High Court · 2012

a deduction for the assessment year 1994-95 and the same could not be again cla imed for the year 1995-96. The assessee could not show that on facts the error n oticed by the Commissioner was not there. However, instead of filing an appeal a gainst the order of the Commissioner, the assessee approached this Court under A rticle 226 of the Constitution alleging that there was no justification for invo king jurisdiction under Section 263 of the Act as the said jurisdiction could be exercised only if there was a ’jurisdictional’ error as held by a Division Benc h of this Court in Rajendra Singh vs. State of Tripura, (1990) 79 STC 10 and oth er similar judgments. It was further submitted that the said power could not be exercised to interfere when power could be exercised for rectification under Sec tion 154 or re-assessment under Section 147 of the Act. It was also submitted th at the said power was not intended to be exercised to substitute the opinion of the Commissioner for the opinion of the Assessing Officer and in any case mere s uggestion of the Audit party could not be the basis of exercise of the said powe r. Reliance was placed on State of Kerala vs. KM Cheria Abdulla [(1965) 16 STC 8 75], Santlal Mehndi Ratta (HUF) vs. Commissioner of Income Tax [ (2002) 1 GLR 19 7], decision of this Court in WP(C) 1416/2001 (Bongaigaon Refinery and Petrochem icals Ltd. vs. Union of India), Sirpur Paper Mills vs. Commissioner of Wealth Ta x [(1970) 77 ITR 6] and Jeevan Lat (1929) Ltd vs. Additional Commissioner of Inc ome Tax (Cal) [1977) 108 ITR 407.

4. The writ petition was opposed and it was submitted that merely because r ectification proceedings were dropped, did not affect jurisdiction of the Commis sioner under Section 263 when such jurisdiction was exercised upon a finding tha t order of the Assessing Officer was erroneous and prejudicial to the interest o f the Revenue. Mere fact that there was an Audit report also taking the same vie w did not affect the jurisdiction of the Commissioner. Objection was also taken that the order of the Commissioner was appellable under Section 253(1)(c) and th erefore in view of the said alternative remedy, the writ petition ought not to b e entertained.

5. Learned Single Judge held that the writ petition could be entertained as order of the Commissioner was without jurisdiction. If the Assessing Officer al lowed the deduction on account of bonus, the Commissioner could not substitute h is opinion for that of the Assessing Officer. The Commissioner could also not ex ercise revisional jurisdiction when the matter was covered by the scope of recti fication jurisdiction. The relevant findings recorded by the learned Single Judg e are : (cid:28)24. er Section 43B of the Act that the assessing authority has allowed the deduction on account of bonus in exercise of its powers under Section 143(3). The assessi ng officer, having acted within his jurisdiction, in allowing the claim of bonus as deduction, it was not open to the Commissioner of Income Tax to consider the said order as erroneous merely because, in his view, certain amount of bonus, a llowed as deduction, should have been disallowed, particularly, when the impugne d order of the Commissioner does not show how the order of assessment can be sai d to he order passed without jurisdiction or an order passed beyond jurisdiction In the present case, it is after examination of the books of account und or wholly contrary to jurisdiction. (cid:29) From what have been discussed above, it becomes abundantly clear that a (cid:28)30. revisional authority cannot entrench upon the powers, which are expressly reserv ed by the Act in favour of the other authorities. The Act, nowhere, authorizes t he revisional authority to intrude into the inquiries properly made by the asses sing authority and to reopen an already completed assessment. (cid:29) (cid:28)32. From the facts as discussed above, it is clear that in the case at hand, the Commissioner has initiated the suo moto revisional proceeding, under Sectio n 263, entirely based on the objection raised by the internal audit authority. T here is nothing either in the impugned notice, dated 24.01.2000, or in the impug ned order, dated 28.03.2000, to show that the Commissioner has applied his indep endent mind and has come to the conclusion that the assessment made needs to be revised. Moreover, the suo moto revisional jurisdiction cannot be invoked, under Section 263, for the purpose of making roving enquiry by directing an authority , as has been done in the present case, to, again, verify an issue, which was ve rified by the Assessing Officer and thereby settled and concluded by him. Such a n approach is not permitted within the parameters of the powers conferred on a r evisional authority under Section 263, for, allowing exercise of such powers wou ld amount to permitting the revisional authority to reopen an assessment, which has been made in exercise of jurisdiction vested in the assessing authority, but while making the assessment, a mistake has been committed by the assessing auth ority unless it is alleged that the deductions allowed were wholly impermissible in law. Furthermore, though a revisional proceeding has been initiated against the order of assessment made on 11.03.1998, no revisional proceeding was initiat ed against the order, dated 07.01.2000, whereby the assessing authority had drop ped the rectification proceeding initiated under Section 154. Thus, while the or der passed, on 07.01.2000, remains unchallenged and unaltered, the order, dated 11.03.1998, gets reopened. When a rectification proceeding is initiated under Se ction 154 and a final order dropping the rectification proceeding is passed, the effect is that the assessment order has merged into the order made in the recti fication proceeding. In the case at hand, the assessment order, dated 11.03.1998 , had merged into the order, dated 07.01.2000. In such circumstances, without in terfering with the order, dated 07.01.2000, the order, dated 11.03.1998, could n ot have been reached by the revisional authority and set aside. Viewed thus, it is clear that the impugned notice, dated 24.01.2000, and the order, dated 28.03. 2000, passed by the Commissioner, under Section 263, are absolutely without juri sdiction and not tenable in law. (cid:29) (cid:28)34. From what have been pointed out above, it is clear that the Commissioner of Income Tax initiated the revisional proceeding influenced by the objection r aised by the internal audit party and has not applied his independent mind, whil e passing the impugned order. Hence, the impugned order is liable to be set asid e and quashed. (cid:29) (cid:28)38. What crystallizes from the above discussion is that in the present case, when there was no lack of jurisdiction on the part of the assessing authority, in passing the order of assessment and the assessing authority had not exceeded its jurisdiction in passing the order of assessment, the order cannot be termed erroneous, within the meaning of Section 263, to enable the Commissioner of Inco me Tax to invoke powers under Section 263 of the Act. (cid:29)

