It cannot be conceived that there may be reason --or valid ground for several cases to reopen the same. It is only on proper grounds that recourse to the aforesaid provision is had to avoid adverse effect on the interest of the Revenue. The instructions were thus issued in regard to five per cent. cases. These instructions do not in any way interfere with the operation of the provisions contained in the statute.
10. We, therefore, reach the conclusion that the instructions did not have the potential to dislodge the aforesaid provision. The recourse to the aforesaid provision had depended on the satisfaction of the Assessing Officer, whereas recourse to the instruction was permissible in conformity with the procedure laid down for the purposes of scrutiny of cases, restricted to five per cent. in number, on random sample basis. The purpose of the instruction was to provide extra check and scrutiny to eliminate the chances of incorrectness or evasion of the taxes in any manner. Luculently the instruction did not control the aforesaid provision, permitting reopening of the assessment and did not render it otiose.
11. In Bengal Iron Corporation v. CTO : 1993(66)ELT13(SC) , it is held as under (headnote) :
'Clarifications/circulars issued by the Central Government and/ or State Government regarding taxability of certain item represent merely their understanding of the statutory provisions. They are not binding upon the courts.'
12. The aforesaid provision permitting reopening, notwithstanding the instruction remained operative and was available for proper proceeding. The instruction did not have the effect of demolishing this section even for a restricted period. The provision and instruction had different fields to operate in and different purposes to serve. They cannot be labelled as mutually destructive of each other. We are, therefore, of the opinion that the Tribunal did not commit any error in taking the view that it took.
13. In the result, we hold that the Tribunal was justified in holding that the assessment completed under Section 143(1) could be reopened under Section 143(2)(b) otherwise than procedure for scrutiny of five per cent. cases laid down in the Instruction No. 1617, dated May 18, 1985.
14. Accordingly, we answer the question in the affirmative, i.e., in favour of the non-applicant/Department and against the applicant/assessee.
15. The reference application is answered accordingly, but without any order as to costs.
16. Counsel fee for each side is, however, fixed at Rs. 750, if certified.
17. Transmit a copy of this order to the Tribunal for compliance in accordance with the law.