9911796707
TMI Blog1988 (7) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... , order of assessment, in appeal. The Commissioner of Income-tax (Appeals) (in short "the Commissioner") modified exhibit P-1 assessment order, by his order dated January 14, 1981. The appellate order was given effect to by the Income-tax Officer, the 2nd respondent, by passing a consequential order, exhibit P-3, dated February 16, 1981, wherein he levied interest under section 215 of the Act in the sum of Rs. 10,44,383. Exhibit P-2 petition filed by the assessee for waiver of interest was considered by the Income-tax Officer. He passed exhibit P-4 order, dated May 13, 1981. Therein, he referred to exhibit P-3 consequential order, passed by him dated February 16, 1981, the assessee's petition for waiver of interest dated May 15, 1980 (exhibit P-2), and also the proceedings of the Inspecting Assistant Commissioner of Income-tax, dated May 8, 1981. He waived sum of Rs. 3,80,460 under rule 40(1) and rule 40(5) of the Income-tax Rules and reduced the interest under section 215 of the Act to Rs. 6,63,923. The petitioner-assessee filed a revision petition, exhibit P-5, before the Commissioner of Income-tax, Ernakulam, dated September 28, 1981. Exhibits P-6 and P-7 are further communicati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reference to the proceedings on the basis of which the order was passed. The reference to the Inspecting Assistant Commissioner of Income-tax is in accord with rule 40(5) of the Rules. The petitioner was not heard before the Inspecting Assistant Commissioner passed the proceedings dated May 8, 1981. The petitioner had no notice or knowledge about the proceedings of the Inspecting Assistant Commissioner dated May 8, 1981 ; nor was he asked to explain about the instructions given by the Inspecting Assistant Commissioner dated May 8, 1981, and afforded an opportunity to explain. It is not known how the Inspecting Assistant Commissioner has arrived at 30% reduction. There is no basis for this. If the petitioner was afforded an opportunity by the Inspecting Assistant Commissioner before he rendered the proceedings dated May 8, 1981, or was at least informed about the proposal either by the Inspecting Assistant Commissioner or by the Income-tax Officer, he would have offered his explanation, which might have convinced that the entire interest levied by the Income-tax Officer should have been waived. In the absence of notice or hearing by the Inspecting Assistant Commissioner before rende ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see had paid advance tax under section 212 on the basis of his own estimate, and the advance tax so paid is less than seventy-five per cent. of the assessed tax, simple interest at the rate of twelve per cent. per annum from the 1st day of April next following the said financial year up to the date of the regular assessment shall be payable by the assessee upon the amount by which the advance tax so paid falls short of the assessed tax ... (4) In such cases and under such circumstances as may be prescribed, the Income-tax Officer may reduce or waive the interest payable by the assessee under this section." Rule 40 of the Income-tax Rules, 1962, provides as follows: "40. Waiver of interest. -The Income-tax Officer may reduce or waive the interest payable under section 215 or section 217 in the cases and under the circumstances mentioned below, namely (1) When the relevant assessment is completed more than one year after the submission of the return, the delay in assessment not being attributable to the assessee. (2) Where a person is under section 163 treated as an agent of another person and is assessed upon the latter's income. (3) Where the assessee has income from an unregi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exhibit P-4 proceedings. Therein, the proceedings of the Inspecting Assistant Commissioner are referred to as item No. (3). The Officer has also stated that a sum of Rs. 3,80,460 was waived under rule 40(1) read with rule 40(5) of the Income-tax Rules. In exhibit P-8 revisional order passed by the Commissioner of Income-tax, he has referred to the waiver of interest under rule 40(5) of the Rules in paragraphs 7 and 11. So, it is idle to contend that in passing exhibits P-4 and P-8 orders, rule 40(5) was not invoked at all. This is against the recitals contained in exhibits P-4 and P-8 orders, as also the relevant files which positively show that the Income-tax Officer referred the matter to the Inspecting Assistant Commissioner, who rendered his decision on the basis of which exhibit P-4 proceeding was passed. Secondly, it is not open to the Revenue to contend that rule 40(5) of the Income-tax Rules is ultra vires or unauthorised. (Asst. Commr. of Commercial Taxes (Asst.) v. Dharmendra Trading Co. AIR 1988 SC 1247 paragraph 5.) The plea of the Revenue that it is not open to the petitioner to rely on rule 40(5) of the Income-tax Rules or that the matter should be adjudicated withou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nspecting Assistant Commissioner of Income-tax praying for relief under rule 40(5) but in the context of section 215(4) and rule 40, it is not obligatory for him to do so. The Income-tax Officer, who is enjoined to exercise the "discretion" under rule 40, can refer the matter to the Inspecting Assistant Commissioner to consider the matter from the angle or perspective of rule 40(5) and obtain appropriate orders from him on that score and then pass the final orders. In this case, the Income-tax Officer himself has moved the Inspecting Assistant Commissioner to consider the matter from the standpoint of rule 40(5) and so the plea that the petitioner did not move the Inspecting Assistant Commissioner is of no consequence. Even an administrative order or decision in matters involving civil consequences has to be made consistently with the rules of natural justice (State of Orissa v. (Dr.) (Miss) Binapani Devi [1967] AIR 1967 SC 1269). The rule has been made applicable to administrative enquiries also. Every authority quasi-judicial or administrative or executive should act fairly, reasonably and in a just manner, i.e., in accordance with the principles of natural justice, when the resu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ording such an opportunity, the Income-tax Officer has no jurisdiction to render the final order, exhibit P-4. The defect cannot be cured by the mere fact that it was affirmed, or varied in part, by exhibit P-8 revisional order, The decisions of this court in Ponkunnam Traders v. Addl. ITO [1972] 83 ITR 508 affirmed by the Division Bench in Addl. ITO v. Ponkunnam Traders [1976] 102 ITR 366 (Ker) and the recent decision of this court in Ananthakrishnan v. Oriental Fire and General Insurance Co. Ltd. [1988] 2 KLT 159 go to show that the illegality in the proceedings of the Inspecting Assistant Commissioner, which formed the basis of exhibit P-4 order, cannot be cured or obliterated either by exhibit P-8 revisional order or otherwise. It should be also noticed that though the absence of notice and hearing by the Inspecting Assistant Commissioner was pointedly raised before the Commissioner of Income-tax, the said matter was not adjudicated by him in rendering exhibit P-8 order. In this view of the matter, we hold that exhibit P-4 order, passed by the Income-tax Officer and the revisional order passed in revision therefrom, exhibit P-8 order passed by the Commissioner of Income-tax, ar ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
