TaxTMI 
TaxTMI 
1983 (8) TMI 17
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....n is coming up before us on a reference made by our learned brother, P. C. Balakrishna Menon I judge, by his order of reference dated December 15, 1981. 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 s. 35B of the Act. For the assessment year 1975-76, the return filed by the petitioner was substantially accepted by the 3rd respondent by 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 s. 35B of the Act. Immediately, an application was filed before the 3rd respondent on September 6, 1977, seeking rectification of the assessment under s. 154 of the Act, to afford deduction under s. 35B of the Act, i....
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....eous. Counsel stressed that the power vested in the Commissioner under s. 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 s. 250 of the Act. Says the counsel, that the decision of the Supreme Court in Addl. CIT v. Gurjargravures P. Ltd. [1978] 111 ITR 1, 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 s. 264 of the Act also. It will be useful to refer ss. 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) In disposing 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....
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....on 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......" We heard the counsel at length. On a perusal of s. 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] 111 ITR 1 . We shall briefly state our reasons therefor. It is true that the Supreme Court in Shankar Ramchandra Abhyankar v. Krishnaji Dattatraya Bapat, AIR 1970 SC 1, held, in construing s. 115 of the C.P.C., " that the jurisdiction which is being exercised is a part of the general 'appellate jurisdiction' ....
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.... in the decision, CIT v. Rai Bahadur Hardutroy Motilal Chamaria [1967] 66 ITR 443. At page 450 of the Report, after referring to the earlier decisions of the Supreme Court including CIT v. Shapoorji Pallonji Mistry [1962] 44 ITR 891 (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 of the assessment. At page 493 of the re....
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....issioner, 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 respective statutes considered in the above two cases by the Supreme Court is 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." 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 s. 12(2) are not confined to errors....
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....es of the case justify...... " The revisional jurisdiction vested in the Commissioner under s 263 of the Act is entirely different from the revisional jurisdiction vested in him under s. 264 of the Act. The revisional powers under s. 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 s. 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 s. 263 of the Act are not present in s. 264 of the Act. It is significant to note that for exercising the powers under s. 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 s. 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 s. 264 of the Act. We are unable to persuade ourse....
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...., 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 Incometax 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 ail assessee discloses that a certain sum of money has been received by him, the fac....
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....ship justice Pathak in Pt. Sheo Nath Prasad Sharma's case El 967] 66 ITR 647 (All), the Division Bench held (p. 725 of 11O 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 manifest error and has to be quashed. " Again, in C. Parikh & Co. v. CIT 1980] 122 ITR 610 (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 s. 264 of the Act. The assessment of the assessee for the year 1966-67 was c....
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....nce it is found that there was a mistake in making an assessment, the Commissioner had power to correct it under s. 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-totalling of the purchases to the extent of Rs. 20,000. " 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. 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 t....