COMMISSIONER OF INCOME TAX Vs. A SAMARAPURI CHETTY

JUDGEMENT

(1.) IN this tax case reference under section 256(1) of the INcome-tax Act, 1961 (hereinafter referred to as "the Act"), at tile instance of the Revenue, the questions of law arising out of the Tribunal's order dated March 2, 1979, in ITA. No. 221/Mds/1978-79 with reference to the assessment year 1974-75, are as follows "1. Whether, on the facts and in circumstances of the case, the Appellate Tribunal was right in law in cancelling the order of tile Commissioner of INcome-tax passed under section 263 for the assessment year 1974-75 in the assessee's case ?.2. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal's finding that the order of the INcome-tax Officer dated March 11, 1976, should be treated as non est is sustainable in law ?"

(2.) THE facts of the case are as followsTHE assessee filed a return on November 6, 1974, showing an income of Rs. 6, 860. An assessment was made on him on December 23, 1975. On December 31, 1975, the assessee filed a revised return showing an enhanced income. No notice under section 148 of the Act was issued by the Income-tax Officer. On March 11, 1976, however, another assessment order, on an income of Rs. 17, 097, was made on the assesseeSubsequently, the Commissioner of Income-tax, looking into the file of the assessee, held in his order dated February 7, 1978, under section 263 of the Act, that the above said second assessment order of the Incometax Officer dated March 11, 1976, was erroneous, in so far as it was prejudicial to the interests of the Revenue. For coming to this conclusion, apart from stating that only one assessment could be made for a year, lie made the following observations"In the original return, the assessee has admitted net agricultural income of Rs. 2, 500 while in the revised return, net agricultural income admitted is Rs. 5, 000. In the original return, the assessee has not admitted any income from property. Only in the return filed on January 5, 1976, (this must be the revised return filed on December 31, 1975), the assessee has admitted property income of Rs. 1, 816 for the first time. In addition, to this, the assessee has admitted purchase of 2 acres and 47 cents of wet lands at Kaveripettai on February 20, 1974, for a sum of Rs. 13, 710. After deducting savings from agricultural income of Rs. 5, 000 lie has admitted an income of Rs. 8, 710 under the head "Business" in addition to the income originally returned.

(3.) TO the same effect is Kerala Kaumudi (P) Ltd. v. CIT 1990 (181) ITR 30, 1989 (48) TAXMAN 76 (Ker)Learned, counsel pointed out that even though the above said second assessment order by the Income-tax Officer was a void order, yet it has to be set aside and it cannot be ignored and the Tribunal erred in holding that since the said second order of the Income-tax Officer was non est, the subsequent order of the Commissioner under section 263 was not justified. Learned counsel for the Revenue also cited V. Raju v. CIT 1984 (147) ITR 212, 1983 (36) CTR 17, 1984 (16) TAXMAN 249, 1984 (2) TLR 1241 (Mad), where it was held that any order passed by an authority without following the principles of natural justice was null and void even though it had been passed well within its jurisdiction. However, it was observed in the said decision as follows (at page 217)"So long as the order is passed under a statutory provision, it continues to be enforceable, unless it is set aside by the appropriate forum constituted under the same Act. Therefore, the assessee will be acting at his risk and peril if he ignores the order as being null and void." * Learned counsel for the Revenue also cited the following passage from Anisminic Ltd. v. Foreign Compensation Commission 1967 (2) AllER 986, 1967 (3) WLR 382, 1969 (2) AC 147 (HL) at page 169"If it is a nullity, that could only be established by raising some kind of proceedings in Court." * He also cited a passage quoted from Naresh Shridhar Mirajkar v. State of Maharashtra, 1967 AIR(SC) 1, 1966 (3) SCR 744, 28, in paragraph 53 in A R. Antulay v. R. S. Nayak 1988 AIR(SC) 1531, 1988 (2) CRIMES 753, 1988 (94) CRLJ 1661, 1988 CrLR(SC) 366, 1988 (2) JT 325, 1988 (S) Scale 52, 1988 (2) SCC 602, 1988 SCC(Cr) 372, 1988 (S1) SCR 1, 1988 CRLR 366, 1988 AIR(SC) 1531, 1988 (2) CRIMES 753, 1988 (94) CRLJ 1661, 1988 CrLR(SC) 366, 1988 (2) JT 325, 1988 (S) Scale 52, 1988 (2) SCC 602, 1988 SCC(Cr) 372, 1988 (S1) SCR 1, 1988 CRLR 366.