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1988 Supreme(Pat) 131
PATNA HIGH COURT
Uday Sinha and Krishna Ballabh Sinha JJ.
Commissioner Of Income Tax
Versus
Pushpa Devi
Taxation Case No. 114 of 1979 ; 115 of 1979 ;
Decided On : APRIL 05, 1988
Important Points
Subject
Income Tax - ASSESSMENT
Act Referred
Headnote
INCOME TAX - Assessment - Scheme for mass communication to encourage new assessees in small income groups to furnish returns of income voluntarily - Assessment of ladies and minors - Whether to be made under Sec.143(1) or Sec.143(3) of the Income-tax Act, 1961 - Whether the Commissioner of Income-tax had jurisdiction to set aside the assessment orders passed by the Income-tax Officer under Sec.263(1) of the Act.
Fact of the Case:
The assessee, a lady, was assessed under Sec.143(1) of the Income-tax Act, 1961, in pursuance of a scheme for mass communication to encourage new assessees in small income groups to furnish returns of income voluntarily. The Commissioner of Income-tax set aside the assessment order under Sec.263(1) of the Act, holding that the assessment should have been made under Sec.143(3) of the Act, as the assessee was a lady and the scheme did not apply to ladies and minors.
Finding of the Court:
The court held that the assessment of the assessee should have been made under Sec.143(3) of the Act, as the scheme did not apply to ladies and minors. The court further held that the Commissioner of Income-tax had jurisdiction to set aside the assessment order under Sec.263(1) of the Act, as the assessment order was erroneous and prejudicial to the Revenue.
Issues: 1. Whether the assessment of the assessee should have been made under Sec.143(1) or Sec.143(3) of the Income-tax Act, 1961? 2. Whether the Commissioner of Income-tax had jurisdiction to set aside the assessment order under Sec.263(1) of the Act?
Ratio Decidendi: 1. The scheme for mass communication to encourage new assessees in small income groups to furnish returns of income voluntarily did not apply to ladies and minors. Therefore, the assessment of the assessee, a lady, should have been made under Sec.143(3) of the Act, which requires a detailed inquiry into the source of the assessee's income. 2. The Commissioner of Income-tax had jurisdiction to set aside the assessment order under Sec.263(1) of the Act, as the assessment order was erroneous and prejudicial to the Revenue. The assessment order was erroneous because it was made under Sec.143(1) of the Act, which does not require a detailed inquiry into the source of the assessee's income, when it should have been made under Sec.143(3) of the Act, which does require such an inquiry. The assessment order was prejudicial to the Revenue because it allowed the assessee to escape taxation on income that may have been earned by someone else.
Final Decision: The court answered all the questions in favour of the Revenue and against the assessee. The references were thus answered with consolidated costs of Rs. 250 payable by the assessee to the Revenue.
Uday Sinha, J.
1. The points falling for consideration in these references had been answered earlier in CIT V/s. Pushpa Devi [1987] 164 ITR 639 and CIT V/s. Rambha Devi [1987] 164 ITR 658. Mr. K. N. Jain, learned counsel for the assessee, has once again agitated the same questions. Out of deference to him, I proceed to a reconsideration of his submissions. It only needs to be stated that the present assessee, Pushpa Devi, is different from the assessee, Pushpa Devi, in the decision referred to above.
2. In these references, we are concerned with the assessment years 1972-73 and 1973-74. The questions referred to us for our opinion are 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 so as to enable the Commissioner of Income-tax to assume jurisdiction under Sec.263(1) of the Income-tax Act, 1961 ?
2. Whether, on the facts and in the circumstances of the case, the Tribunal has rightly held that the impugned order of the Commissioner of Income-tax is based upon mere surmises and conjectures and is, therefore, not valid ?
3. Whether, in view of the decision of the Tribunal, Patna, in the case of Rambha Devi V/s. ITO (Income-tax Appeals Nos. 1713 to 1715 (Pat) 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 groups evolved by the Government ?
4. Whether, on the facts and in the circumstances of the case, the Tribunal has rightly held that the Commissioner of Income-tax acted in a mechanical manner in setting aside the assessment order for the assessment year 1973-74 and so his order for that year is invalid ?
5. Whether, on the facts and in the circumstances of the case, the Tribunal has rightly cancelled the consolidated order passed by the Commissioner of Income-tax under Sec.263(1) of the Income-tax Act, 1961, for the assessment years 1972-73 and 1973-74 ? "
3. Question No. 1 mentioned above was question No. 1 in the earlier Pushpa Devis case [1987] 164 ITR 639. Question No. 2 of these references was question No. 3 in the earlier case. Question No. 3 of these references was question No. 4 in the earlier case. Question No. 4 was question No. 5 in the earlier case and question No. 5 was question No. 6 in the earlier case. A Bench of this court had answered all the questions in the negative, in favour of the Revenue and against the assessee. The Commissioner had disposed of the revisions by a consolidated order in terms of sec. 263(1) of the Income-tax Act. The Tribunal disposed of the two appeals by a common judgment. We have heard the references together and they will be disposed of by this common judgment.
4. In October, 1972, the Central Board of Direct Taxes, came out with a scheme for mass communication, with a view to encouraging new assessees in small income groups, to furnish their returns of income voluntarily. This scheme was launched in exercise of powers under Sec.119 of the Income-tax Act. The scheme covered assessees where the borrowed capital did not exceed Rs. 25,000 and the returned income did not exceed Rs. 15,000. The assessment of the assessees, who fall within these two limits, was to be effected in terms of Sec.143(1) of the Act. There was, however, a severe rider that returns of income filed in the names of minors and ladies should not be accepted without proper inquiries. Such assessees, in terms of the scheme, would not be liable to penalty. Where the income exceeded Rs. 15,000, after making adjustments in terms of Section 143(1)(b) of the Act, the assessee would not be entitled to waiver of
