Skip to content


Raj Kishore Prasad Vs. Income-tax Officer and ors. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtAllahabad High Court
Decided On
Case NumberCivil Miscellaneous Writ Petition No. 1885 of 1980
Judge
Reported in[1983]144ITR904(All); [1984]16TAXMAN403(All)
ActsConstitution of India - Article 226; Income Tax Act, 1961 - Sections 154, 210, 210(3) 212(1) and 263(1)
AppellantRaj Kishore Prasad
Respondentincome-tax Officer and ors.
Appellant AdvocateK.B. Jindal, Adv.
Respondent AdvocateP.N. Mathur, Adv.
Excerpt:
- - 3, a perusal whereof would indicate that the commissioner was of the view that as the assessee had failed to file an estimate of the advance tax under section 212(1) penalty was leviable in this case ;but the ito had not charged that interest hence the assessment made by him was prejudicial to the interest of the revenue......those submissions by another representation dated 19th march, 1979 (annexure 7), whereupon the commissioner passed the following order :'please refer to your counsel's letter dated march 19, 1979. the proceedings initiated under section 263 of the income-tax act for the assessment year 1974-75 have been dropped.'3. a copy of the order of the commissioner is annexure 8 to the petition. it may be stated here that after the commissioner had passed his order dated 30th september, 1976 (annexure 3) the ito proceeded again to assess the petitioner with respect to assessment year 1974-75 and he passed the order of assessment dated 15th february, 1977 (annexure 4), which was subsequently rectified under section 154 of the act vide annexure 5. the ito did not, however, treat the order dated.....
Judgment:

T.S. Misra, J.

1. This petition under article 226 of the Constitution has been filed by the assessee in the circumstances stated hereinafter.

2. The petitioner was assessed to income-tax for the assessment year 1974-75 for the first time on 5th October, 1974, by the TTO, 'A' Ward, Circle II, Lucknow. A copy of the assessment order is annexure 1 to the writ petition. A notice was thereafter issued under Section 154 of the I.T. Act, 1961, to the assessee regarding the excess rebate allowed to him. It appears that the assessee had no objection to the proposed rectification, hence the mistake was rectified by order dated 12th February, 1975 (annexure 2) to the writ petition. It further appears that a notice under Section 210 was issued for this year demanding an advance tax of Rs. 3,368 which was revised to Rs. 5,449 on 17th December, 1973, under Section 210(3) of the I.T. Act. The Commissioner took up the matter suo motu and passed order under Section 263(1) of the I.T. Act, 1961, on 30th September, 1976. A copy of that order is annex. 3, a perusal whereof would indicate that the Commissioner was of the view that as the assessee had failed to file an estimate of the advance tax under Section 212(1) penalty was leviable in this case ; but the ITO had not charged that interest hence the assessment made by him was prejudicial to the interest of the Revenue. A show cause notice under Section 263(1) of the Act was accordingly issued and the Commissioner set aside the assessment order aforesaid passed by the ITO and directed the ITO to make a fresh assessment according to law. The assessee feeling aggrieved went up in appeal before the Income-tax Appellate Tribunal on the ground, inter alia, that he was not afforded an adequate opportunity to put up his defence before the Commissioner because the notice under Section 263(1) of the Act was dated 27th September, 1976, while the order passed by the Commissioner was dated 30th September, 1976. The Appellate Tribunal being of the view that the assessee did not have a reasonable opportunity of placing his case before the CIT held that the order of the Commissioner was violative of the principles of natural justice and was, therefore, not sustainable. The appeal was accordingly allowed and the order of the Commissioner was set aside and the Commissioner was directed to give an opportunity to the assessee on the question of the leviability of interest and, after considering the assessee's plea, to pass order according to law. The proceedings were remanded and it appears from annexure 7 that the assessee hadmade certain submissions in writing on 22nd January, 1979, before the Commissioner and supplemented those submissions by another representation dated 19th March, 1979 (annexure 7), whereupon the Commissioner passed the following order :

'Please refer to your counsel's letter dated March 19, 1979. The proceedings initiated under Section 263 of the Income-tax Act for the assessment year 1974-75 have been dropped.'

3. A copy of the order of the Commissioner is annexure 8 to the petition. It may be stated here that after the Commissioner had passed his order dated 30th September, 1976 (annexure 3) the ITO proceeded again to assess the petitioner with respect to assessment year 1974-75 and he passed the order of assessment dated 15th February, 1977 (annexure 4), which was subsequently rectified under Section 154 of the Act vide annexure 5. The ITO did not, however, treat the order dated 5th October, 1974, as revived and it appears that penalty was levied under Section 273(c). The matter was again taken up by the assessee before the CIT (Appeals) whose order is to be found in annexure 16 to the writ petition. That appellate order is quite revealing in the sense that it has stated in brief and quite succinctly the historical background of the entire case right from the order of 5th October, 1974, onwards. The CIT (Appeals) in the aforesaid order, annexure 16, after narrating the facts and circumstances as had occurred, observed that in fact the original order of assessment dated 5th October, 1974 stood, in the course of which no penalty proceedings were initiated. The penalty proceedings were initiated later could not be held to be valid and penalty levied as a result thereof could not be held to be legally correct. Even on merits there was no case for levy of penalty. The penalty levied accordingly was quashed and appeal was allowed.

4. Now the petitioner requested the ITO and the IAC (Assessment), respondent No. 2, to refund the amount which had been realised from him on the basis of the assessment order dated 15th February, 1977, as rectified also by the order dated 7th March, 1977. The petitioner alleged in para. 12 of the petition that he had paid a total sum of Rs. 1,08,824 whereas he was liable to pay only Rs. 18,433 towards demand due as per original assessment order dated 5th October, 1974. The petitioner, therefore, claimed a refund of Rs. 90,391 from the income-tax authorities but to no avail, and instead they levied penal interest under Section 220(2) and penalty under Section 221(1) for non-payment of arrears of the income-tax. The contention of the petitioner was that in view of the order passed by the Income-tax Appellate Tribunal setting aside the order of the Commissioner dated 30th September, 1976, the original order of assessment dated5th October, 1974, as rectified by the order dated 5th February, 1975, has become operative, in our view, (is correct) on merits. That order of 9th October, 1974, was no doubt set aside by the Commissioner by his order dated 30th September, 1976, and the ITO was directed to make a fresh assessment but the order dated 30th September, 1976, having been set aside in appeal by the Tribunal the basis of the second assessment did not survive. In fact the Commissioner himself after the case was sent back to him by the Appellate Tribunal dropped the proceedings. Hence the subsequent order of assessment dated 15th February, 1977 (annexure 4) and the order under Section 154 of 7th March, 1977, do not survive and are liable to be quashed.

5. In the result the petition is allowed with costs. The assessment order dated 15th February, 1977 (annexure 4) and the order under Section 154 dated 7th March 1977, are quashed and the respondent No. 1 is directed to refund to the petitioner any amount which might have been recovered from him in excess of the amount payable by the petitioner with respect to the assessment year 1974-75 as per orders dated 5th October, 1974 and 12th February, 1975 (annexures 1 and 2).


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //