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TMI Blog2012 (1) TMI 76X X X X Extracts X X X X X X X X Extracts X X X X ..... on the premise that the revisional orders of the commissioner had been set aside by it and the revisional orders having now been restored by us in terms of the judgment in the above two appeals, the matter again has to necessarily go back to the tribunal - Decided in favor of Revenue. - IT Appeal Nos. 3098 & 3160 of 2005 and 588 & 589 of 2006 - - - Dated:- 4-1-2012 - D.V. Shylendra Kumar And H.S. Kempanna, JJ. JUDGMENT These two appeals by the revenue are in respect of the very assessee for the two assessment years viz., assessment years 1995-96 and 1996-97 seeking for our answer in respect of the following common questions :- "1. Whether the Tribunal was correct in holding that the commissioner exercising jurisdiction under Section 263 of the Act by holding that the Assessing Officer should rework the credit in respect of Canadian and Thailand Tax claimed under Double Taxation Avoidance Agreement (DTAA) without specifying the error in the original order sought to be revised and how it was erroneous and prejudicial to the interest of the revenue. 2. Whether the Tribunal committed an error in failing to appreciate that in accordance with the DTAA Clause 23 entered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Thailand. 4.3 The assessee being aggrieved with the Revisional Orders passed by the Commissioner, preferred appeals to the Income Tax Appellate Tribunal. 4.4 Assessee urged among other grounds that the Commissioner could not have exercised jurisdiction u/s.263 of the Act for the reason that the order which was sought to be revised was neither shown to be erroneous nor prejudicial to the interest of the revenue and in fact, it is virtually a case of the Commissioner opining differently from the Assessing Authority and therefore, was not amenable to the revisional jurisdiction. 4.5 This argument of the assessee found favour with the Tribunal and therefore, the Tribunal set aside the revisional orders of the Commissioner and restored the assessment order as had been passed by the Assessing Authority, as per its common order dated 2.6.2005. The Tribunal while setting aside the order of the Commissioner opined that there was no need or scope for interference by the Commissioner, in exercise of the revisional jurisdiction to do the same and therefore, allowed the appeals. 5. It is against this common order passed by the Tribunal dated 2.6.2005, not only in respect of these two ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment, or cancelling the assessment and directing a fresh assessment. Explanation. For the removal of doubts, it is hereby declared that, for the purposes of this sub-section, (a) an order passed on or before or after the 1st day of June, 1988 by the Assessing Officer shall include (i) an order of assessment made by the Assistant Commissioner or Deputy Commissioner or the Income-tax Officer on the basis of the directions issued by the Joint Commissioner under section 144A: (ii) an order made by the Joint Commissioner in exercise of the powers or in the performance of the functions of an Assessing Officer conferred on, or assigned to, him under the orders or directions issued by the Board or by the Chief Commissioner or Director General or Commissioner authorised by the Board in this behalf under section 120; (b) "record" shall include and shall be deemed always to have included all records relating to any proceeding under this Act available at the time of examination by the Commissioner; (c) where any order referred to in this sub-section and passed by the Assessing Officer had been the subject matter of any appeal filed on or before or after the 1st day ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spect of income from sources within Canada which has been subjected to tax both in India and Canada shall be allowed as a credit against the Indian tax payable in respect of such income but in an amount not exceeding that proportion of Indian tax which such income hears to the entire income chargeable to Indian tax. and in the case of Thailand Article 23(3)(a), reading as under: METHODS FOR ELIMINATION OF DOUBLE TAXATION ARTICLE 23 - Elimination of Double Taxation ** ** ** 4. The amount of Indian tax payable under the law of India and in accordance with the provisions of the Agreement, whether directly or by deduction, by a resident of Thailand, in respect of profits or income arising in India, which has been subjected to tax both in India and Thailand, shall be allowed as a credit against Thai tax payable in respect of such profits or income provided that such credit shall not exceed the Thai tax (as computed before allowing any such credit) which is appropriate to the profits or income arising in India. and with reference to the said articles, submits that the Assessing Authority had allowed the deductions as claimed by the assessee without