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Parekh Brothers Vs. Commissioner of Income-tax and ors. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKerala High Court
Decided On
Case NumberOriginal Petition No. 2415 of 1978-D
Judge
Reported in(1983)36CTR(Ker)372; [1984]150ITR105(Ker)
ActsIncome Tax Act, 1961 - Sections 263 and 264
AppellantParekh Brothers
RespondentCommissioner of Income-tax and ors.
Appellant Advocate T.L. Viswanatha Ayyar,; P.S. Narayanan,; K.S. Menon
Respondent Advocate P.K.R. Menon, Adv.
Cases ReferredHari Shankar v. Rao Girdhari Lal Chowdhury
Excerpt:
direct taxation - revision - sections 263 and 264 of income tax act, 1961 - whether commissioner had revisional jurisdiction where assessee having included income for assessment can claim relief of weighted deduction under section 35b for first time in petition filed under section 264 - even though mistake was committed by assessee and it was detected by him after order of assessment - order of assessment is not erroneous nonetheless it is open to assessee to file revision before commissioner under section 264 and claim appropriate relief - held, commissioner has jurisdiction to entertain revision petition under section 264. - - (3) in the case of an application for revision under this section by the assessee, the application must be made within one year from the date on which the.....paripoornan, j.1. the petitioner is an assessee to income-tax borne on the files of the 3rd respondent, the income-tax officer, a-ward, circle i, calicut. in this original petition, exts. p-1, p-3 and p-5, orders of respondents nos. 3, 2 and 1, respectively, are challenged. the 1st respondent is the commissioner of income-tax, kerala ii, ernakulam, the 2nd respondent is the appellate assistant commissioner of income-tax, calicut range, calicut, and the 3rd respondent is the income-tax officer, a ward, circle i, calicut. the final order is the one passed by the 1st respondent, evidenced by ext. p-5, dated may 5, 1978. the short question that arises for consideration is the scope of the revisional power of the first respondent under section 264 of the i.t. act, 1961.2. this original.....
Judgment:

Paripoornan, J.

1. The petitioner is an assessee to income-tax borne on the files of the 3rd respondent, the Income-tax Officer, A-Ward, Circle I, Calicut. In this Original Petition, exts. P-1, P-3 and P-5, orders of respondents Nos. 3, 2 and 1, respectively, are challenged. The 1st respondent is the Commissioner of Income-tax, Kerala II, Ernakulam, the 2nd respondent is the Appellate Assistant Commissioner of Income-tax, Calicut Range, Calicut, and the 3rd respondent is the Income-tax Officer, A Ward, Circle I, Calicut. The final order is the one passed by the 1st respondent, evidenced by ext. P-5, dated May 5, 1978. The short question that arises for consideration is the scope of the revisional power of the first respondent under Section 264 of the I.T. Act, 1961.

2. This original petition is coming up before us on a reference made by our learned brother, P.C. Balakrishna Menon, Judge, by his order of reference dated December 15, 1981.

3. The short facts necessary to adjudicate the controversy in this case are as follows : The petitioner firm carries on business in the export of goods to foreign countries. It is an assessee borne on the files of the 3rd respondent. In respect of the exports, the petitioner claims weighted deduction under Section 35B of the Act. For the assessment year 1975-76, the return filed by the petitioner was substantially accepted by the 3rd respondentby order dated July 24, 1976, evidenced by ext. P-1. Against certain deductions disallowed by the assessing authority, the petitioner filed an appeal before the 2nd respondent and he allowed the appeal in part, ext. P-3 order dated June 8, 1977. Subsequent to this, the petitioner discovered that it had inadvertently omitted to make a claim for deduction which it was entitled to under Section 35B of the Act. Immediately, an application was filed before the 3rd respondent on September 6, 1977, seeking rectification of the assessment under Section 154 of the Act, to afford deduction under Section 35B of the Act, in a sum of Rs. 1,43,475. It should be stated that such a claim was not made either in the return or at the time of arguments when the assessment was made. Since the request made by the petitioner was not acceded to by the 3rd respondent, the petitioner filed a revision dated September 30, 1977 (ext. P-4) before the 1st respondent. It is common ground that this particular deduction, weighted deduction under Section 35B of the Act, was not the subject-matter of the appeal before the 2nd respondent when ext. P-3 was rendered. Along with the revision petition the petitioner made a prayer to condone the delay in filing the revision.

