1991 (3) TMI 190 - AT - Income Tax

Summary

Issues: Jurisdiction of the Commissioner under section 263 of the Income-tax Act, 1961.

Analysis:

The judgment by the Appellate Tribunal ITAT Chandigarh pertains to an appeal against an order made by the Commissioner of Income-tax under section 263 of the Income-tax Act, 1961, for the assessment year 1984-85. The Tribunal focused on the validity of the assumption of jurisdiction by the Commissioner and ultimately canceled the order as being without jurisdiction. The assessee, a registered firm engaged in the transportation of goods, had filed its first assessment return declaring a loss. Subsequently, the assessing authority completed the assessment under section 143(3) of the Act. However, a notice under section 148 was served upon the assessee, leading to a revised assessment under section 144. The Commissioner issued a notice under section 263, alleging errors in the previous assessments. The Tribunal highlighted that the notice lacked essential judicial requirements, as it was signed by the Commissioner's stenographer and did not specify the basis for considering the previous orders as erroneous. Another notice was issued by the Commissioner, but the subsequent order was made before the notice was served on the assessee, raising concerns about procedural fairness and principles of natural justice. The Tribunal concluded that the Commissioner did not assume lawful jurisdiction under section 263, rendering the order null and void, and subsequently allowed the appeal.

The Tribunal emphasized that the power of revision under section 263 is a judicial power vested in the Commissioner, requiring a lawful assumption of jurisdiction. It highlighted the necessity for the Commissioner to personally sign and specify the basis for considering an order as erroneous and prejudicial to the revenue. The Tribunal found the initial notice issued by the Commissioner deficient in judicial application, as it was signed by the stenographer and lacked specificity regarding the errors alleged in the assessments. Additionally, the Tribunal raised concerns about the timing of the order in relation to the notice, indicating a violation of principles of natural justice. Ultimately, the Tribunal held that the Commissioner's actions did not meet the legal requirements for assuming jurisdiction under section 263, leading to the cancellation of the order.

In conclusion, the Tribunal's decision underscores the importance of procedural fairness and adherence to legal requirements in exercising powers of revision under section 263. The judgment serves as a reminder of the need for meticulousness in issuing notices, specifying errors in assessments, and ensuring compliance with principles of natural justice to uphold the integrity of the revision process.