a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . not before commencing the enquiry, is that he must give the assessee an opportunity of being heard and make or cause to make such enquiry as he deems necessary. Those requirements have nothing to do with the jurisdiction of the Commissioner. They pertain to the region of natural justice. Breach of the principles of natural justice may affect the legality of the order made but that does not affect the jurisdiction of the Commissioner. At present we are not called upon to consider whether the order made by the Commissioner is vitiated because of the contravention of any of the principles of natural justice. The scope of these appeals is very narrow. All that we have to see is whether before assuming jurisdiction the Commissioner was required to issue a notice and if he was so required what that notice should have contained? Our answer to that question has already been made clear. In our judgment no notice was required to be issued by the Commissioner before assuming jurisdiction to proceed under section 33B. Therefore the question what that notice should contain does not arise for consideration. It is not necessary nor proper for us in this case to consider as to the nature of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Section 263 of the Act particularly, when the Assessing Authority had in fact shown his awareness for the deductions as claimed by the assessee and had allowed the same and though not necessarily by indicating in the order and submits that the assessee had placed material justifying the claim before the Assessing Authority and in this view of the matter, when the Assessing Authority had consciously allowed the deductions as claimed under the relevant articles of the avoidance agreements with the two countries, it was definitely not open to the Commissioner, in any manner to interfere or undo an order passed by the Assessing Authority, while exercising suo moto revisional jurisdiction. 10. In this regard strong reliance is placed by the learned senior counsel for the assessee on the following decisions: Commissioner of Income Tax v. Max India Ltd. [2007] 295 ITR 282 (SC) Commissioner of Income Tax v. Gabriel India Ltd. [1993] 203 ITR 108 (Bombay) Commissioner of Income Tax v. Ashish Rajpal [2010] 320 ITR 674 (Delhi) 11. Submission of Sri Sarangan, learned senior counsel appearing for the respondents-assessee, with reference to these decisions, is that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ither not entitled to some part of it or was not entitled to the entire amount, more so when it was not demonstrated in terms of the order of the commissioner and therefore the Tribunal was fully justified in setting aside the order of the Commissioner. 13. Sri T Suryanarayana, learned counsel for the assessee, supplementing the submissions made by Sri Sarangan, has further drawn our attention to a Division Bench judgment of the Delhi High Court, in the case of Ashish Rajpal (supra), wherein the Delhi High Court had occasion to discuss various authorities on the subject i.e. scope of revisional jurisdiction of Commissioner under Section 263 of the Act and in particular having noticed the decisions which have been referred to and relied upon by the assessee and observed as under: Before we advert to the submissions made by the learned counsels appearing for the parties, it would be wise to recall the parameters and principles laid down by the courts which govern the exercise of power by the Commissioner under the provisions of section 263 of the Act. (i) The power is supervisory in nature, whereby the Commissioner can call for and examine the assessment records. (ii) The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ima facie material on record. The evaluation of such material should show that tax which was lawfully eligible was not imposed. (See CIT v. Gabriel India Ltd. [1993] 203 ITR 108 (Bom.)). 14. Sri Suryanarayana submits that even on facts, the present case is almost on par with the case as was examined both by the Bombay High Court and the Delhi High Court in the cases of Gabriel India Ltd. and Ashish Rajpal (supra) respectively, and therefore, submits that the view taken therein should commend for our acceptance and should be applied and the appeals of the revenue should be dismissed. 