Income Tax Appellate Tribunal - Chandigarh
Nand Parkash And Co. vs Income-Tax Officer on 8 March, 1991
Equivalent citations: [1991]38ITD1(CHD)
ORDER
--Without having any basis and specification as to which assessment it was related for.
Ratio:
Revisional order without specifying the basis for the revision as well as to which assessment of two made for the year it was related for and not properly signed, could not be said a valid order.
Held:
The Punjab and Haryana High Court in the case of CIT v. R. K. Metal Works (1978) 112 ITR 445 (P&H), had laid down that in passing order of revision under section 263, it is necessary for the Commissioner to state in what manner he considered that the order of the assessing officer was erroneous and prejudicial to the interests of revenue and what the basis was for such a conclusion. The contents of notice show that there was no judicial application of mind to determine whether the order of the Income Tax Officer was erroneous so as to be prejudicial to the interest of revenue. This notice merely says that the show cause notice is in respect of, "your case for assessment year 1984-85". This is not in accordance with the requirement of the section. The notice is also not signed by a person statutorily authorised to do so. This show-cause notice also is not specific as to which assessment of the two made for the year it was related to. The notice does not specify the basis on which the order in the mind of the Commissioner was erroneous so as to be prejudicial to the interest of revenue. This notice is, therefore, invalid. This could not have given lawful jurisdiction to the Commissioner.
Application:
Also to current assessment years.
Income Tax Act 1961 s.263 ORDER S.K. Chander, Accountant Member
1. This appeal by the assessee is directed against the order of the Commissioner of Income-tax, Patiala, made under Section 263 of the Income-tax Act, 1961, for the assessment year 1984-85 on 30-3-1987.
2. We have heard the parties on the validity of assumption of jurisdiction by the Commissioner and since for the reasons assigned below we are cancelling the order as without jurisdiction, we will not be dealing with the merits of the case.
3. The assessee is a registered firm working under the name and style of M/s. Nand Parkash & Co., 35, The Mall, Shimla. Its business is that of transportation of goods. It was assessee's first assessment year. It filed return on 16-10-1984 declaring loss of Rs. 43,784 along with TDS certificates for the total amount received (including Rs. 1,53,909 received). On the basis of this return, assessment was completed under Section 143(3) of the Act on 26-3-1985 on a total income of Rs. 11,890. This assessment order is at pages 10 and 11 of the paper-book.
The assessing authority also made an order under Section 185(1)(a) granting registration to the newly constituted firm as all legal formalities had been fulfilled and the firm was a genuine one.
4. However, on 2-9-1985, a notice under Section 148 of the Act was served upon the assessee in response to which the assessee did not file a return but submitted before the ITO computation showing gross receipts from business during the assessment proceedings. The ITO made an order under Section 144 read with Section 148 on 23-9-1985 determining total income of Rs. 16,000 including the originally assessed income.
5. The CIT, Patiala, from his camp office at Shimla, issued a notice under Section 263 on 19-3-1987, to show cause why assessment for the year 1984-85 be not cancelled. This notice is of great importance. We are, therefore, incorporating the notice in its entirety into the body of this order to project the import thereof.
6. The learned counsel for the assessee submitted before us that this notice does not specify the assessment which the Commissioner though was erroneous and also the basis thereof. He made a specific point that the notice is invalid as it is not signed by the Commissioner but on his behalf by his steno. The photostat copy of the notice filed shows the signature as for (Saroj Kumar) and below the signature is mentioned 'steno'.
The assessee respondent to this notice by letter dated 24-3-1987 appearing at page 17 of the paper book and submitted that the assessment order for the assessment year 1984-85 was neither erronous nor prejudicial to the interest of Revenue and could not be cancelled by the Commissioner.
7. On 26-3-1987, from his regular office at Patiala, the Commissioner again issued a notice under Section 263. In this notice, the Commissioner has observed that, "it is noticed that order dated 26-3-1985 and 23-9-1985 under Section 143(3) and under Section 144 is erroneous insofar as it is prejudicial to the interests of the revenue within the meaning of that expression occurring in Section 263 of the Income-tax Act, 1961 since the Income-tax Officer erred in not assessing the payment of Rs. 1,53,909". The assessee has filed a copy of this show-cause notice along with a photostat of the postal envelope in which the notice was received. The notice is shown as received on 2-4-1987. The Commissioner made the impugned order on 30-3-1987. By this order he held that the assessment orders passed under Section 143(3) and on 26-3-1985 and under Section 144 on 25-9-1985 were erroneous insofar as they were prejudicial to the interest of revenue. These were cancelled and the ITO was directed to make fresh assessment in accordance with law.
