TaxTMI 
TaxTMI 
2006 (9) TMI 125
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....igaoh. It is an assessee under the Act. Its three units-refinery, petrochemicals and polyster staple fibre were set up and commissioned in the financial years 1979-80, 1985-86 and 1988-89, respectively, and produce articles distinctly different and individually identifiable. According to the petitioner, in terms of Notification No. S. O. 165 No. 7056/F. No. 178/171/86-IT(AI), dated December 19, 1986 declaring the entire State of Assam to be a backward area under the Act it is entitled to claim deductions under sections 80HH and 80-I of the Income-tax Act, 1961. Though eligible, it could not claim the same till the assessment year 1992-93 as its net taxable income in the earlier assessment years was ascertained to be "nil". It was only in the assessment year 1992-93 when its income recorded positive, that it claimed the relief under sections 80HH and 80-1 for its petrochemical industrial unit. It accordingly filed its return on December 29, 1992, claiming a deduction amounting to Rs. 12,71,07,137 each under the above two provisions totalling Rs. 25,42,14,274. The Deputy Commissioner of Income-tax (Assessment), Special Range I, Guwahati, in terms of section 143(1)(a) of the Act after....
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....ring the assessment erroneous and as such prejudicial to the interests of the Revenue. The authority concerned recorded that the audited profit and loss account did not reveal any bifurcation amongst the three industrial units by totally overlooking the fact that the petitioner in the course of the assessment proceeding had submitted the unitwise accounts. The Commissioner, therefore, reascertained the profits of the three units. In response to the notice, the petitioner appeared before the said authority and endeavoured to explain the apparent error in the proposal to bifurcate the profits on turnover basis more particularly in view of the existence of necessary documents disclosing unitwise profit and loss of the three industrial units submitted in the course of the assessment proceedings and also at the time of hearing of the audit objection. The learned Commissioner of Income-tax, however, by order dated March 19, 1997, directed the Assessing Officer to ascertain the correct deductions under the above provisions of the Act in the light of the observations made in the order. In the appeal preferred by the petitioner before the Income-tax Appellate Tribunal, Guwahati Bench, Guw....
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.... order dated December 5,2005, the learned Commissioner of Income-tax set aside the order of the Assessing Officer for the assessment year 1992-93 and directed him to ferret out the deductions under sections 80HH and 80-I by calculating the profit of the petitioner's units in proportion to the turnover thereof and to pass a fresh assessment order accordingly. As observed hereinabove, these statements on oath have remained uncontroverted in the absence of any. counter by the respondents. Dr. Saraf has urged that in the absence of the essential preconditions for exercise of powers under section 263 of the Act, the order impugned is patently illegal and without jurisdiction. He has maintained that the order of the Assessing Officer, on completion of assessment read with the order dated November 10, 1995, of the Tribunal not being erroneous and, therefore, not prejudicial to the Revenue, the learned Commissioner of Incometax acted without jurisdiction in passing the impugned order in purported exercise of powers under section 263 of the Act. As the order of the Assessing Officer does not suffer from any jurisdictional error, patent illegality or procedural contraventions, no interferen....
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....following decisions were pressed into service in support of the above contentions. Rajendra Singh v. Superintendent of Taxes [1990] 79 STC 10 (Gauhati); [1990] (1) GLR 449; Santalal Mehendi Ratta (HUF) v. Commissioner of Taxes [2002] (1) GLR 197, State of Kerala v. K. M. Cheria Abdulla and Co. [1965] 16 STC 875 (Sc), Jeewanlal (1929) Ltd. v. Addl. CIT [1977] 108 ITR 407 (Cal), CIT v. Technotive Eastern P. Ltd. [2002] 255 ITR 253 (Gauhati), Bongaigaon Refinery and Petrochemicals Ltd. v. CIT [2005] 274 ITR 379 (Gauhati) and Shree Automobiles P. Ltd. v. Commissioner of Taxes [2003] 3 GLT 40 (Gauhati). Mr. Bhuiyan as against this has fairly conceded that the determination in Bongaigaon Refinery and Petrochemicals Ltd. v. CIT [2005] 274 ITR 379 (Gauhati), having remained unchallenged has become final and thus if the exercise of jurisdiction by the learned Commissioner of Income-tax under section 263 of the Act lacked authority, all subsequent orders including the one impugned had been rendered invalid. Without prejudice to the above, learned counsel, however, has urged that the impugned order being appealable under the Act, this court would not invoke its extraordinary jurisdiction und....