15. We have perused the orders of the assessing authority, revisional Commissioner and the Tribunal. We have also looked into the relevant statutory provisions and bestowed our attention to the submissions made at the Bar and the authorities relied upon. 16. Sri E R Indra Kumar, learned senior counsel appearing for the revenue has while placed strong reliance on the judgment of the Supreme Court in the case of Electro Housing (supra), as quoted earlier, and has pointed out that the scope of exercise of revisional jurisdiction by the commissioner is not one which is conditioned by any prior require ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me Tax [2010] 243 ITR 244 (SC), though this decision was relied upon on behalf of the assessee, particularly to the passage/observation of the Supreme Court at page 88 reading as under: Mr. Abraham relied on the judgment of the Division Bench of the High Court of Madras in Venkatakrishna Rice Company v. CIT [1987) 163 ITR 129 interpreting "prejudicial to the interests of the Revenue." The High Court held (page 138): "In this context, it must be regarded as involving a conception of acts or orders which are subversive of the administration of revenue. There must be some grievous error in the Order passed by the Income-tax Officer, which might set a bad trend or pattern for similar assessments, which on a broad reckoning, the Commissioner might think to be prejudicial to the interests of Revenue administration." In our view, this interpretation is too narrow to merit acceptance. The scheme of the Act is to levy and collect tax in accordance with the provisions of the Act and this task is entrusted to the Revenue. If due to an erroneous order of the Income-tax Officer, the Revenue is losing tax lawfully payable by a person, it will certainly be prejudicial to the interests of the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral income within the meaning of Section 2(1A) of the Act as elucidated by this Court in CIT v. Raja Benoy Kumar Sahas Roy [1957] 32 ITR 466, does not arise for consideration. It is evident from the Order of the High Court that the findings recorded by the Tribunal that the appellant stopped agricultural operation in November, 1982, and the receipt under consideration did not relate to any agricultural operation carried on by the appellant, were not questioned before it. Though, we do not agree with the High Court that the said amount was paid for breach of contract as indeed it was paid in modification/relaxation of the terms of the contract, we hold that the High Court is justified in concluding that the said amount was a taxable receipt under the head "income from other sources." We find no merit in the appeal and dismiss the same with costs. 20. Though it is either vaguely or loosely described by the authorities, even including the tribunal that the commissioner lacked jurisdiction to exercise revisional powers in a situation of the present nature, as it was virtually in the nature of change of opinion on the part of the commissioner, taking a different view from the view t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsonance with the same and if it has resulted in a situation of granting a greater relief than the assessee is otherwise entitled to under these agreements and if the commissioner can revise such an order without any hassle in the exercise of revisional jurisdiction under section 263 of the Act and can correct the order which is erroneous and prejudice to the interest of the revenue, just because the assessing authority does not spell out the reasons and therefore can avoid scrutiny under Section 263 of the Act, is an argument which is not logical or rational and not acceptable and at any rate on the authority of the Supreme Court in the case of Malabar Industries Co. (supra) is not an acceptable submission. 23. Though learned counsel for the assessee have placed strong reliance on two judgments of the Bombay High Court and the Delhi High Court in the cases of Gabriel India Ltd. and Ashish Rajpal (supra) respectively and the Delhi High Court, in fact, has made reference to the decision of the Supreme Court in the case of Max India Ltd. (supra), with great respect, we are unable to apply the ratio of these two decisions to the present circumstance and we are quite satisfied that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or adverse to the interest of the assessee and no need for the assessing authority to spell out reasons when the order is accepting the claim of the assessee and the learned counsel submit that, this is the legal position on authority, we are afraid that to accept a submission of this nature would be to give a free hand to the assessing authority, just to pass orders without reasoning and to spell out reasons only in a situation where the finding is to be against the assessee or any claim put forth by the assessee is denied. 28. We are of the clear opinion that, there cannot be any dichotomy of this nature, as every conclusion and finding by the assessing authority should be supported by reasons, however brief it may be, and in a situation where it is only a question of computation in accordance with relevant articles of a double taxation avoidance agreements and that should be clearly indicated in the order of the assessing authority, whether or not the assessee had given particulars or details of it. It is the duty of the assessing authority to do that and if the assessing authority had failed in that, more so in extending a tax relief to the assessee, the order definitely con ..... X X X X Extracts X X X X X X X X Extracts X X X X
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