8. Whereas before us the learned counsel for the assessee emphasised that the entire manner and method adopted by the Commissioner is against the provisions of law and in gross violation of principles of natural justice. The learned Sr. Departmental Representative fully supported the order of The Commissioner and contended that if there is a violation, the assessee could be afforded another opportunity by the Commissioner if his order is set aside.
9. Section 263 vests the Commissioner with the powers of revision of orders prejudicial to the revenue. This is a judicial power vested in the Commissioner. Section 263 requires that the Commissioner may call for and examine the record of any proceedings under this Act and if he considers that any order passed therein by the Assessing Officer is erroneous so far as it is prejudicial to the interest of 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 orders thereon as the circumstances of the case justify. This power vested in the Commissioner cannot be delegated to anyone and issuing a show-cause notice under this section under the hand and seal of Commissioner is a sine qua non for lawful assumption of jurisdiction. Not only this, the Hon'ble Punjab and Haryana High Court in the case of CIT v. R.K. Metal Works [1978] 112 ITR 445, has laid down that in passing order of revision under Section 263 of the Income-tax Act, 1961, it is necessary for the Commissioner to state in what manner he considered that the order of the Assessing Officer was erroneous and prejudicial to the interest of revenue and what the basis was for such a conclusion.
10. Now, when we examine the notice issued by the Commissioner on 19-3-1987, we find it bereft of all judicial requirements. This is a letter by way of show-cause notice signed by the steno of the Commissioner for the Commissioner. Unfortunately, for the Commissioner the person who signed placed his designation below the signature as steno.
Therefore, we have to accept the contention raised on behalf of the assessee that it was not the Commissioner who signed the show-cause notice but his stenographer. The contents of this notice show that there was no judicial application of mind to determine whether the order of the ITO was erroneous so as to be prejudicial to the interest of revenue. We say so because, as pointed out in the narrative of facts above, the first order for this assessment year is made under Section 143(3) on 26-3-1985 on a total income of Rs. 11,890. The second order is made after issuing notice under Section 148 and is shown as an order under Section 144 made on 23-9-1985 determining total income at Rs. 16,000. Now this notice issued to the assessee to show cause does not refer to any of these orders. This notice merely says that the show-cause notice is in respect of, "your case for assessment year 1984-85". To our mind, this is not in accordance with the requirement of the section. The notice is also not signed by a person statutorily authorised to do so. This show-cause notice also is not specific as to which assessment of the two made for the year it was related to. The notice also does not specify the basis on which the order in the mind of the Commissioner was erroneous so as to be prejudicial to the interest of revenue. This notice is, therefore, invalid. This could not have given lawful jurisdiction to the Commissioner.
11. The Commissioner issued another notice under Section 263 on 26-3-1987 and it is received by the assessee on 2-4-1987. The impugned order of the Commissioner is dated 30-3-1987. The order is made before the notice was served upon the assessee. It is apparently in gross violation of the principles of natural justice. We do not know the reasons why the Commissioner made the order before he received a response to the show-cause notice from the assessee issued on 26-3-1987. The notice issued on 26-3-1987 was to give an opportunity of hearing to the assessee on 30-3-1987. Even if very expeditious postal transit from Patiala to Shimla be considered, notice dated 26-3-1987 asking the assessee to be before the Commissioner in Iyakar Bhavan at Patiala was not in accordance with the principles of natural justice. We do not go further on this because this notice was not served on the assessee before the order was made by the Commissioner.
12. Thus when we see the facts of the case from any angle, we find that the Commissioner did not assume lawful jurisdiction under Section 263 to make the impugned order. Therefore, we do not consider it necessary to go into the merits of the issues involved as the order is null and void. It is cancelled as such.
13. In the result, the appeal is allowed.