GUPTA AGRO-FARM VS COMMISSIONER OF INCOME-TAX, 2000 PTD-GAUHATI-HIGH-COURT-INDIA 2538 (1998)

Income-tax---

----Writ---Revision---Commissioner---Powers of Commissioner-- Commissioner setting aside assessment order of ITO with direction to recompute same---Assessing Officer completing fresh assessment ---CIT issuing notice to set aside assessment order on ground that Assessing Officer failed to direct himself to directions contained in CIT's earlier order---Notice issued to show-cause as to why power under S.263 should not be exercised-- Assessee could raise those points before CIT himself instead of filing writ petition---Writ petition not maintainable---Indian Income Tax Act, 1961; S.263---Constitution of India, Art. 226.

For the assessment years 1994-95 and 1995-96 assessment orders were passed by the Assessing Officer under section 143(3) of the Income Tax Act, 1961, against the petitioners. The Commissioner of Income-tax in exercise of his powers under section 263 of the Act set aside these assessment orders with a direction to recompute the same as per law after carrying out thorough investigation on the agricultural income as directed in the said order. The Assessing Officer thereafter passed two assessment orders for the two assessment years in question. The Commissioner of Income-tax thereafter issued notices in exercise of his power under section 263 of the Act calling upon the petitioners to show cause in writing as to why the assessment orders should not be set aside -on the ground that the Assessing Officer failed to direct himself to the directions contained in the earlier order of the Commissioner of Income-tax under section 263. On writ petitions challenging the notices of the Commissioner:

Held, that the order under section 263 is appealable under section 253(1)(c) of the Act before the Income-tax Appellate Tribunal which can thereafter be taken up by way of a reference under section 256. The Commissioner of Income-tax at this stage only issued notices under section 263 to the petitioners, to show cause before him. The petitioners instead of raising these points in the writ petitions could very well have taken up these points before the Commissioner of Income-tax who could pass necessary orders thereafter in accordance with law. The Commissioner in his notices only gave his tentative reason for his proposal to exercise the power under section 263. The facts enumerated were matters which could be verified and evaluated by the Commissioner of Income-tax involving the questions of fact as well. Therefore, the writ petitions were not maintainable.

CIT v. Gabriel India Ltd. (1993) 203 ITR 108 (Bom.) and Smt. Daljeet Kaur v. CIT (1990) 184 ITR 149 (Gauhati) ref.

R. Gogoi,. Dr. A. K. Saraf, R. K: Joshi, K. K. Gupta and R. K. Agrawalla for Petitioners.

U. Bhuyan for Respondents

JUDGMENT

This is an application under Article 226 of the Constitution of India arising out of an order, dated January 19, 1998, passed by the Commissioner of Income-tax, North Eastern Region, Shillong, proposing to take action under section 263 of the Income Tax Act, 1961.

For the assessment years 1994-95 and 1995-96 assessment orders were passed by the Assessing Officer under section 143(3) of the Act. The Commissioner of Income-tax by his earlier order, dated February 21, 1997, in exercise of his power under section 263 of the Act set aside the assessment orders for the assessment years 1994-95 and 1995-96 with a direction to re-compute the same as per law after carrying out thorough investigation on the agricultural income as directed in the said order. The Assessing Officer thereafter passed two assessment orders for the assessment years mentioned above and completed the assessment. The Commissioner of Income-tax thereafter issued the impugned notice proposing to exercise his power under section 263 of the Act to set aside the order on the ground that the Assessing Officer failed to direct himself to the directions contained in the earlier order. The above order is under challenge before this Court.

Mr. R. Gogoi, learned counsel appearing on behalf of the petitioner, submitted that the power under section 263 is not an arbitrary power and the same is to be exercised strictly in conformity with the statutory provisions. The power under section 263 is a power conferred on the revisional authority to suo motu revise an order only on fulfilment of the conditions precedent as enumerated in the section itself. The power, submitted Mr. Gogoi, cannot be exercised for the purpose of making a roving and fishing enquiry. In the instant case, according to learned counsel, the Commissioner, at the first instance set aside the order of the assessment and directed the Assessing Officer to make, assessment in terms of the law and in compliance therewith the Assessing Officer passed the assessment order. The Commissioner of Income-tax was only exercising a suo motu revisional power and that power cannot be equated with the appellate power.

Mr. U. Bhuyan, learned counsel for the Revenue, on the other hand, submitted that the impugned notice was issued by the respondents in exercise of power conferred by the Act itself and there is no excess of jurisdiction or failure of jurisdiction. Mr. Bhuyan also submitted that the impugned order only asked the petitioner to show-cause as to why the power under section 263 should not be exercised and the petitioner was advised to submit a written statement and to appear for hearing. It was for the petitioner to avail of that opportunity for passing necessary order.

During the course of the argument Mr. Gogoi referred to a decision of this Court Smt. Daljeet Kaur v. CIT (1990) 184 ITR 149 and CIT v. Gabriel India Ltd. (1993) 203 ITR 108 (Bom). In fact these were rather held as appeal and arose out of appellate authority and, therefore, those cases had no bearing at this stage.

Section 263 of the Act corresponds to subsections (1) and (2) of section 33 of the 1922 Income-tax Act, conferring jurisdiction on the Commissioner to call for and examine the record of any proceedings under the Act and pass such orders as the circumstances demand whenever there is any order prejudicial to the Revenue. The power conferred under section 263 though discretionary in nature, the authority is required to act with objectivity and responsibility. It is not a arbitrary power which can be exercised according to the whim or fancy of the officer concerned.- The power is quasi judicial in nature. The Commissioner while exercising the power under section 263 is required to act justly and fairly. The power is to be exercised objectively and dispassionately and thereafter decide the same in accordance with law. The power is to be exercised in the interests of justice limited not only to the assessee but also to the Revenue. The Legislature, therefore, provided on the administrative mechanism to the higher executive to revise the order in the situation enjoined under section 263 since no provision for appeal was given by the Act to the Department.

The order under section 263 is appealable under section 253(1)(c) of the Act thereafter before the Income-tax Appellate Tribunal which can thereafter be taken up by way of a reference under section 256. The Commissioner of Income-tax at This stage only issued notice under section 263 and for that matter the impugned notice is issued on the petitioner to show cause before him. The petitioner instead of raising these points in this writ petition could very well-take up those points before the Commissioner of Income-tax who could pass necessary order thereafter in accordance with law. The Commissioner in his order only gave his tentative reason for his proposal to exercise the power under section 263. The facts enumerated above are matters which can be verified and evaluated by the Commissioner of Income-tax involving the questions of fact as well. As such no injustice is caused by the impugned order.

Considering the facts and circumstances of the case, I am not inclined to exercise my power under Article 226 of the Constitution. Accordingly, the writ petition stands dismissed.

M.B.A./4181/FCPetition dismissed.