1989 (1) TMI 158 - AT - Income Tax

Tribunal Upholds Commissioner's Jurisdiction in Assessment Review

The Tribunal upheld the Commissioner's order under section 263, confirming the Commissioner's jurisdiction to review an original assessment under section ... Assessment Proceedings, Assessment Year, Orders Prejudicial To Interests Issues:1. Jurisdiction of the Commissioner under section 263 of the Income-tax Act, 1961 for an assessment year.2. Non-charging of interest under sections 139(8) and 217 by the assessing officer.3. Validity of the assessment made by the assessing officer under section 147(a) of the Act.Analysis:Issue 1: Jurisdiction of the Commissioner under section 263The appeal was against the order of the Commissioner of Income-tax (Administration) under section 263 for the assessment year 1975-76. The Commissioner invoked section 263 based on the failure of the assessing officer to charge interest under sections 139(8) and 217 and to initiate penalty proceedings under section 271(1)(a). The Commissioner held that the assessment was not a reassessment but an original assessment under section 147(a) since no return was filed by the assessee. The Commissioner directed the assessing officer to verify the levy of interest as per law. The Tribunal upheld the Commissioner's order, stating that the Commissioner had the lawful jurisdiction to review the assessment and issue directions. The Tribunal found no bar under the law to prohibit the Commissioner from assuming jurisdiction under section 263 for an original assessment under section 147(a).Issue 2: Non-charging of interest under sections 139(8) and 217The assessing officer did not charge interest under sections 139(8) and 217 and did not indicate any reason for not doing so. The Commissioner held this as erroneous and prejudicial to the revenue's interest. The Tribunal agreed that the assessing officer's failure to apply his mind to the issue of charging interest rendered the order erroneous. The Tribunal emphasized that charging interest under these sections is part of the assessment process, and the assessing officer's discretion to waive or reduce interest must be supported by reasons. The Commissioner's direction to verify the levy of interest was deemed reasonable and fair.Issue 3: Validity of the assessment under section 147(a)The assessing officer made the assessment under section 147(a) as the assessee had not filed a return. The Tribunal clarified that an order of reassessment under section 147 is distinct from an original assessment under the same section. The Tribunal noted that the Commissioner had jurisdiction to review the original assessment under section 147(a) and found that the assessing officer had not deliberated on the levy of interest under sections 139(8) and 217. The Tribunal upheld the Commissioner's order and dismissed the appeal, affirming the directions issued regarding the verification of interest levy.In conclusion, the Tribunal upheld the Commissioner's order under section 263, emphasizing the importance of charging interest under relevant sections during the assessment process and confirming the Commissioner's jurisdiction to review an original assessment under section 147(a) for the assessment year in question.