4. The 1st respondent condoned the delay but dismissed the revision holding that ' it cannot be said that the quasi-judicial powers of the Commissioner of Income-tax under Section 264 are so wide that it is open to him for the first time to entertain a claim for relief of this kind when the assessee, on account of its negligence, had omitted to make the claim before the lower authorities.' The order of the Commissioner passed in revision is dated May 5, 1978, evidenced by ext. P-5.

5. Mr. T.L. Viswanatha Iyer, learned counsel for the petitioner, contended that the first respondent misconstrued Section 264 of the Act and also misunderstood the scope of his jurisdiction. According to counsel, the revision filed by the petitioner is maintainable and the Commissioner is bound to entertain it and dispose of it on merits. The contra view expressed by the Commissioner in ext. P-5 is a refusal to exercise a jurisdiction vested in him under law which has resulted in a manifest injustice to the petitioner and in this view of the matter ext. P-5 deserves to be annulled.

6. On the other hand, Mr. P.K. Ravindranatha Menon, counsel for the Revenue, contended that in this case, the claim of weighted deduction under Section 35B of the Act was never put forward either in the return filed or at any stage during the course of the assessment proceedings and it is not open to the petitioner to put forward such a claim after the assessment is over. Counsel contended that under Section 264 of the Act, the Commissioner has got jurisdiction to entertain and consider a revision petition only if the order of the authority below is erroneous, and in this case a claim which was never made nor was adjudicated in the assessmentorder by the officer, cannot be said to (make the order) erroneous. Counsel stressed that the power vested in the Commissioner under Section 264 of the Act is only a different form of ' appellate power ' and on that premise, the jurisdiction so vested in the Commissioner is analogous to the appellate power provided under Section 250 of the Act. Says the counsel, that the decision of the Supreme Court in Addl. CIT v. Gurjargravures P. Ltd., : [1978]111ITR1(SC) , enjoins that it is not open to the assessee to obtain a relief before the AAC unless it was claimed before the officer or the material to substantiate the same was available on record, and such words of limitation specified for the exercise of the appellate power should be applied by way of analogy to the exercise of revisional power under Section 264 of the Act also.

7. It will be useful to refer Sections 251, 263 and 264 of the I.T. Act in order to appreciate the submissions made by counsel.

'251. Powers of the Appellate Assistant Commissioner.--(1) Indisposing of an appeal, the Appellate Assistant Commissioner shall have the following powers-

(a) in an appeal against an order of assessment, he may confirm, reduce, enhance or annul the assessment; or he may set aside the assessment and refer the case back to the Income-tax Officer for making a fresh assessment in accordance with the directions given by the Appellate Assistant Commissioner and after making such further inquiry as may be necessary, and the Income-tax Officer shall thereupon proceed to make such fresh assessment and determine, where necessary, the amount of tax payable on the basis of such fresh assessment;

(b) in an appeal against an order imposing a penalty, he may confirm or cancel such order or vary it so as either to enhance or to reduce the penalty ;

(c) in any other case, he may pass such orders in the appeal as hethinks tit.

(2) The Appellate Assistant Commissioner shall not enhance an assessment or a penalty or reduce the amount of refund unless the appellant has had a reasonable opportunity of showing cause against such enhancement or reduction.

Explanation :--In disposing of an appeal, the Appellate Assistant Commissioner may consider and decide any matter arising out of the proceedings in which the order appealed against was passed, notwithstanding that such matter was not raised before the Appellate Assistant Commissioner by the appellant.

263. Revision of orders prejudicial to Revenue.--(1) The Commissioner may call for and examine the record of any proceeding under this Act, andif he considers that any order passed therein by the Income-tax Officer is erroneous in so far 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 inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, cancelling the assessment and directing a fresh assessment.....

264. Revision of other orders.--(1) In the case of any order other than an order to which Section 263 applies passed by an authority subordinate to him, the Commissioner may, either of his own motion or on an application by the assessee for revision, call for the record of any proceeding under this Act in which any such order has been passed and may make such inquiry or cause such inquiry to be made and, subject to the provisions of this Act, may pass such order thereon, not being an order prejudicial to the assessee, as he thinks fit.

(2) The Commissioner shall not of his own motion revise any order under this section if the order has been made more than one year previously.

(3) In the case of an application for revision under this section by the assessee, the application must be made within one year from the date on which the order in question was communicated to him or the date on which he otherwise came to know of it, whichever is earlier : Provided that the Commissioner may, if he is satisfied that the assessee was prevented by sufficient cause from making the application within that period, admit an application made after the expiry of that period....'

