1978 (4) TMI 69 - HC - Income Tax

Summary

Issues Involved:
1. Whether the Income-tax Officer (ITO) is required to make an order u/s 215, 216, and 217 of the Income-tax Act, 1961.
2. Whether an order made u/s 215, 216, or 217 forms part of an assessment order.
3. Whether an omission to make an express order u/s 215, 216, or 217 can be deemed an order subject to the jurisdiction of the Commissioner u/s 263 of the Act.

Summary:

Issue 1: Requirement of an Order by ITO u/s 215, 216, and 217
The court held that the proceedings under s. 215 and s. 217 of the Act are quasi-judicial in nature, necessitating an order by the ITO to give effect to these sections. The court referenced the Supreme Court's decision in M. Chockalingam and M. Meyyappan v. CIT, which emphasized the need for the ITO to consider the reduction or waiver of interest after giving the assessee a reasonable opportunity to make representations.

Issue 2: Order u/s 215, 216, or 217 as Part of Assessment Order
The court clarified that an order under s. 215, 216, or 217 does not form part of an assessment order. The definition of "regular assessment" u/s 2(40) excludes orders made under these sections. The court noted that if such orders were part of the assessment order, they would be appealable under s. 246(c), making s. 246(m) redundant.

Issue 3: Deemed Order and Jurisdiction of Commissioner u/s 263
The court rejected the argument that an omission by the ITO to make an express order u/s 217 could be deemed an order subject to the Commissioner's jurisdiction u/s 263. The court distinguished the case from S. A. L. Narayan Row v. Ishwarlal Bhagwandas, noting that the latter involved a retrospective amendment. The court disagreed with the Kerala High Court's decision in CIT v. Cochin-Malabar Estates Ltd., which allowed the Commissioner to assume jurisdiction under s. 263 in the absence of an express order by the ITO. The court concluded that the Commissioner's action was premature as no order u/s 217 existed in these cases.

Conclusion:
The court answered the questions in the affirmative, indicating that the Commissioner did not have jurisdiction u/s 263 in the absence of an express order by the ITO u/s 217.