9911796707
TMI Blog2009 (12) TMI 927X X X X Extracts X X X X X X X X Extracts X X X X ..... ment year 1999-2000 is erroneous and prejudicial to the interest of the Revenue because of the reason that certain issues, highlighted in the said order, were not considered at the time of framing of the issues. Consequently, the assessment order has been set aside with direction to the AO to frame the assessment afresh after affording the assessee an opportunity of being heard and after making proper enquiries and verifications. According to the petitioner, this order is illegal and mala fide. 2. As far as the other writ petitions are concerned, only show-cause notice under Section 263 of the Act in respect of different assessment years, i.e. from assessment years 2000-01 to 2005-06 have been issued, which are challenged, but admittedly no orders under Section 263 of the Act have been passed so far. In these circumstances, it is but proper to first deal with WP (C) No. 4722/2008 on merits as the consequences from the outcome of this writ petition will determine the fate of other writ petitions as well. 3. Before we have a grip of the legal contentions on the basis of which the impugned order is challenged, it would be apposite to scan through the factual matrix in brief. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dent No.4 issued another notice dated 15.10.2007. In response to this notice issued by the respondent No.4, the petitioner filed detailed preliminary objections to the assumption of jurisdiction under Section 263 of the Act vide its letter dated 10.1.2008. In this letter, the petitioner requested the respondent No.4 to dispose of the preliminary legal objections first, by passing a reasoned speaking order. This request was made keeping in view the ratio of the judgment of the Supreme Court in the case of GKN Driveshaft v. CIT, 259 ITR 19, thought in the context of Section 148 of the Act. According to the petitioner, nothing was heard thereafter and almost five months thereafter, the respondent No.4 passed impugned orders dated 19.6.2008. Vide this order, not only the legal objection raised by the petitioner was turned down, the Commissioner proceeded to dispose of the matter on merits as well by passing the order under Section 263 of the Act giving directions to the AO, as mentioned above. 7. Though the Act provides for statutory remedy of appeal against such an order passed under Section 263 of the Act, instead of availing the same, the petitioner chose to file the present writ p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its as well and passing the order afresh. On the basis of this concession of the learned Additional Solicitor General, after obtaining instructions from the respondents, the matter could have been disposed of at that stage itself inasmuch as with this concession the impugned order, on merits, has to be set aside. However, the petitioner persisted with the other two contentions and argued them in detail. 10. We now proceed to take note of these contentions. 11. RE: MALA FIDES Mr. Sorabjee submitted that under Section 263 of the Act, the satisfaction has to be of the Commissioner himself acting independently in bona fide exercise of his judgment. According to him, the sequence of events and the surrounding circumstances establish that the issue of show-cause notices dated 23.7.2007 and 15.10.2007 and the impugned order dated 19.6.2008 were not passed in bona fide exercise of independent and unfettered judgment but were impelled and directed by the superior authorities in the Income Tax hierarchy. The tone and contents of several preemptory communications addressed by Mr. A.L. Mehta to the superior authorities pressurized such authorities to direct the Commissioner to initiate proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble to exercise independent judgment and unfettered discretion in discharge of his statutory function under Section 263 of the Act. 13. Mr. Sorabjee made a vehement plea that cumulative effect of the informant's communication and conduct and the letters of CBDT had to be seen in order to determine whether, having regard to human probabilities and ordinary course of human conduct, the Commissioner could exercise independent judgment and discretion in such an atmosphere. According to him, it was a case of mala fides and in any event there was a real likelihood/ danger that exercise of independent judgment was not possible in the facts of the present case. 14. The aforesaid submissions were supported and supplemented with the following case law:- (i) M.P. Special Police Establishment v. State of M.P. & Ors., (2004) 8 SCC 788, wherein a Constitution Bench of the Apex Court held as under :- "18. As has been mentioned above, the Division Bench had noted this case. The Division Bench however held that even though this principle may apply to the case of a Chief Minister it cannot apply to a case where Ministers are sought to be prosecuted. We are unable to appreciate the subtle distinc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) IL & FS Investment Managers Limited 298 ITR 32 16. Countering these arguments, Mr. Parag P. Tripathi, learned Additional Solicitor General, tried to cut the very root of the submissions by contending that the person against whom mala fides are alleged, namely, Mr. A.L. Mehta, was not even impleaded as a party to these proceedings. Thus, no mala fides could be imputed insofar as Mr. Mehta is concerned in his absence, as held by the Supreme Court in (1997) 9 SCC 151 and M/s. Medley Minerals India Ltd. v. State of Orissa & Ors., JT 2004 (8) SC 29. He further submitted that the petitioner's contention that the assessment has been completed under monitoring of senior officials is also wrong as is clear from paras 3 and 4 of the impugned order depicting independent mind of the respondent No.4. Similarly, the plea of the petitioner that the proceedings have been initiated on account of any pressure, as alleged, is also wrong and misconceived. His submission was that the records clearly indicated otherwise. 17. He also argued that the communications of CBDT would only indicate that the CBDT had called for the reports about the action taken by the Commissioner and in none of these lette ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... articular manner. He also submitted that the remedy of statutory appeal was open and order could be challenged on all grounds, including on the ground advanced in this writ petition and, therefore, this Court should not exercise its extraordinary jurisdiction by interfering in the matter. 20. The legal position which cannot be disputed is that when a particular authority is vested with the power to discharge statutory function, like the Commissioner who is empowered to pass orders under Section 263 of the Act, it is that authority which is to apply its independent mind and arrive at its own conclusion without being influenced by any other authority, much less the higher authority. Unfettered discretion lies in the Commissioner of Income Tax to pass orders under Section 263 of the Act. He is supposed to examine the records produced before him to arrive at a conclusion whether the assessment order passed by the AO suffers from infirmities and needs to be revised under Section 263 of the Act. The parameters which are laid down in Section 263 of the Act need to be fulfilled in exercising such a discretion. It is the Commissioner who has to satisfy himself, on the basis of available re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titioner for making its submissions on the merits of the case by the Commissioner and thereafter fresh order would be passed. For this reason alone, once we proceed to set aside the impugned order, the effect would be that the concerned Commissioner will have to go into this issue afresh for considering the submissions of the petitioner, which would necessarily involve application of his independent mind. This, coupled with the fact that the Commissioner who passed the order is no more the concerned officer, i.e. the respondent No.4, the matter will have to go to another office discharging the duties in the capacity of respondent No.4. In these circumstances, the very basis of the submission that the impugned order was passed on the dictated lines of CBDT vanishes. At the same time, we make it clear that the present Commissioner/respondent No.4, while exercising his powers under Section 263 of the Act, shall look into the matter with independent mind without being influenced by the observations made in the impugned order. While doing so, he shall have regard to the submissions that would be made by the petitioner pleading that it is not a case for exercising powers under Section 26 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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