8. We heard the counsel at length. On a perusal of Section 264 of the I.T. Act, we are clearly of the opinion that the powers vested in the Commissioner are not subject to the limitations, as contended by the counsel for the Revenue or as laid down in the decision of the Supreme Court in Addl. CIT v. Gurjargravures P. Ltd., : [1978]111ITR1(SC) . We shall briefly state our reasons therefor.

9. It is true that the Supreme Court in Shankar Ramchandra Abhyankar v. Krishnaji Dattatraya Bapat, : [1970]1SCR322 , held, in construing Section 115 of the C.P.C., ' that the jurisdiction which is being exercised is a part of the general 'appellate jurisdiction' of the High Court as a superior Court', in ' a wider and larger sense'. In the said case, the question that arose was whether the order passed by the lower court merged in the order passed by the High Court under Section 115, C.P.C. and whether, after the disposal of the said revision, the filing of a petition under Article 226 of the Constitution of India is in any way precluded. The court held that the order of the court below merged in the revisional order even though the order of the superior court was passed in the exercise of revisional jurisdictionunder Section 115, C.P.C. In coming to that conclusion, the court observed that the revisional jurisdiction is a form of appellate jurisdiction as distinguished from an original jurisdiction. It should also be noticed that the decision of the Supreme Court in Addl. CIT v. Gurjargravures P. Ltd., : [1978]111ITR1(SC) , was rendered in the context of the powers of the AAC under Section 251(1)(a) of the I.T. Act. These two decisions heavily relied on by the counsel for the Revenue will not in any way assist him to contend that the power exercised by the Commissioner under Section 264 of the I.T. Act is analogous to the power exercised by the AAC under Section 251 of the Act. We are not in a position to appreciate the contention of the counsel for the Revenue that the powers of the AAC, even to enhance an assessment, as laid down by the Supreme Court in the decision of CIT v. Shapoorji Patlonji Mistry, : [1962]44ITR891(SC) , (which) is a part of the revisionary power and the principles enunciated therein may afford an indication that the revisional power to be exercised under Section 264 of the Act is similar to or is a specie of the appellate power specified in Section 251 of the I.T. Act and so the principles laid down by the Supreme Court in the decision in Addl. CIT v. Gurjargravures P. Ltd., : [1978]111ITR1(SC) , construing the appellate power, should apply. It is trite law that argument by way of analogy is to be resorted to with extreme care andcaution. We are of the opinion that the scope of the appellate power specified in Section 251 of the I.T. Act and the scope of the revisional power vested in the Commissioner under Section 264 of the I.T. Act are entirely different. Because of the express provision in the statute, the AAC has got the power even to enhance an assessment. But the content and scope of the said power has been laid down by the Supreme Court in the decision, CIT v. Rai Bahadur Hardutroy Motilal Chamana, : [1967]66ITR443(SC) of the Report, after referring to the earlier decisions of the Supreme Court including CIT v. Shapoorji Pallonji Mistry, : [1962]44ITR891(SC) and the decision in King v. Income-tax Special Commissioners, [1936] 1 KB 487, was cited with approval. The court observed (p. 450):

' In this context reference may be made to the decision of the Court of Appeal in King v. Income-tax Special Commissioners, [1936] 1 KB 487, in which the taxpayer sought to withdraw a notice of appeal which had been given on his behalf against an additional assessment under Schedule D. The Commissioners of Inland Revenue were not satisfied that the assessment was adequate. The Special Commissioners then proposed to proceed with the hearing of the appeal in the ordinary way. At that stage the taxpayer sought a writ of prohibition to prohibit the Special Commissioners from hearing the appeal. It was held by the Court of Appeal that notice of appeal having once been given, the Commissioners were bound to proceed in accordance with the Income-tax Acts and determine the true amount ofthe assessment. At page 493 of the report, Lord Wright observed as follows:

'......in making the assessment and in dealing with the appeals, theCommissioners are exercising statutory authority and a statutory duty which they are bound to carry out. They are not in the position of judges deciding an issue between two particular parties. Their obligation is wider than that. It is to exercise their judgment on such material as comes before them and to obtain any material which they think is necessary and which they ought to have, and on that material to make the assessment or the estimate which the law requires them to make. They are not deciding a case inter parties; they are assessing or estimating the amount on which, in the interests of the country at large, the taxpayer ought to be taxed.' The principle that emerges as a result of the authorities of this court is that the Appellate Assistant Commissioner has no jurisdiction, under Section 31(3) of the Act, to assess a source of income which has not been processed by the Income-tax Officer and which is not disclosed either in the returns filed by the assessee or in the assessment order, and, therefore, the Appellate Assistant Commissioner cannot travel beyond the subject-matter of the assessment. In other words, the power of enhancement under Section 31(3) of the Act is restricted to the subject-matter of assessment or the source of income which have been considered expressly or by clear implication by the Income-tax Officer from the point of view of the taxability of the assessee.'

