1959 (8) TMI 43 - HC - Income Tax

Court affirms Commissioner's revision power under Section 33B of Income-tax Act, clarifying appeal restrictions.

RAMLAL ONKARMAL Versus COMMISSIONER OF INCOME-TAX, ASSAM

The court upheld the validity of the Commissioner's order under Section 33B of the Income-tax Act, ruling that the Commissioner can exercise revision ... - Issues Involved:1. Validity of the Commissioner's order under Section 33B of the Income-tax Act.Detailed Analysis:Issue 1: Validity of the Commissioner's order under Section 33B of the Income-tax ActBackground:The case involves a Hindu undivided family (the assessee) with shares in two unregistered firms. The Income-tax Officer (ITO) included the profits and losses from these firms in the assessment for the year 1953-54. The Commissioner of Income-tax (CIT) later revised the assessment, enhancing it by disallowing the set-off of a loss from one of the firms. The assessee contended that the CIT had no jurisdiction to pass this order while an appeal was pending before the Appellate Assistant Commissioner (AAC).Section 33B:Section 33B allows the CIT to revise any order passed by the ITO if it is erroneous and prejudicial to the interests of the revenue. The CIT must provide the assessee an opportunity to be heard and must act within two years from the date of the order sought to be revised. The section does not explicitly restrict the CIT from exercising these powers if an appeal is pending.Arguments by the Assessee:The assessee argued that the CIT could not exercise powers under Section 33B while an appeal was pending before the AAC. They relied on the provisions of Section 31(3)(a) and Section 31(3)(h), which allow the AAC to confirm, reduce, enhance, or annul the assessment and provide the ITO the right to be heard during the appeal process. The assessee cited cases from the Bombay High Court and the Patna High Court to support their argument.Court's Analysis:The court analyzed the provisions of Section 33B and compared them with Section 33A, which explicitly restricts the CIT from exercising revision powers if an appeal is pending. The court noted that Section 33B does not contain similar restrictions. The court also reviewed the legislative intent, concluding that the absence of such restrictions in Section 33B indicates that the CIT can exercise revision powers even if an appeal is pending.Precedent Cases:1. Commissioner of Income-tax v. Amritlal Bhogilal and Co. [1953] 23 I.T.R. 420 (Bom.):- The Bombay High Court held that the CIT could not exercise powers under Section 33B if an appeal was pending. The court reasoned that the appellate authority could address any errors, and the CIT's intervention could prejudice the appeal process.- This view was not upheld by the Supreme Court, which emphasized that the CIT's powers under Section 33B are not restricted by the pendency of an appeal.2. Smt. Durgabati and Smt. Narmadabala Gupta v. Commissioner of Income-tax [1956] 30 I.T.R. 101 (Pat.):- The Patna High Court held that the CIT's powers under Section 33B are wide and not restricted by the pendency of an appeal. The court emphasized the statutory language and the absence of restrictions in Section 33B.Supreme Court's View:The Supreme Court in Commissioner of Income-tax v. Amritlal Bhogilal & Co. [1958] 34 I.T.R. 130 (S.C.) clarified that the CIT's powers under Section 33B are not limited by the pendency of an appeal. The court stated that the revisional power must be determined solely by the terms of Section 33B, without imposing additional limitations based on hypothetical considerations of policy.Conclusion:The court concluded that the CIT's order under Section 33B was valid despite the pending appeal. The powers under Section 33B are not circumscribed by the pendency of an appeal, and the CIT acted within his jurisdiction. The question referred by the Tribunal was answered in the affirmative, in favor of the department. The respondent was entitled to costs assessed at Rs. 100.Separate Judgment by DEKA J.:DEKA J. concurred with the Chief Justice, emphasizing that the statutory language of Section 33B does not impose restrictions based on the pendency of an appeal. The judgment reiterated that the CIT's powers under Section 33B are only confined by the three conditions mentioned in the section.Final Decision:The reference was answered in the affirmative, validating the CIT's order under Section 33B.