COMMISSIONER OF INCOME TAX JABALPUR vs. M/S J.K.TRANSPORT, DURG

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ITR/27/1997HC ChhattisgarhCGHC01000563199724 November 2009Bench: HON'BLE SHRI JUSTICE DHIRENDRA MISHRA,HON'BLE SHRI JUSTICE RANGNATH CHANDRAKAR2 pages
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What did the High Court hold?

The High Court held that the learned Tribunal was justified in law in holding that the decision of the Commissioner of Income Tax in setting aside the assessment under Section 263 was correct. The Tribunal's decision was based on a CBDT Circular dated 26.8.1987, which indicated that no remedial action was necessary in summary assessment cases where revenue loss was consciously suffered by the Government to prioritize scrutiny of larger cases. The High Court agreed with the law laid down by the Allahabad High Court in CIT vs. Smt. Prakashwati (1994) 210 ITR 567 (All), which held that the validity of a summary assessment under Section 143(1) cannot be subjected to revision under Section 263 in view of departmental instructions. Therefore, the assessment completed under Section 143(1) could not be rectified or amended under Section 263. The issue regarding Section 147 was not explicitly decided, but the overall finding implies it would also be covered by the principle that summary assessments are not subject to revision under these circumstances. The reference is answered against the Revenue and in favour of the Assessee.

What were the facts?

This is a reference application filed by the Commissioner of Income Tax, Jabalpur (the Revenue) against M/s. J.K. Transport, Durg (the Assessee). The Income Tax Appellate Tribunal, Nagpur, referred two questions of law to the High Court of Chhattisgarh at Bilaspur for opinion, in compliance with a previous High Court order. The Tribunal had previously set aside orders passed under Section 263 of the Income Tax Act, 1961, by the Commissioner of Income Tax. The Revenue is challenging the Tribunal's decision regarding the validity of the Commissioner's revisionary powers over assessments completed under Section 143(1). The amount in dispute is not explicitly stated.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the learned Tribunal was justified in law in holding that the decision of the Commissioner of Income Tax in setting aside the assessment under Section 263 is correct? 2. Whether, on the facts and in the circumstances of the case, the learned Tribunal was justified in law in holding that the assessment completed under Section 143(1) could not be rectified or amended either under Section 147 or Section 263? Assessee's contentions: The judgment does not record specific arguments made by the Assessee. However, the Tribunal's decision implies that the Assessee likely argued that the Commissioner's action under Section 263 was not justified. Revenue's contentions: The Revenue is challenging the Tribunal's finding that the Commissioner's order under Section 263 was incorrect. The Revenue likely contended that the Commissioner had the power to revise the assessment under Section 263. The Revenue is essentially seeking to uphold the Commissioner's revisionary powers.

Which sections of the Income-tax Act were involved?

Section 256,Section 263,Section 143(1),Section 147

AI-generated summary — verify with the full judgment below

HIGH COURT OF CHHATTISGARH AT BILASPUR Comm:- Hon’ble Shri Dhirendra Mishra & Hsn’b!e Shri RN. Chandrakar. JJ LT.R. No.27i1997 Commissioner of income Tax,. Jabalpur Applicant Versus M/s. J.K. Transport, Durg Respondent Reference application under Section 256 (2) of the income Tax Act 1961 Present: Shri S. Rajeshwara Rao, counsel for the applicant. Orai Order (Passed on 25“ of November 2009) Per Ehirendra Mishra J - This reference has been made by the income Tax Appellate Tribunal, Nagpur (for short the ‘Tribunal‘) under Section 256 (2) of the income Tax Act, 19611 (for short the ‘Act’) and the Tribunal has referred the following questions of lawvfef j’V compliance of High Courts order dated 15071996 for our OplnlOn - ‘Whether on the facts and in the circumstances of the; case, the learned Tribunal was justified in‘law in holding that the decision of the Commissioner of income—Tax, in setting aside the assessment u/s 263 is i correct?” i i i ‘Whether on the ‘facts and in the Circumstances of thei case the iearned Tribunal was justified in iaw in holding that the assessment completed under Section 143(1) \r\ \

could not be rectified or amended either u/S‘ 147 or 263?” (2) The Tribunai has set aside the orders passed under Section 263 of the Aot by the Commissioner of Income Tax by referring to the circular dated 26.8.1987 issued by the Central Board of Direct Taxes, wherein it has been mentioned that no remedial action was necessary in summary assessment cases as the revenue ioss, if any, was consciously suffered by the Government to utilize its resources for scrutiny and investigation of the larger cases. (3) The High Court of Allahabad in the matter of Commissioner of Income Tax vs.Smf. Prakashwati reported in (1994) 210 ITR 567 (Alt) held that validity of summary assessment made under s.143(1) cannot be subjected to revision under S263 in View of Departmental instructions contained in CBDT Circular No.4 of 8th July, 1986 and 176 of 20m Aug, 1987. (4) We are in agreement with the law laid down by the Allahabad High Court in this regard and accordingly, the reference is answered against the Revenue and in favour of the ESSGS$€9. (5) With the above observation, thisWof 7i, ¥’riya l , Sdl- Sd/— ,7, .J i ‘ R.N. Chandrakar J Dhirendra Mishra Judge ;,,, WJ,” Judge *1; ,

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