10. The revisional jurisdiction may be a part of or a species of appellate jurisdiction, and not part of original jurisdiction. On that basis, it does not follow that all powers so exercisable by the appellate authority with all limitations inherent therein as enunciated by the above Supreme Court decision will be equally applicable in construing the scope and content of the revisional power under Section 264 of the Act. We are unable to accept the plea so put forward by the counsel for the Revenue.

11. Reference made by the counsel for the Revenue to the decisions of the Supreme court in State of Kerala v. K.M. Cheria Abdulla and Co., [1965] 16 STC 875 and Swastic Oil Mills Ltd. v. H.B. Munshi, [1968] 21 STC 383, is also misplaced in construing the scope of Section 264 of the I.T. Act. In those cases the court was construing the revisional powers of the Deputy Commissioner, in the context of particular statutory provisions. The revisional authority was enabled to exercise such powers, for the purpose of satisfying itself as to the legality or propriety of the order sought to be revised or the regularity of the proceedings and for enabling the revisional authority to pass such order with respect thereto, as it thinks fit. The language of the repective statutes considered in the above two cases by the Supreme Courtis different. It is worthwhile to note the observations of the Supreme Court in Cheria Abdulla's case, [1965] 16 STC 875. The Supreme Court said at page 884:

' It is, therefore, not right baldly to propound that, in passing an order in the exercise of his revisional jurisdiction, the Deputy Commissioner must, in all cases, be restricted to the record maintained by the officer subordinate to him, and can never make enquiry outside that record.'

12. Again at page 886, the court referred with approval to the decision of the Madras High Court in State of Madras v. Madura Knitting Company Ltd., [1959] 10 STC 155, wherein it was ruled by the court that the powers given to the ' revising authority under Section 12(2) are not confined to errors patent on the face of the records, but would extend to probing further into the records like calling for despatch registers and other evidence '. In the said decision, the Supreme Court also referred to the provisions of Section 31(2) (similar to Section 251(1) of the I.T. Act), Section 33-A (similar to Section 264) and Section 33(4) of the Indian I.T. Act, 1922, and observed as follows (p. 885 of 16 STC):

' It must be noticed that the power to determine the correct amount of tax after issuing a notice to the dealer and after making such enquiry as the authority considers necessary is vested by this Rule in the appellate authority as well as the revising authority. It is usual in taxing statutes to confer such power upon the appellate and revising authorities.....Theonly difference between the Income-tax Acts and the Madras General Sales Tax Act is that whereas the power to entertain the appeal or revision application and to make orders for further enquiry in the hearing of the appeal or revision is wholly dealt with by the provisions of the Income-tax Acts, under the Madras General Sales Tax Act the revisional jurisdiction and appellate jurisdiction are conferred by the Act, but the power of the appropriate authority in the exercise of the jurisdiction when it appears to the appellate or revising authority that the correct amount of tax payable by the dealer has not been paid to make a further inquiry as the authority considers necessary is conferred by the Rules. But there is no ground for regarding the conferment of power to travel outside the record of the subordinate taxing authorities as unauthorised.'

