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1986 Supreme(Pat) 278
PATNA HIGH COURT
Uday Sinha and Ashwini Kumar Sinha JJ.
Commissioner Of Income Tax
Versus
Rambha Devi
Taxation Case No. 21 of 1978 ; 23 of 1978 ;
Decided On : SEPTEMBER 04, 1986
The Commissioner of Income-tax has the power to act under Sec.263(1) of the Act even in cases where the order of assessment has been passed under Sec.143(1) of the Act in pursuance of the scheme to help new taxpayers in small income groups.
Headnote:
INCOME TAX - Scheme to help new taxpayers in small income group - Power of Commissioner to act under Sec.263(1) of the Act - Order of assessment made under Sec.143(1) in pursuance of the scheme - Whether erroneous and prejudicial to the Revenue - Whether Commissioner can interfere with such order - Held, yes.
Fact of the Case:
The assessee, a lady, filed her return of income for the assessment years 1970-71, 1971-72 and 1972-73 under the scheme to help new taxpayers in small income groups. The Income-tax Officer accepted the return without any enquiry and passed orders of assessment under Sec.143(1) of the Income-tax Act, 1961. The Commissioner of Income-tax, acting under Sec.263(1) of the Act, set aside the orders of assessment and directed the Income-tax Officer to make fresh assessments after proper enquiry. The Tribunal cancelled the orders passed by the Commissioner of Income-tax. On reference to the High Court:
Finding of the Court:
The High Court held that the Commissioner of Income-tax was not divested of the power to act in terms of Sec.263(1) of the Act. The scheme did not cover cases of ladies and minors and, therefore, the Commissioner had full jurisdiction to act in terms of Sec.263(1) of the Act. The order of the Income-tax Officer was erroneous and prejudicial for not having taken note of the provisions of Section 143(1) of the Act. It was prejudicial to the Revenue, as the necessary enquiry had not been made by the Income-tax Officer.
Issues: 1. Whether, on the facts and in the circumstances of the case, the Tribunal has rightly held that the Commissioner of Income-tax, acting under Section 263(1) of the Income-tax Act, 1961, could not interfere with an order of assessment made under Sec.143(1) in pursuance of the Scheme to help the new taxpayers in small income group launched by the Government? 2. Whether, on the facts and in the circumstances of the case, the Tribunal has rightly cancelled the order passed by the Commissioner of Income-tax under Sec.263(1) of the Income-tax Act, 1961, for each of the assessment years 1970-71, 1971-72 and 1973-74?
Ratio Decidendi: The Commissioner of Income-tax has the power to act under Sec.263(1) of the Act even in cases where the order of assessment has been passed under Sec.143(1) of the Act in pursuance of the scheme to help new taxpayers in small income groups. The order of assessment passed by the Income-tax Officer was erroneous and prejudicial to the Revenue as the necessary enquiry had not been made by the Income-tax Officer.
Final Decision: The references were disposed of. Both the questions were answered in favour of the Revenue and against the assessee.
1. These are three references in terms of Sec.256(1) of the Income-tax Act, 1961 (hereinafter called "the Act"). The questions referred to us for our opinion are the following :
"(1) Whether, on the facts and in the circumstances of the case, the Tribunal has rightly held that the Commissioner of Income-tax, acting under Section 263(1) of the Income-tax Act, 1961, could not interfere with an order of assessment made under Sec.143(1) in pursuance of the Scheme to help the new taxpayers in small income group launched by the Government ?
(2) Whether, on the facts and in the circumstances of the case, the Tribunal has rightly cancelled the order passed by the Commissioner of Income-tax under Sec.263(1) of the Income-tax Act, 1961, for each of the assessment years 1970-71, 1971-72 and 1973-74?"
2. Earlier, we had heard Taxation Cases Nos. 93 to 98 of 1978 (CIT V/s. Pushpa, Devi [1987] 164 ITR 639) which we disposed of by our judgment dated June 13, 1986. The questions referred to us for our consideration in the present references fell for consideration in the earlier cases as well. In the aforesaid earlier cases, questions Nos. 1 and 4 were as follows:
"(1) Whether, on the facts and in the circumstances of the case, the Tribunal has rightly held that the assessment orders, having been passed by the Income-tax Officer after necessary enquiries in pursuance of the Scheme to help the new taxpayers in the small income groups launched by the Government, were not erroneous as to enable the Commissioner of Income-tax to assume jurisdiction under Sec.263(1) of the Income-tax Act, 1961?......
(4) Whether, in view of the decision of the Income-tax Appellate Tribunal, Patna, in the case of Smt. Rambha Devi V/s. ITO (ITA Nos. 1713 to 1715 of 1974-75), the Tribunal has rightly held that the Commissioner of Income-tax acting under Sec.263(1) of the Income-tax Act, 1961, could not legally set aside an order of assessment made under Sec.143(1) in pursuance of the scheme to help the new taxpayers in the small income group evolved by the Government ?"
3. Question No. 1 was identical in both the cases. Question No. 1 in both the cases, referred to the power of the Commissioner to act under Sec.263(1) of the Act. In that case, we held that the Commissioner was not divested of the power to act in terms of Sec.263(1) of the Act. The scheme did not cover cases of ladies and minors and, therefore, the Commissioner had full jurisdiction to act in terms of Sec.263(1) of the Act. In paragraph 26 of the judgment, we held that the Tribunal was not right in holding that the order of the Income-tax Officer was not erroneous which could enable the Commissioner to assume jurisdiction under Sec.263(1) of the Act. The first question was, therefore, answered in the negative. That meant that the Tribunal was not right in holding that the Commissioner of Income-tax could not interfere with the order of assessment made under Sec.143(1) of the Act in pursuance of the "Scheme to help new taxpayers in small income groups". It may be stated here that the present case arose as a sequel to the same scheme as fell for consideration in the case of Pushpa Devi [1987] 164 ITR 639. In our view, therefore, following our earlier decision, the first question referred to us in these cases must be answered in the negative, in favour of the Revenue and against the assessee.
4. The first question having been answered in favour of the Revenue, it necessarily follows that the Tribunal was not right in cancelling the order passed by the Commissioner of Income-tax under Sec.263(1) of the Act for the assessment years 1970-71, 1971-72 and 1972-73.
5. Mr. Rastogi, learned counsel for the assessee, contended that even if the decision of this court in regard to question No. 1 is unassailable, yet question No. 2 must be answered in favour of the assessee. It was contended that in order to exercise jurisdiction in terms of Sec.263(1) of the Act, it is not enough to hold that the order wa
