COMMISSIONER OF INCOME TAX vs. SHRI BUDHILAL HIRALAL RANA,

PDF · subscribers
ITR/158/1989HC GujaratGJHC24012938198919 July 2002Bench: HONOURABLE MR. JUSTICE MOHIT S. SHAH,HONOURABLE MR. JUSTICE K.A.PUJ4 pages
AI SummaryAllowed

What did the High Court hold?

The High Court held that the ITAT was correct in setting aside the order passed by the Commissioner of Income-tax under Section 263 of the Act. The Court reasoned that there was no material on record to justify the CIT's conclusion that the ITO's order was erroneous or prejudicial to the interest of the revenue. Furthermore, the High Court affirmed the ITAT's view that even if there were omissions or mistakes concerning certain items, it was not proper to set aside the entire assessment. The Court followed its earlier decision in the case of CIT vs. M/s Arvind Jewellers. Both questions referred to the Court were answered in the affirmative, in favour of the assessee and against the revenue. The reference was disposed of accordingly.

What were the facts?

The Revenue (Commissioner of Income Tax) is in reference before the High Court challenging an order of the Income Tax Appellate Tribunal (ITAT). The ITAT had set aside an order passed by the CIT under Section 263 of the Income Tax Act, 1961. The assessment years involved are 1980-81 and 1981-82. The CIT had set aside the original assessment orders passed by the Income Tax Officer (ITO) for these years, directing fresh assessments after investigation. The assessee, Shri Budhilal Hiralal Rana, challenged these fresh assessments before the Appellate Assistant Commissioner (AAC), who also set aside the assessment orders. The assessee then appealed to the ITAT against the CIT's Section 263 order. The ITAT found no material to justify the CIT's order being erroneous or prejudicial to the revenue and thus set aside the CIT's order.

What were the issues?

1. Whether, on the facts and circumstances of the case, the Appellate Tribunal is right in law in setting aside the order made by the CIT u/s. 263 of the I.T. Act, 1961? 2. Whether, the Tribunal is right in law and on facts in holding that even if there is an omission or mistake with regard to certain items it was not proper as found in the assessment order to set aside the whole assessment? Assessee's arguments: The judgment does not record specific arguments made by the assessee. However, the ITAT's finding, upheld by the High Court, suggests the assessee contended that the CIT's order under Section 263 was not justified as there was no material to show the ITO's order was erroneous or prejudicial to the revenue, and that setting aside the entire assessment for minor omissions was improper. Revenue's arguments: The Revenue, represented by Mr. Manish Bhatt, argued that the ITAT was not right in setting aside the CIT's order and that the Tribunal's reasoning regarding the impropriety of setting aside the whole assessment was incorrect.

Which sections of the Income-tax Act were involved?

Section 263,Section 143(2)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No 158 of 1989

For Approval and Signature:

Hon'ble MR.JUSTICE M.S.SHAH and Hon'ble MR.JUSTICE K.A.PUJ

============================================================ 1. Whether Reporters of Local Papers may be allowed : NO to see the judgements?

2.

To be referred to the Reporter or not? : NO

3.

Whether Their Lordships wish to see the fair copy : NO of the judgement?

4.

Whether this case involves a substantial question : NO of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder?

5.

Whether it is to be circulated to the concerned : NO Magistrate/Magistrates,Judge/Judges,Tribunal/Tribunals? -------------------------------------------------------------- COMMISSIONER OF INCOME TAX Versus SHRI BUDHILAL HIRALAL RANA, -------------------------------------------------------------- Appearance: 1. INCOME TAX REFERENCE No. 158 of 1989 MR MANISH R BHATT for Petitioner No. 1 DS AFF.NOT FILED (N) for Respondent No. 1

--------------------------------------------------------------

CORAM : MR.JUSTICE M.S.SHAH and MR.JUSTICE K.A.PUJ

Date of decision: 19/07/2002

ORAL JUDGEMENT (Per : MR.JUSTICE K.A.PUJ)

At the instance of the revenue, the following two

questions of law are referred to this Court for its opinion for assessment years 1980-81 and 1981-82 :-

1.