13. It will be evident from Section 264 of the I.T. Act (extracted hereinabove) that the Commissioner may, call for the record of any proceeding under this Act, in which any such order has been passed ; and may make such inquiry or cause such inquiry to be made and subject to the provisions of the Act, may pass such order thereon, as he thinks fit. Under Section 263 ofthe Act, the Commissioner is enabled to revise orders which are ' prejudicial to the Revenue '. It is provided that the ' Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Income-tax Officer is erroneous in so far as it is prejudicial to the interests of the Revenue.'......may pass suchorder thereon as the circumstances of the case justify...... ' The revisionaljursidiction vested in the Commissioner under Section 263 ef the Act is entirely different from the revisional jurisdiction vested in him under Section 264 of the Act. The revisional powers under Section 263 can be exercised, only where the order passed by the ITO is erroneous in so far as it is prejudicial to the interests of the Revenue. Under Section 264 of the Act, the Commissioner can revise any order either of his own motion or on an application by the assessee, call for the record of any proceeding under the Act passed by an authority subordinate to him, can make enquiry and may pass such order thereon as he thinks fit. The words of limitation contained in Section 263 of the Act are not present in Section 264 of the Act. It is significant to note that for exercising the powers under Section 263 of the Act, the order should be erroneous and should also be prejudicial to the interests of the Revenue, but such requirement is not necessary for the exercise of powers under Section 264 of the Act. There is no indication in the Act to show that the Commissioner can revise only an erroneous order in exercise of the powers under Section 264 of the Act, We are unable to persuade ourselves to accept the contention of the Revenue that it is only an order which is erroneous that can be revised by the Commissioner under Section 264 of the Act. Counsel for the Revenue vehemently contended that the claim of weighted deduction under Section 35B of the Act was not put forward before the ITO, and so could not be adjudicated by him. (It was also not taken up in the appeal filed before the AAC). Says the counsel, that in so far as such a claim was not put forward before the Officer, nor adjudicated upon by him, the order passed by the ITO is proper and justified, and if that be so, there is no scope for revision under Section 264 df the Act at the instance of the assessee. Counsel states that it is implicit in the power to revise that the order sought to be revised is erroneous. We cannot accept the above proposition advanced by the counsel for the Revenue since it is not warranted by the express language of the relevant statutory provision. We may also observe that the 'rights of appeal' and ' revision ' exist or. are available only when expressly provided by the relevant statutory provisions and the extent of the power under both is also regulated by such provisions. Subject thereto, it should be said, as observed by the Supreme Court in Hari Shankar v. Rao Girdhari Lal Chowdhury, AIR 1963 SC 698 :

' A right of appeal carries with it a right of rehearing on law as well as fact, unless the statute conferring the right of appeal limits the rehearingin some way as, we find; has been done in second appeals arising under the Code of Civil Procedure. The power to hear a revision is generally given to a superior court so that it may satisfy itself that a particular case has been decided according to law. '

14. We are of the opinion that ordinarily the question as to whether an assessee is entitled to a deduction or not will depend on the relevant provisions of law relating thereto and not on the yiew which the assessee might take of his rights, or the method and manner in which accounts are kept or an entry made in the books or the way in which the claim for deduction is pleaded or made. In Pt. Sheo Nath Prasad Sharma v. CIT, : [1967]66ITR647(All) the question arose, whether the assessee can, in revision question the taxability of particular amounts offered by him as income for assessment. Justice R.S. Pathak (now judge of the Supreme Court), at page 651, observed as follows :

' It seems to me, however, that the order of the Commissioner rejecting the previous applications, on the mere ground that the petitioner had shown the income in his return, is erroneous. The Commissioner was bound to apply his mind to the question whether the petitioner was taxable on that income. The Income-tax Officer is entitled under Section 23(1) to make an assessment on the basis of the return if he is satisfied, without requiring the presence of the assessee or the production of evidence in support of the return, that the return is correct and complete. But it may be that the assessee may have committed a mistake in treating a certain receipt as taxable. The mere circumstance that he has shown that receipt as income in his return does not make him liable to tax thereon. An assessee is liable to tax only upon such receipt as can be included in his total income and is assessable under the Income-tax Act. The law empowers the Income-tax Officer to assess the income of an assessee and determine the tax payable thereon. In doing so, he may proceed on the basis that, where an assessee discloses that a certain sum of money has been deceived by him, the fact of that receipt may be accepted without anything more as constituting an admission on the part of the assessee. That would be an admission as to a state of fact. But whether the receipt can be considered as taxable income is quite another matter, and consideration of that question leads into the realm of law. If the Income-tax Officer assesses an assessee upon a receipt which is not taxable in law, it is always open to the assessee to take the case in appeal or in revision thereafter. It is then for the Appellate Assistant Commissioner or the Commissioner ot Income-tax, as the case may be, to examine the matter and determine whether, although the money has been received by the assessee, it is taxable in law. The assessee is then within his rights in requiring the appellate or therevisional authority to examine the validity of the assessment to tax of a receipt which, though admitted by him, is not taxable in law.'

