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TMI Blog1989 (1) TMI 161X X X X Extracts X X X X X X X X Extracts X X X X ..... t the assessee alongwith others had made investment in the construction of a building of M/s Om Rice Mills, the ITO issued notice under s. 148 calling for a return from the assessee. This notice was issued on7th Feb., 1980. The assessee filed a return declaring 'nil' income on28th Feb., 1980. However, after taking into consideration, the report of the Valuation Officer regarding the cost of construction for the period Diwali, 1974 to Diwali, 1975 and for the period for Diwali, 1976 to Diwali, 1977, the ITO compared the cost of construction declared as recorded in the books of accounts and the cost of construction estimated by the assessee's valuer. Finally, he concluded, as recorded in his impugned order dt.29th Feb., 1984, apparently, made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -86 onwards. It was also contended that failure of the ITO to initiate penalty proceedings under s. 271(1)(a) did not empower the Commissioner to assume jurisdiction under s. 263 of the Act. It was projected to the Commissioner that an assessment made by the ITO could not be held to be erroneous and prejudicial to the interest of Revenue merely because of the failure of the ITO to record his opinion about the penalty, if any, leviable upon the assessee. In any case, it was argued that such a minor omission or mistake could not justify the action the Commissioner under s. 263. 4. The Commissioner considered the submissions made on behalf of the assessee before him. According to him, though the assessment had been made under s. 143(3) r/w s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld be seen that the order of the ITO was held to be erroneous and prejudicial to the interest of the Revenue because, the ITO neither recorded his opinion anywhere in his record of the proceedings about charging of interest under s. 139(8)/217, nor he actually levied any interest under these sections. 6. The learned counsel for the assessee submitted before us that under the provisions of s. 263, as applicable to the assessment year under appeal, there is prohibition provided on sub-s. (2) ibid that no order shall be made under sub-s. (1): (a)either to revise an order of reassessment made under s. 147 or (b) after the expiry of two years from the date of the order sought to be levied. Since, the impugned order made by the ITO was not a re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt was dismissed by their Lordships as reported in (1984) 147 ITR 1 (Stat). 8. Regarding the other points, on which the Commissioner projected to the assessee that action under s. 263 was required, the learned counsel reiterated that the assessment made by the ITO not being a regular assessment and having been made under s. 147(1), the jurisdiction of the CIT under s. 263 was statutorily ousted. For this proposition he relied upon the following authorities: 1. CIT vs. Smt.Jagjit Katur (1980) 126 ITR 540(All); 2. P.C. Puri, vs. CIT (1985) 151 ITR 584 (Del); 3. T.Khemchand Tajoomal vs. CIT (1986) 51 CTR (Bom) 81 : (1986) 161 ITR 492 (Bom); 4. CIT vs. Mukand Family Tst., (1987) 29 TFJ (Del)(TM) 549 : (1987) 23 ITD 12(Del)(TM); 5. Third ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceeded to assume jurisdiction on the grounds as projected in the narration of facts above. Out of the three points he took up for consideration he appears to have himself given up the point regarding the failure of the ITO to initiate proceedings under s. 271(1)(a) of the Act. Therefore, for all intents and purposes, we have to consider whether non-charging of interest under s. 139(8) and s. 217 by the assessing officer and his failure to indicate his mind about it anywhere on the record of the proceedings could render his order as erroneous as well as prejudicial to the interest of Revenue so as to clothe the Commissioner with lawful jurisdiction under s. 263 of the Act. In determining this issue, we have not only considered the facts o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or to reduce it. His order being quasi-judicial in nature, it must state some reason for the waiver or reduction of interest. Interest cannot altogether be waived by inaction. 12. However, the question is whether, when the ITO makes an original assessment under s. 147(a) there is any bar provided under the law to prohibit the Commissioner from assuming lawful jurisdiction within the meaning of s. 263(2)(a) of the Act. In this context, we do not find any difficulty in determining the issue because the language of s. 263(2)(a) is very clear that the Commissioner is debarred from assuming powers of review or revision only in a case, where an order of reassessment has been made under s. 147. An order of re-assessment under s. 147 is different ..... X X X X Extracts X X X X X X X X Extracts X X X X
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