Whether, on the facts and circumstances of the case, the Appellate Tribunal is right in law in setting aside the order made by the CIT u/s. 263 of the I.T. Act, 1961 ?

2.

Whether, the Tribunal is right in law and on facts in holding that even if there is an omission or mistake with regard to certain items it was not proper as found in the assessment order to set aside the whole assessment ?

2.

Heard Mr Manish Bhatt, the learned senior standing counsel appearing for the revenue. Nobody appears on behalf of the respondent-assessee. Since we are deciding this reference in favour of the assessee even if the office endorsement shows that the respondent is not served, no prejudice will be caused to the assessee by virtue of his absence in the present reference. For assessment year 1980-81, the return of income was filed by the assessee on 13.1.1983 and notice under Section 143(2) of the Act was issued which was duly complied with and necessary details were furnished and proper explanation was also given in response to the said notice. The Income-tax Officer has framed the assessment determining the total income of Rs.10,990/-.

For assessment year 1981-82, the return of income was filed on 13.1.1983 and notice under Section 143(2) of the Act was issued which was duly complied with and necessary details were furnished and proper explanation was also given in response to the said notice. The Income-tax Officer has framed the assessment determining the total income of Rs.19,110/-.

The Commissioner of Income-tax (Inv.) vide his order dated 28.11.1984 has passed a common order for assessment years 1980-81 and 1981-82 under Section 263 of the Act and set aside both the assessment orders passed by the Income-tax Officer with a direction to pass fresh orders after carrying out necessary investigation. Pursuant to the order passed by the Commissioner of Income-tax (Inv.) under Section 263 of the Act, the Income-tax Officer framed fresh assessments for assessment years 1981-82 and 1982-83 on 30.3.1985 determining the total income at Rs.25,270/- and Rs.53,440/- respectively.

The assessee has challenged the said fresh assessment orders before the Appellate Assistant Commissioner, Ahmedabad and he vide his order dated 31.1.1986 again set aside the assessment orders for both the assessment years.

It is pertinent to note here that the assessee has preferred appeals before the Tribunal against the order passed by the Commissioner of Income-tax under Section 263 of the Act and while disposing of the appeals of the assessee, the Tribunal has come to the conclusion that there is no material brought on record to justify that there was an error or omission or failure on the part of the Income-tax Officer so as to make the order erroneous. The Tribunal has further observed that apart from the fact that such order is also to be prejudicial to the interest of the revenue. The Tribunal has, therefore, set aside the order passed by the Commissioner under Section 263 of the Act. It is that order of the Tribunal which is under challenge in the reference before us.

3.

Similar question in involved in the case of M/s. Arvind Jewellers, Ahmedabad in which the assessee was a partnership firm. Today we have disposed of that reference filed by the revenue against the order of the Tribunal in the case of M/s Arvind Jewellers, Ahmedabad and in the said order we have upheld the order of the Tribunal and decided the reference in favour of the assessee.

Since the identical issue is involved and since the Tribunal has referred to the order of the present assessee while disposing of the appeal of M/s Arvind Jewellers, we are of the view that the reference would meet with the same fate.

4.

Following our decision in CIT vs. M/s Arvind Jewellers being ITR No. 174 of 1989, we are of the view that the Tribunal was right in setting aside the order under Section 263 of the Act. We are also of the view that even if there is an omission or mistake with regard to certain items, it was not proper as found in the assessment order to set aside the whole assessment.

In this view of the matter, we answer both the questions referred to us in the affirmative i.e. in favour of the assessee and against the revenue.

5.

The reference is disposed of accordingly with no

order as to costs.

(M.S. Shah, J.) (K.A. Puj, J.)

sundar/-

More judgments on Section 263

All 13,616 judgments and leading authorities on Section 263 →

Recent GST High Court judgments

Search GST case law →