15. In O.C.M. Ltd. (London) v. ITO, : [1977]110ITR722(All) , a Division Bench of the Allahabad High Court followed the above decision. The assessee therein filed a return and an assessment was made on that basis. Thereafter, in view of certain statutory provisions, the assessee filed an application before the ITO to include ' dividend ' in the assessment and grant refund of super-tax. The ITO declined to do so. In a revision filed under Section 264 of the Act, the Commissioner also declined to interfere on the ground that income as returned by the assessee was accepted by the officer and there was no mistake in the order of the ITO which required interference. The assessee moved the High Court under Article 226 of the Constitution of India and prayed for quashing the orders of the income-tax authorities. In allowing the petition, the Division Bench observed at page 724 :

'In our opinion, the Commissioner has taken a too narrow view of the scope of the revision under Section 264. Though the Income-tax Officer accepted the income as returned by the petitioner and made assessment, its case is that the order of assessment has to be revised in view of the fact that a sum of Rs. 2,30,000 which ought to have been included in the return filed by it was omitted by inadvertence and, consequently, it was deprived of the refund of Rs. 11,500. This aspect of the case has not at all been considered by the Commissioner, '

16. After referring to the decision of His Lordship Justice Pathak in Pt. Sheo Nath Prasad Sharma's case, : [1967]66ITR647(All) , the Division Bench held (p. 725 of 110 ITR):

' In the light of the aforesaid decision of this court, it is clear that the Commissioner should have applied his mind to the petitioner's plea that it had inadvertently omitted to include in its return the amount of interim dividend received by it from M/s. O.C.M. India (Private) Ltd. and that the assessment made by the Income-tax Officer without taking into account that amount of interim dividend, should be revised and that it (the petitioner) should be given the benefit of the refund of the super-tax which was deducted at source before payment of the interim dividend to it. Hence, the impugned order of the Commissioner suffers from a manifest error and has to be quashed. '.

17. Again, in C. Parikh & Co. v. CIT, : [1980]122ITR610(Guj) , the question arose whether in the case of an over-assessment due to the assessee's mistake, which was found out subsequent to the order of assessment, the Commissioner can be requested to afford relief to the assessee in exercise of the powers under Section 264 of the Act. The assessment of the assessee for theyear 1966-67 was completed. Thereafter, a mistake was detected in the books of account which showed that in totalling the purchases, the asses-see had under-totalled the purchases to the extent of Rs. 20,000 and on account of this under-totalling the gross profit went up to 10 per cent. as against the gross profit of 7 per cent. in the preceding year. The assessee, therefore, made an application under Section 264 of the Act to the Commissioner requesting him to afford him relief to the extent of Rs. 20,000. The Commissioner denied jurisdiction. In a petition filed under Article 226 of the Constitution to quash the order passed by the Commissioner, the Gujarat High Court observed (p. 614):

'...... the revisional powers conferred on the Commissioner underSection 264 are very wide. He has the discretion to grant or refuse relief and the power to pass such order in revision as he may think fit. The discretion which the Commissioner has to exercise is undoubtedly to be exercised judicially and not arbitrarily according to his fancy. Therefore, subject to the limitations prescribed in Section 264, the Commissioner in exercise of his revisional power under the said section may pass such order as he thinks fit which is not prejudicial to the assessee. There is nothing in Section 264 which places any restriction our the Commissioner's re-visional power to give relief to the assessee in a case where the assessee detects mistakes on account of which he was over-assessed after the assessment was completed. We do not read any such embargo in ihe Commissioner's power as read by the Commissioner in the present case. It is open to the Commissioner to entertain even a new ground not urged before the lower authorities while exercising revisional powefs...... In other words, the assessment of the total income ofthe assessee is not correctly made in the assessment order and it has resulted in over-assessment. The Commissioner would not be acting de hors the I.T. Act, if he gives relief to the assessee in a case where it is proved to his satisfaction that there is over-assessment, whether such over-assessment is due to a mistake detected by the assessee after completion of assessment or otherwise...... The Commissioner was, therefore,not right in holding that it was not open to him to give relief to the petitioner on account of the petitioner's own mistake which it detected after the assessment was completed. Once it is found that there was a mistake in making an assessment, the Commissioner had power to correct it under Section 264(1). In our opinion, therefore, the Commissioner was wrong in not giving relief to the petitioner in respect of over-assessment as a result of under-totailing of the purchases to the extent of Rs. 20,000. '

18. The reasoning and conclusion of the above decisions of the Allahabad and Gujarat High Courts commend themselves to us. We respectfully agree with the reasoning and conclusion of the above decisions.

