Income Tax Appellate Tribunal - Pune
J. R. Agarwal vs Assistant Commissioner Of Income Tax on 3 December, 1999
Equivalent citations: (2000)67TTJ(PUNE)72
ORDER
B. L. Chhibber, A.M. This appeal by the assessee is directed against the order of Commissioner passed under section 263 of the Act.
2. Consequent upon search at the business and residential premises of the assessee, assessment for the block period 1986-87 to 1996-97 was completed by the assessing officer on 30-9-1996. Prior to passing the said order, the assessing officer had forwarded a draft assessment order for the approval of the Commissioner and after getting such approval, the assessing officer completed the above assessment. Later on, the successor Commissioner was of the view that the order passed by the assessing officer such that under section 158BC was erroneous and prejudicial to the interest of revenue. He invoked his jurisdiction under section 263 and issued the following notice :
"On perusal of your income-tax records for the above assessment years, it is seen in computing the undisclosed income, additions were made on account of on money payment of Rs. 10 per box to M/s S.N. Products during the assessment year 1994-95 and assessment year 1995-96. However, from the case records of M/s S.N. Products, it is seen that such unexplained on-money received from M/s J.R. Agarwal & Co. was at the rate of Rs. 15 per box as against Rs. 10 per box considered in your case. Considering the above fact and for consistency purpose, the same rate is to be adopted i.e. Rs. 15 per box for the block period assessment years 1986-87 to 1996-97."
3. In response to the above notice, the assessee submitted before the Commissioner that his action of invoking the provisions of section 263 is 'ad initio' bad in law inasmuch as there cannot be revisional jurisdiction conferred on the Commissioner where the block assessment order under consideration was passed by the assessing officer only on and after due approval of the predecessor Commissioner. It was also pointed out that the assessing officer initially passed the draft assessment order and forwarded the same to the then Commissioner for her approval as was then required under the provisions of section 158BG of the Act. The predecessor Commissioner also allowed the assessee an opportunity to represent his case before her as the assessee had several objections against the additions proposed therein by the assessing officer. It was further pointed out that the predecessor Commissioner had considered those objections and deleted few of the proposed additions and thereafter accorded her approval on the basis of which the block assessment order was passed by the assessing officer. The Commissioner rejected the above contentions and observed that order sought to be revised is not the order passed by the Commissioner but by the assessing officer. After overruling the preliminary objection raised by the assessee, the Commissioner directed the assessing officer to redo the assessment to include the full amount paid by the assessee to M/s S.N. Products i.e. Rs. 15 per box as adduced by Smt. Godbole in her preliminary statement and also considering the amounts, if any deductible out of the same to the extent of Rs. 5 per box.
4. Aggrieved by the order of the Commissioner the assessee is in appeal before us.
5. Shri S.N. Doshi, the learned counsel for the assessee reiterated the submissions made before the Commissioner that the action of invoking the provisions of section 263 by the Commissioner is void ab initio, bad in law inasmuch as there cannot be revisional jurisdiction conferred on the Commissioner where the block assessment under consideration was passed by the assessing officer only on and after the due approval of the predecessor Commissioner. He submitted that the assessing officer initially passed the draft assessment order (placed on record, to which our attention was drawn), forwarded the same to the then Commissioner for approval as was then required under section 158BG of the Act. The then Commissioner had also allowed the assessee an opportunity to represent his case before her as the assessee had several objections against the additions proposed therein by the assessing officer. The learned counsel further submitted that the Commissioner considered those objections and deleted few of the proposed additions and thereafter accorded her approval on the basis of which the block assessment order was passed by the assessing officer. The learned counsel concluded that it virtually means that the order was passed by the Commissioner.
6. The learned Departmental Representative Shri Adhir Jha, strongly supported the order of the Commissioner. He admitted that the then Commissioner has given directions to the assessing officer but that does not tentamount to that the order passed by the assessing officer was the one passed by the Commissioner. According to the learned Departmental Representative such an order can be revised by the Commissioner by invoking the provisions of section 263.
7. We have considered the rival submissions and perused the facts on record. As per the provisions of section 263(1), the Commissioner may call for and examine the record of any proceedings under the Act and if he considers that any order passed therein by the assessing officer is erroneous insofar 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 enquiry 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. The section therefore amply and clearly provides that the Commissioner can revise only that order which is passed by the assessing officer (Emphasis, italicised in print, supplied). In other words, the Commissioner cannot revise his own order. In the instant case, it is an admitted fact that the assessment was completed by the assessing officer under section 158BC of the Act. The assessing officer initially passed the draft assessment order and forwarded the same to the then Commissioner for approval as was then required under the provisions of section 158BG of the Act, The then Commissioner (predecessor of the present Commissioner) considered these objections and deleted few of the proposed additions and thereafter accorded her approval on the basis of which the block assessment order was passed by the assessing officer. That virtually means that the order was passed by the Commissioner. The Commissioner has no jurisdiction under section 263 to revise the order of assessment passed on the basis and in pursuance to the directions issued by his predecessor-Trustees of Parsi Panchayat Funds and Properties v. Director of Income-tax (1996) 57 ITD 328 (Bom) and Savani Transport Ltd. v. Deputy Commissioner (1997) 60 ITD 513 (Bom). The ratio laid down in the above two decisions has been followed by Pune Bench of the Tribunal in the cases of Orient Co. Panaji v. Deputy Commissioner (ITA No. 360 and 361/Pune/1997) and D.B. Bandedkar (ITA Nos. 632 and 633/Pune/1997).
8. In the light of the above discussions, we hold that the Commissioner had no jurisdiction to pass an order under section 263 in the case of the assessee. We accordingly quash the order of the Commissioner.
9. In the result, the appeal is allowed.