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Addl. Commissioner of Income-tax Vs. Kantilal Jain - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtMadhya Pradesh High Court
Decided On
Case NumberM.C.C. No. 280 of 1976
Judge
Reported in[1980]125ITR373(MP)
ActsIncome Tax Act, 1961 - Sections 212(3), 217, 263 and 273; Income Tax (Amendment) Act, 1978
AppellantAddl. Commissioner of Income-tax
RespondentKantilal Jain
Appellant AdvocateS.C. Bagdia, Adv.
Respondent AdvocateLadha, Adv.
Cases ReferredIndian Pharmaceuticals v. Addl.
Excerpt:
.....justified in law in holding that the exercise of jurisdiction under section 263 by the additional commissioner of income-tax in respect of penalty actions is without jurisdiction and bad in law ? '2. the material facts as set out by the tribunal in the statement of the case are these :the assessee is an individual of indore and the assessment year involved is 1966-67. the ito completed the assessment of the assessee on a total income of rs. commissioner exeicising his jurisdiction under section 263 of the act found that for the assessment year 1966-67 the assessee was an assessee who had not been previously assessed by way of regular assessment and he ought to have filed an estimate of advance tax payable and paid tax accordingly during the financial year 1965-66 in accordance with the..........assessment order did not invoke the provisions of section 217 or section 273(b) of the act. the addl. commissioner exeicising his jurisdiction under section 263 of the act found that for the assessment year 1966-67 the assessee was an assessee who had not been previously assessed by way of regular assessment and he ought to have filed an estimate of advance tax payable and paid tax accordingly during the financial year 1965-66 in accordance with the provisions of section 212(3) of the act and that having failed to do so, the assessee was liable for penalty under the provisions of section 273(b) as well as interest under section 217 of the act. the addl. commissioner after giving notice to the assessee and considering the objections of the assessee held that the order of the ito was.....
Judgment:

Vijayvargiya, J.

1. At the instance of the Addl. Commissioner of Income-tax, M.P., Bhopal, the Income-tax Appellate Tribunal, Indore Bench, Indore, has referred the following question of law for the opinion of this court under Section 256(1) of the I.T. Act, 1961 (hereinafter referred to as ' the Act ') :

' Whether the Tribunal was justified in law in holding that the exercise of jurisdiction under Section 263 by the Additional Commissioner of Income-tax in respect of penalty actions is without jurisdiction and bad in law '

2. The material facts as set out by the Tribunal in the statement of the case are these : The assessee is an individual of Indore and the assessment year involved is 1966-67. The ITO completed the assessment of the assessee on a total income of Rs. 80,972. The ITO while passing the assessment order did not invoke the provisions of Section 217 or Section 273(b) of the Act. The Addl. Commissioner exeicising his jurisdiction under Section 263 of the Act found that for the assessment year 1966-67 the assessee was an assessee who had not been previously assessed by way of regular assessment and he ought to have filed an estimate of advance tax payable and paid tax accordingly during the financial year 1965-66 in accordance with the provisions of Section 212(3) of the Act and that having failed to do so, the assessee was liable for penalty under the provisions of Section 273(b) as well as interest under Section 217 of the Act. The Addl. Commissioner after giving notice to the assessee and considering the objections of the assessee held that the order of the ITO was erroneous and was prejudicial to the interests of the revenue. The Addl. Commissioner, therefore, set aside the order of the ITO with the direction that the ITO should make a fresh assessment in accordance with law, keeping in view the applicability of the provisions of Section 273(b) and Section 217 of the Act. The assessee preferred an appeal to the Income-tax Appellate Tribunal, Indore Bench. The Tribunal allowed the appeal in part, confirmed the order of the Addl. Commissioner in regard to the direction under Section 217 of the Act while setting aside the direction of the Addl. Commissioner under Section 273(b) of the Act. On the application of the Addl. Commissioner, the Tribunal has referred the aforesaid question of law arising out of the order of the Tribunal for the opinion of this court.

3. While allowing the appeal the Tribunal placed reliance upon its earlier judgment in I.T.A. Nos. 1154/1970-71 1154/1970-71 and 1155 of 1970-71 in the case of Indian Pharmaceuticals v. Addl. CIT, wherein it was held that the Addl. Commissioner had no power to set aside the order of assessment and directing the ITO to start penalty proceedings under Section 273(b) of the Act. However, the earlier order of the Tribunal on which reliance was placed by the Tribunal in the present case came up for consideration by this court in Addl. CIT v. Indian Pharmaceuticals : [1980]123ITR874(MP) on a reference made by the Tribunal. This court held that if the ITO during the pendency of the proceedings has omitted to take notice of facts attracting Section 271(1)(a) of the Act during the pendency of proceedings which ultimately ended in an order of assessment, the order would be erroneous and, in this view of the matter, the Commissioner was right in exercising the jurisdiction conferred on him under Section 263 of the Act. The language of Sections 271(1) and 273(1) of the Act is identical and, therefore, if the ITO has omitted to take notice of facts attracting the provisions of Section 273(1)(b) of the Act during the pendency of the proceedings which ultimately ended in an order of assessment, the order would be erroneous and as the Addl. Commissioner has held that it was prejudicial to the interests of the revenue he was right in exercising the jurisdiction conferred on him under Section 263 of the Act. No decision of the Supreme Court or of this court taking a contrary view has been brought to our notice. We are, therefore, of the opinion that the Tribunal has erred in law in holding that the Addl. Commissioner had no jurisdiction to exercise the powers vested in him under Section 263 of the Act on the facts and in the circumstances of the case.

4. In the light of the discussion aforesaid, our answer to the question referred to us is in the negative and in favour of the department. There shall be no order as to costs of this reference.


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