19. It may not be out of place to refer to a Circular issued by the Central Board of Direct Taxes No. 14 (XL-35) of 1955, dated April 11, 1955 (referred to as item 491 in Taxman's Direct Taxes Circulars, Volume I, 1977, 4th Edition). The title is ' Administrative instructions'. In regard to the attitude of the Department in matters affecting the assessee's interest. Para. 3 of the. said circular is as follows;

' Officers of the Department must not take advantage of the ignorance of an assessee as to his rights. It is one of their duties to assist a taxpayer in every reasonable way, particularly in the matter of claiming and securing reliefs and in this regard the officers should take the initiative in guiding a taxpayer where proceedings or other particulars before them indicate that some refund or relief is due to him. This attitude would, in the long run, benefit the Department for it would inspire confidence in him that he may be sure of getting a square deal from the Department. Although, therefore, the responsibility for claiming refunds and reliefs rests with assessees on whom it is imposed by law, officers should :

(a) draw their attention to any refunds or reliefs to which they appear to be clearly entitled but which they have omitted to claim for some reason or other ;

(b) freely advise them when approached by them as to their rights and liabilities and as to the procedure to be adopted for claiming refunds and reliefs. '

20. We are referring to this circular only to highlight the spirit behind this circular. In our opinion, the circular envisages that ' Officers of the Department '--which will certainly take in the Head of the Department--the Commissioner of Income-tax (1st respondent herein) should bear in mind the spirit of the said circular in affording relief to the assessee, as indicated therein. At least when the matter is brought to their notice, without raising technical objections, the matter should receive attention. The circulars have got the force of law. The circulars, at any rate, are binding on the Department. The assessee is entitled to the benefit of such circulars. It is unnecessary to refer to the scope and enforceability of such circulars in view of the fact that we are not resting our decision on the above circular.' But we are referring to that circular only to highlight the spirit behind the circular in the approach to be made by the departmental officials, when a claim for deduction or relief is claimed. The binding nature of the circulars has been considered in the decisions reported in CIT v. B.M. Edward, India Sea Food, : [1979]119ITR334(Ker) , CIT v. Venkiteswaran, [1919] 120 ITR 675 and CWT v. Gammon (India) (P.) Ltd., : [1981]130ITR471(Bom) .

21. In the light of the above discussions, we have no hesitation to hold that the Commissioner of Income-tax committed an error of law in holding that it is not open to him for the first time to entertain a relief of the kind pleaded by the assessee and in denying jurisdiction. We hold, that even though a mistake was committed by the assessee and it was detected by him after the order of assessment, and the order of assessment is not erroneous, none the less it is open to the assessee to file a revision before the Commissioner under Section 264 of the Act and claim appropriate relief. But it should not be forgotten that the power to be exercised under Section 264 is a revisionary one. The limitations implicit in the exercise of such power are well known. The jurisdiction is discretionary; Whether in a particular case, on the basis of facts disclosed, the Commissioner will exercise his jurisdiction and interfere in the matter, is a matter of discretion. It is certainly a judicial discretion vested in the Commissioner, to be exercised in accordance with law. We are not called upon to pronounce on the scope and amplitude of the revisional power. The only question mooted for our consideration in this case is whether the Commissioner has got revisional jurisdiction at all, where the assessee having included the income for assessment, can claim the relief of weighted deduction under Section 35B of the Act, for the first time, in a petition filed under Section 264 of the Act. On that aspect of the question, we have no doubt in our mind that the Commissioner has jurisdiction to entertain a revision petition under Section 264 of the Act.

22. In the light of the above, we quash ex. P-5 order passed by the 1st respondent--Commissioner of Income-tax. We direct the 1st respondent to restore ex. P-4 revision to file and pass appropriate orders. Before passing final orders on Ex. P-4 revision, the assessee will be given an opportunity for being heard along with such of those documents which he intends to produce to substantiate his plea.

23. The original petition is disposed of as above. There will be no order as to costs.

24. After the judgment was pronounced, the counsel for the Revenue made an oral submission under Article 134A(b) of the Constitution for a certificate to appeal to the Supreme Court. Inasmuch as, in our opinion, no substantial question of law of general importance which need to be settled by the Supreme Court is found to arise in this case, we decline to grant the certificate prayed for.


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