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TMI Blog1982 (1) TMI 80X X X X Extracts X X X X X X X X Extracts X X X X ..... rder shows that he gave credit for advance tax paid of Rs. 38,720 and ordered to charge interest under sections 217(1A) and 139(8) of the Act, and ordered for the issuance of notice under section 274 read with section 273(c) of the Act. 3. However, the Commissioner, on a perusal of the assessment records, found that the assessment order passed by the ITO in the assessee's case on 15-1-1979 for the assessment year under consideration was erroneous and prejudicial to the interests of the revenue for the following reasons : "a. The return of income was due on 30-6-1976. It was filed on 11-4-1977. Tax on total income of Rs. 1,99,640 as unregistered firm works out to Rs. 1,30,282. After deducting advance tax paid in time, balance tax payable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, interest under section 139(8) had to be charged. Accordingly, he directed the ITO to charge interest under section 139(8) as well as to initiate penalty proceedings under section 271(1)(a). 4. The assessee being aggrieved has preferred this appeal. Shri. V.H. Patil, learned counsel for the assessee, contends that the Commissioner can take action under section 263 if the assessment order of the ITO is erroneous insofar as prejudicial to the interest of the revenue, and when in the assessment order there is no mention for initiation of the penalty proceedings under section 271(1)(a) and for charging interest under section 139(8), then his jurisdiction is ousted if he takes action on the plea that the ITO had not charged the interest unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty proceedings under section 271(1)(a), then the Commissioner is within his powers to direct him to do so, under section 263(2). He has also placed reliance in support of this proposition on the decisions in the cases of CIT v. City Palayacot Co. [1980] 122 ITR 430 (Mad.), Addl. CIT v. Kantilal Jain [1980] 125 ITR 373 (MP) and IT Appeal Nos. 1592 and 1593 (Bom.) of 1975-76 dated 8-11-1975. 5. We have heard the rival contentions and gone through the record before us. The assessment order shows that the ITO ordered for charging interest under section 139(8) but, he did not charge it in the computation of the assessment. However, he did not initiate penalty proceedings under section 271(1)(a) during the assessment proceedings. Thus, when the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot only computation of income and tax but various other things which fall within the scheme of Chapter XIV of the IT Act, 1961, which talks of procedure of assessment. When section 271 of the Act talks of 'proceedings pending' it includes the proceedings for assessment within the scheme of Chapter XIV of the Act, and the proceedings of the assessment under the scheme of the law ultimately culminating in an order of assessment. The scheme of assessment under the Act is not restricted to the mere computation of income and tax but extends to a number of other things and, therefore, in the proceedings of assessment, if the ITO rails to take notice of the facts attracting the provisions of section 271(1)(a), it cannot be said that the failure do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder would be erroneous and the Commissioner would be entitled to exercise the revisionary power conferred on him under section 263. However, their Lordships of the Karnataka High Court in the case of Executors of the Estate of Late H.H. Rajkuverba Dowager Maharani Saheb of Gondal took the contrary view holding therein that the power of revision under section 263 can be exercised by the Commissioner when the following factors co-exist: 1. There should be proceedings under the Act. 2. In such proceedings, the ITO must have passed an order. 3. The Commissioner should consider that the said order is erroneous and prejudicial to the interests of the revenue. Hence, it concluded that if there is no order under section 271 in existence in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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