TaxTMI 
TaxTMI 
1984 (10) TMI 124
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....der section 273(2)(c) of the Act. He also did not levy interest under section 217(1A) of the Act. The Commissioner was of the view that these were lapses which rendered the relevant assessment orders erroneous and prejudicial to the revenue. He called upon each of the assessees to show cause why action under section 263 should not be taken. The pleas of the assessees were that they had paid the advance taxes as demanded and they had no reason to believe that the income for the year would have been higher and would have necessitated filing of an estimate, showing an upward revision of the tax payable and further extension of time had been sought for filing the returns and, hence, the penal provisions of section 271(1)(a) and section 273(2)(c....
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....nce with law." 4. In appeal before us, the learned counsel placed reliance on the decision of the Delhi High Court in the case of Addl. CIT v. J.K. D'Costa [1982] 133 ITR 7 as also on the latter decision of the same High Court in Addl. CIT v. Achal Kumar Jain [1983] 142 ITR 606. He submitted that the non-initiation of penal proceedings, during the course of assessment proceedings, would not render the assessment made erroneous or prejudicial to the revenue. Since there was no infirmity in the order of assessment, for non-initiation of penalty proceedings, even if they should have been initiated, he submitted, the Commissioner could not exercise his revisionary powers under section 263. Apart from it, he stated that even on facts, each of....
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....iled by 15-12-1978. By this time, no assessment had been made in the case of Purshotham Ramjee & Co. for any of the assessment years 1976-77, 1977-78 and 1978-79, such assessments having been completed only on 22-8-1979, 6-9-1980 and 5-9-1981. Therefore, there was no question even of the assessee imagining with reference to the additions made by the department for earlier years in the firm's case that the assessee's income would require upward revision. It was also submitted that though the returns were filed in December 1979, the assessments were made only in March 1982 and the delay was not due to any fault of the assessee and in any view of the matter, interest under section 217(1A) should not be charged and it is a fit case for the waiv....
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....e earlier decision in the case of J.K. D'Costa. The latter decision of the Delhi High Court has set out the various pronouncements of the Madhya Pradesh High Court, which took the view that action under section 263 could be taken by the Commissioner in case the ITO had omitted to initiate penal proceedings. The Court eventually reiterated the view taken in J.K. D'Costa's case. Dealing with the powers of the Commissioner, the Court finally observed in Achal Kumar Jain's case as under : " The meaning attributed to the expression ' assessment ' is different in various contexts of the Act. But in the context of section 263 it is a particular ' proceeding ' that is to be considered. If he is dealing with the assessment proceedings and assessm....
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....ing for the Court, observed : " . . . The intention of the Legislature was to give a wide power to the Commissioner. He may consider the order of the Income-tax Officer as erroneous not only because it contains some apparent error of reasoning or of law or of fact on the face of it but also because it is a stereotyped order which simply accepts what the assessee has stated in his return and fails to make inquiries which are called for in the circumstances of the case . . . ." This cannot be read to mean that the Commissioner is entitled to bring within his scope and deal with penalty proceedings and orders (which are admittedly connected but distinct) while calling for and examining the record of the assessment proceedings and orders.....
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....interest, a wholesale cancellation of the assessment was not warranted and all that the Commissioner can do was to direct the ITO to consider the question on merits and in accordance with law after giving the assessee an opportunity of being heard. Following the ratio of the aforesaid decision, we have to hold that for non-levy of interest under section 217(1A), even if it was otherwise leviable, the assessment could not be set aside. The plea of the learned counsel was that the levy of interest under section 217(1A) had to be by an independent order, though customarily it formed part of the assessment order and, hence, non-levy of interest under section 217(1A) could not vitiate the assessment order. We need not pronounce on this aspect in....