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TMI Blog2003 (9) TMI 67X X X X Extracts X X X X X X X X Extracts X X X X ..... 31, 1997 (annexures 1 to 5 to the petition), passed by the Additional Commissioner of Income-tax, Muzaffarnagar, respondent No. 1. The petitioner has also prayed for a mandamus directing the respondents not to disregard or ignore the earlier orders, copies of which are annexures 8 to 12 to the writ petition. Heard learned counsel for the parties. The petitioner is a company registered under the Indian Companies Act. It is engaged in the business of manufacture and sale of sugar, industrial alcohol, etc., in its three manufacturing units, (1) Upper Doab Sugar Mill located at Shamli in District Muzaffarnagar, (2) Shamli Distillery and Chemical Works, located at Shamli in District Muzaffarnagar, and (3) Pilkhani Distillery and Chemical Works, located at Pilkhani in District Saharanpur. It is a alleged in para. 6 of the writ petition that the manufacturing operation at all the three units are of continuous nature, and therefore, for smooth operation it is necessary that the employees of the company are available at all times to meet the emergent needs in the manufacturing operation even at odd hours. In para. 7 it is alleged that the aforesaid three units of the petitioner are loca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Inspecting Assistant Commissioner obtained a report in regard to the fair rental value of the quarters and furniture from the Assessing Officer, and then issued directions/orders to the Assessing Officer regarding the value to be fixed for the perquisite of the quarters and the furniture. This order dated August 21, 1982, was for the assessment years 1982-83, 1983-84 and 1984-85. By this direction the fair rental value was fixed ranging from Rs. 150 per month to Rs. 250 per month depending upon the categories of the quarters. The fair value of the furniture was fixed ranging from Rs. 35 to Rs. 75 per month. True copy of the said order is annexure 8 to the writ petition. Copy of this order was communicated to the Income-tax Officer, Shamli, with a direction that the rental value as fixed in the letter, should be adopted in the aforesaid assessment years. For the aforesaid subsequent assessment years 1985-86 to 1996-97, the petitioner filed four representations in the same manner as the representation dated July 31, 1982, for necessary directions for fixing the fair rental value of the quarters and the furniture. The Inspecting Assistant Commissioner and the Deputy Commissioner dete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... returns of salaries (Form No. 24) filed by the petitioner right from 1982 onwards. He also directed that while scrutinising the returns the perquisite value of quarters and furniture should be fixed in accordance with rule 3 of the Rules vide annexure 15 to the writ petition. In accordance with the aforesaid direction of the Additional Commissioner of Income-tax, the Income-tax Officer issued a notice dated October 8, 1996, asking for explanation as to why the perquisite was not shown by the petitioner in the relevant Form No. 24 in accordance with rule 3 of the Rules in respect of its unit, namely, Shamli Distillery and Chemical Works, for the financial years 1993-94 and 1994-95 and in respect of Upper Doab Sugar Mills for the financial years 1991-92 and 1995-96. In the above note it has been stated that the Deputy Commissioner of Income-tax, had issued some letters for the review of his predecessor's letter, but that has not been communicated to the petitioner. The petitioner filed a reply objecting to the aforesaid notice but thereafter another notice dated November 15, 1996, was issued asking the petitioner for producing documents of the terms and conditions with the employee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orders dated August 21, 1982, June 21,1984, March 6,1989, July 3,1990, and January 3, 1994. It is alleged that the order dated July 31, 1997 was passed without issuing any show cause notice to the petitioner and without giving it any opportunity of hearing. The allegation in para. 43 of the petition that the petitioner was not given opportunity of hearing has not been denied in para. 24 of the counter affidavit. All that has been stated in para. 24 of the counter affidavit is that it is not necessary to give opportunity of hearing. We do not agree. In our opinion the order dated July 31, 1997, has civil consequences. It has been held by the Supreme Court in the leading case of State of Orissa v. Binapani Dei, AIR 1967 SC 1269, that any order which has civil consequences will be invalid if it was passed without giving opportunity of hearing. Hence the petition deserves to be allowed on this ground alone. However, we may also consider the contention in para. 17 of the counter affidavit that the directions, copies of which are annexures 8 to 12 to the writ petition, could not be given under any provision of the Income-tax Act. In our opinion, this contention is not correct. In our ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... power to set aside an order of the Inspecting Assistant Commissioner (or Deputy Commissioner, as the case may be) is under section 263 of the Income-tax Act, but that power has admittedly not been exercised, and the power under section 263 can only be exercised after giving opportunity of hearing to the petitioner. Admittedly, no such hearing was given. It may be noted that section 263 specifically mentions about giving opportunity of hearing. Hence, the impugned orders are wholly arbitrary, illegal and without jurisdiction. Secondly, even assuming that there was power in the Additional Commissioner to pass the impugned order, the said power cannot be exercised arbitrarily. Existence of power is one thing, and exercise of it is another, as held by a Division Bench decision of this court in Shaukat Ali v. Allahabad Development Authority (Writ Petition No. 47222 of 2002 decided on July 1, 2003). In the present case even assuming that the Additional Commissioner had power to pass the impugned orders, in our opinion the power has been exercised totally arbitrarily because to rake up issues settled about 15 years ago will only result in total confusion and unnecessary hardship and har ..... X X X X Extracts X X X X X X X X Extracts X X X X
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