6. We have heard Mr. Sanjoy Sarma, learned Standing Counsel for the Revenue . None appears for the assessee though the service is complete as noticed in ord er dated 25.11.2010.

7. Learned counsel for the Revenue challenged the view taken by learned Sin gle Judge by submitting that there was clear and patent error in the order of th e Assessing Officer in not taking into account the fact that the assessee had al ready availed of the same deduction in the earlier assessment year which was not disputed by the assessee. In these circumstances, the order of the Assessing Of ficer could certainly be held to be erroneous. The expression ’erroneous’ did no t include mere error of jurisdiction but also covered a case of wrong assumption of facts or incorrect application of law or absence of application of mind. He submits that law laid down in Rajendra Singh (supra) has been explained in a rec ent Full Bench judgment of this Court dated 08.02.2012 in ITA 2 of 2008 (Commiss ioner of Income Tax, Guwahati vs. Jawahar Bhattacharjee). He also submitted that mere fact that the error could be rectified or resort could be taken to re-asse ssment would be no bar to exercise of revisional jurisdiction if the case falls within the purview of the said jurisdiction. Mere fact that the Audit party had also raised some objection did not affect the jurisdiction of the revisional aut hority. It was not a case where the revisional authority had substituted its op inion for that of the Assessing Officer but a case where the Assessing Officer f ailed to notice the factual aspect and made assessment on wrong assumption of fa cts and without application of mind.

8. We have given due consideration to the submission made on behalf of the Revenue. We are of the view that the learned Single Judge was not justified in i nterfering with the order of the Commissioner passed under Section 263 of the Ac t. Even if we ignore the objection of alternative remedy of appeal, available to the assessee under Section 253(1)(c) of the Act, the fact remains that an error was noticed by the Commissioner in the order of the Assessing Officer that the assessee had made claim for the same deduction twice and after noticing the said error, the same was corrected. In these circumstances, it could not be held tha t such an order was beyond the revisional jurisdiction of the Commissioner. Simi lar objection of the Audit party did not in any manner affect the revisional jur isdiction, nor the fact that the error could be rectified by the Assessing Offic er or the Assessing Officer could have taken resort to re-assessment provision c ould be a bar to exercise of revisional jurisdiction. It was also not a case of substitution of opinion of revisional authority for the opinion of the assessing officer. Thus, learned Single Judge was not justified in interfering with the r evisional order of the Commissioner under Section 263 of the Act.

9. In view of above, we allow this appeal, set aside the impugned order pas sed by the learned Single Judge and dismiss the writ petition filed by the respo ndent assessee.