The main legal point established in the judgment is that the Commissioner's jurisdiction under s. 263 is contingent on the existence of an order passed by the ITO, and that an order under s. 217 must be made by the ITO to give effect to the section.

Venkataramaiah, J.

1. "If the quest for certainty in law is often baffled, as it is according to Judge Jerome Frank in 'Law and the modern Mind' the reasons are mainly two : firstly, the lack of precise formulation of even statutory law so as to leave lacunae and loopholes in it giving scope to much avoidable disputation; and, secondly, the unpredictability of the judicial rendering of the law after every conceivable as well as inconceivable aspect of it has been explored and subjected to forensic debate. Even the staunchest exponents of legal realism, who are apt to treat the quest for certainty in the administration of justice in accordance with law, in an uncertain world of imperfect human beings, to be practically always futile and doomed to failure, will not deny the desirability and the beneficial effects of such certainty in law as may be possible. Unfortunately, there are not infrequent instances where what should have been clear and certain, by applying well-established canons of statutory construction becomes befogged by the vagaries, if one may use a possibly strong word, without disrespect, of judicial exposition divorced from these canons."

2. These are the opening words of the learned Cheif Justice in his judgment in Ganpat Ladha v. Sashikant Vishnu Shinde (Civil Appeal No. 1717 of 1975 on the file of the Supreme Court of India decided on 21-2-1978). These words are equally relevant to the cases before us. The question before us relates to the power of the CIT under s. 263 of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), to issue direction to the ITO to pass an order levying interest under s. 217(1) of the Act, in a case where no action has been taken by the ITO yet to exercise his power under s. 217(1). The facts are briefly these :

In each of these cases, the ITO concerned passed an order of assessment under s. 143(3) of the Act, but that order did not state anything about the liability of the assessee concerned to pay interest under s. 217(1) of the Act. When this fact came to the notice of the CIT, he initiated action under s. 263 of the Act and issued notices to the assesses concerned calling upon them to show cause as to why an order should not be made charging interest under s. 217 of the Act. The assessees appeared before the Commissioner and raised various objections and one of them was no order passed by the ITO concerned either levying or not levying interest under s. 217 in respect of which he could exercise his revisional power. The Commissioner overruled the said objections and directed the ITO to levy interest under s. 217. The assessees preferred appeals against the orders of the Commissioner had no powers under s. 263 to pass the orders in question and accordingly cancelled the proceedings initiated by him. At the instance of the Commissioner, the question whether the Commissioner had Jurisdiction under s. 263 of thee Act to pass the orders in question which is common to all these cases, has been referred to this court under s. 256(1) of the Act.

3. Sub-section 910 of s. 263 which is relevant for the purpose of these cases reads :

"The Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Income-tax Officer is erroneous in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment :

It is clear that the power under s. 263 can be exercised by the Commissioner when the following factors co-exist :

(i) There should be a proceeding under the Act : (ii) in such proceeding the Income-tax Officer must have passed an order; and (iii) the Commissioner should consider that the sa