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....rs under article 226 to entertain issues adjudicatable before the fora provided for redress by the corresponding legislations is inalienably basal, no absolute bar in exercise of the writ jurisdiction is suggested thereby. For the reasons cited hereinabove, this court is not inclined to invoke the self-imposed restraint in the instant case. A plain reading of section 263 of the Act, presents the essential prerequisites for the exercise of powers thereunder. It mandates that interference as contemplated therein is comprehended only if the Commissioner considers that any order passed in a particular case by the Assessing Officer is erroneous so much so that it is prejudicial to the interests of the Revenue. Error in the order of the Assessing Officer and resultant prejudice to the interests of the Revenue are twin factors to co-exist for conferring the authority on the Commissioner to invoke his powers thereunder. This court in Shri Rajendra Singh [1990] 79 STC 10, while dealing with section 21 of the Tripura Sales Tax Act, 1976, which is in pari materia with section 263 of the Act, held that two circumstances, i.e., (1) order is erroneous and, (2) it is thereby prejudicial to the i....
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....sessing authorities, and to reopen assessments. The amplitude of the power of the revisional authority under section 36 of the Assam General Sales Tax Act, 1993, was examined by this court, in Santalal Mehendi Ratta, (HUF) [2002] 1 GLR 197 ; [2006] 143 STC 511. Drawing sustenance, inter alia, from the ratio of the decisions in Rajendra Singh [1990] 79 STC 10 (Gauhati) and State of Kerala v. K. M. Cheria Abdulla and Co. [1965] 16 STC 875 (SC), it was held that an erroneous order cannot be equated with a wrong order as understood in common parlance and that an order of assessment passed within the limits of the jurisdiction of the assessing authority even if considered to be wrong by the revisional authority would not attract the invocation of suo motu revisional powers. It expressed itself further in the following terms: "The revisional authority for various good reasons may be inclined to view an assessment order from a negative standpoint. The revisional authority may likewise disagree with the views of the primary authority in its interpretation of the law impasing the liability or the extent or quantum thereaf. It may disagree with the primary authority with regard to the dete....
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....d not clothe the Commissioner with the power to interfere therewith under the said provision of the Act. Differently put, an error within the jurisdiction of the Assessing Officer on an evaluation of the materials available would not be exposed to interference in exercise of suo motu revisional powers under section 263 of the Act. The provision though permits the Commissioner to initiate an enquiry as he may deem necessary does not authorise a roving probe into the facts with the disposition to pick out errors to sustain the eventual interference. This assumes great significance in the context of the statutory framework of the Act outlining the jurisdictional contours of different authorities to adjudicate the issues as legislatively stipulated. The Commissioner in exercise of his revisional powers cannot arrogate to himself a status to surrogate the other authorities and supplant their roles under the Act. The Commissioner is not a substitute for the other statutorily prescribed fora with codified functions dischargeable in terms of the prescribed procedure in the situations comprehended thereby. The Commissioner, therefore has to be rigorously held to the limits of his suo motu r....
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....t the profits of different units as set out in the revised return were duly substantiated by the said profit and loss statements. The Commissioner of Income-tax on a reappraisal of the materials available along with the audit objection was, however, of the view that no basis in arriving at the profit or loss bifurcation in the three units of the petitioner had been provided and that therefore the profits thereof were to be worked out on the proportion of their turnover. By his order dated March 19, 1997, the assessment for the year 1992-93 was thus set aside and the Assessing Officer was directed to work out the correct deduction in the light of his observations. In appeal though the learned Tribunal upheld the assumption of jurisdiction by the Commissioner of Income-tax under section 263 of the Act it set aside the above direction to the Assessing Officer in the following terms: "Moreover, one of the grounds of the assessee-company is that the learned Commissioner of Income-tax in order to pass the order under section 263 before it becomes time-barred had not applied his mind properly. After going through the directions issued by the learned Commissioner of Income-tax, N.E.R., Sh....
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....ion to which they are entitled thereunder. The provisos appearing under the sub-sections permit the Assessing Officer to compute such profits and gains on a reasonable basis as he would deem fit in case in his opinion the computation of the profits and gains in terms of the procedure prescribed presents exceptional difficulties. The power of computation of the profits and accounts for the purpose of determining the deduction grantable to assessees under the above provisions of the Act is located in the Assessing Officer and is exercisable by him subject to his opinion as above. If on the basis of the facts and data available to the Assessing Officer, computation of the profit and loss in terms of the procedure sanctioned by section 80HH(6) and section 80-I(8) is possible and the Assessing Officer is not confronted with any exceptional difficulty, computation of the profit and loss on reasonable basis would not be warranted. It is thus primarily the satisfaction of the Assessing Officer to decide if the computation of the profits and gains on a reasonable basis is called for acting within the parameters of the provisos. The legislative paradigm as available does not admit of the int....