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TMI Blog1991 (1) TMI 236X X X X Extracts X X X X X X X X Extracts X X X X ..... Besides the above work, the assessees had also secured contracts which were not executed by themselves but was got done by other contractors. The contract of foundation excavation on block No. 9 to 13 at Hasedeo Bango Dam amounting to Rs. 8,96,238 was got executed through M/s. Nirman Engineers and Contractors, Raipur. The assessee firm took 5% of the billed amount as their share of profits. The said agreement has been incorporated in the partnership deed itself vide para 14." The Commissioner of Income-Lax, Jabalpur, passed an order under section 263 of the Act on 21-3-1983 because he found that the order passed by the ITO on 23-3-1981 was erroneous insofar as it was prejudicial to the interests of the revenue. Mainly this order was passed because the CIT found that the ITO had allowed payments amounting to Rs. 42,500 made to Shri D.K. Gupta and Shri N.K. Gupta which, according to the CIT, were payments of a capital nature. After discussing the relevant facts, the CIT gave the following directions in his order : "In view of the above, it is clear that the payment of Rs. 42,500 made by the assessee firm to S/Shri D.K. Gupta and N.K. Gupta are payments of capital nature which the I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the learned counsel for the assessee pointed out that the facts of the case were examined by two different Assessing Officers while completing the assessment for the assessment years 1979-80 and 1980-81. Shri Dewani has filed a copy of the order of the ITO, Assessment-V, Raipur, for the assessment year 1979-80 in which the ITO, inter alia, observed as follows :-- " During the accounting year under consideration, the assessee-firm also derived income from commission. There was an agreement between the assessee firm and Nirman Engineers Contractors, Raipur according to which the assessee received a sum of Rs. 4,000 on account of the work order amounting Rs. 99,882. This work was, in fact, executed by M/s. Nirman Engineers Contractors and the assessee received the above commission only." Then again for the assessment year 1980-81 in the original order dated 23-3-1981, the ITO had applied his mind to this issue and had clearly observed that the assessee took only 5% as their share of profit and the contract from M/s. Nirman Engineers Contractors, Raipur, from whom work of foundation excavation on block nos. 9 to 13 at Hasdeo Bango Dam was got executed. Shri Dewani, therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her the second order passed by the ITO on 29-3-1985 was a consequential order and such order could not be considered as erroneous and prejudicial to the interests of the revenue because it was passed to give effect to and in accordance with the directions of the CIT in his order under section 263 dated 21-3-1983. Therefore, there was no question of any prejudice in an order of this type. Shri Dewani next pointed out that action under section 263 could not be taken in the same case on two different occasions. For this proposition he relied on a decision of the Bombay High Court in the case of Brihan Maharashtra Sugar Syndicate Ltd. v. P.R. Joglekar, Dy. CAIT [1987] 165 ITR 279, where the Bombay High Court observed that the power of revision can be exercised by the Commissioner or the Deputy Commissioner only in respect of orders passed by officers subordinate to the Commissioner. An order passed by the Agricultural Income-tax Officer implementing the order of the Tribunal cannot be revised. Shri Dewani next argued that it was the record of the assessee which was relevant for revisionary powers under section 263 and not the record of any other assessee or any other authority. For thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 4. We have considered the submissions made by the learned counsel for the assessee and the learned Departmental Representative. In our opinion, both the orders passed by the CIT under Section 263 for the assessment years 1980-81 and 1982-83 dated 12-3-1987 and the other for the assessment year 1981-82 dated 29-3-1985 have been passed without recording specifically how the orders of assessment are erroneous and prejudicial to the interests of the revenue. We will first deal with the common order for the assessment years 1980-81 and 1982-83 dated 12-3-1987. As has been stated in the recitation of facts in the preceding paragraph the original order passed for the assessment year 1980-81 dated 23-3-1981 indicated that the ITO had scrutinized the contract account in which receipt of Rs. 10,76,414 had been shown. He had also found that the assessee had secured contracts which were not executed by them, but which were got done by other contractors. This fact was enquired into and the ITO had accepted after due enquiry that the firm took 5% of the billed amount as their share of profit. This was also the finding of the ITO for the assessment year 1979-80. It was not as if that the Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stated that this order was passed in accordance with the directions of the CIT in his order under section 263 dated 21-3-1983. Therefore, in an order of this type, there could possibly no error since it was an order consequent to an order of a superior authority and in fact an order to give effect to the directions of that authority. Such an order can never be an erroneous order. This principle has been laid down by the Bombay High Court in the case of Birhan Maharashtra Sugar Syndicate Ltd., to which we have already made reference hereinabove. When an officer passed his order implementing an order of a higher authority (CIT in this case) that order cannot be erroneous or prejudicial to the interests of the revenue. The CIT can proceed under section 263 where an order of the ITO is erroneous and the error has resulted in prejudice to the interests of the revenue and such prejudice must be caused by an error on the part of the ITO himself. This is the substance of judgment of the Supreme Courtin Smt. Tara Devi Aggarwal v. CIT [1973] 88 ITR 323. No error on the part of the ITO has been pointed out by the CIT in the ITO's order dated 29-3-1985 which, as we have stated earlier, was on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed into several aspects of the case which the CIT thought irrelevant. This is the gist of the decision of the Madhya Pradesh High Court in the case of Ratlam Coal Ash Co. at page 142. The CIT cannot proceed under section 263 unless there is a definite and unambiguous finding on his part that the order of assessment passed by the ITO is erroneous and prejudicial to the interests of the revenue. There is no such finding given by the CIT in his order nor is the nature of error clearly brought out. In para 6 of the impugned order dated 12-3-1987, for the assessment years 1980-81 and 1982-83, the CIT has made the following observations :-- " 6. I find that an order under section 263 dated 3-3-1984 was passed by the CIT in the case of M/s Nirman Engineers and Contractors for assessment years 1980-81 and 1981-82. It, is not open to me to sit in judgment on the validity or merits of that order. If that order was passed without giving a show-cause notice to M/s. Nirman Engineers and Contractors, it may be defective technically, or if it was passed on wrong surmises, then it may be wrong on merits. That, however, is a question which can only be decided by a higher appellate authority such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 263 for this year are also the same as those for which revisionary action was taken for the assessment years 1980-81 and 1982-83. Additionally we find that for the assessment year 1981-82 the assessment order was a subject matter of appeal before the CIT (Appeals) who passed his order on 16-2-1985, that is much before the time when the CIT passed the impugned order on 29-3-1985. Therefore, the order of the ITO had merged with that of the CIT (Appeals) order and on that count also the CIT had no jurisdiction to pass an order under section 263 for the assessment year 1981-82. The Full Bench of the Madhya Pradesh High Court, in the case of CIT v. K.L. Rajput [1987] 164 ITR 197, has held that whenever a question arises as to whether the Commissioner is or is not competent to revise, under section 263 of the Act, the order of assessment framed by the ITO which has been the subject-matter of an appeal before the AAC, it has to be ascertained as to whether the Commissioner has set aside the entire order of assessment or only that part of the order of assessment which was not the subject matter of an appeal either because the AAC had no jurisdiction to consider that matter or because the A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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