AGRAWAL K N Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS writ petition (No. 387 of 1980) is directed against a show-cause notice issued by the Commissioner of Income-tax under Section 263 of the Income-tax Act, 1961, calling upon the petitioner to show cause as to why the assessment order dated September 21, 1978, relating to the assessment year 1975-76 be not revised.

(2.) THE impugned show-cause notice recites the following facts :

(3.) HAVING regard to the fact that the writ petition was admitted more than ten years ago and proceedings were stayed in pursuance of the impugned show cause notice, we do not think it would be a proper exercise of discretion to dismiss the writ petition summarily on the ground that it is directed against a mere show-cause notice, more particularly when there is no factual dispute involved herein. It is evident from the record that in the case of this very petitioner-assessee, this court has held earlier with respect to the preceding assessment years that the entire share income received from the aforesaid partnership firm is not liable to be included or assessed in the hands of the petitioner. It was held that only 1/3rd of the said share income received should be included in the petitioner's income and the rest 2/3rds in the respective incomes of the petitioner's wife and minor son. True, it is submitted that the said decision is the subject-matter of an appeal pending before the Supreme Court, but can it be said on that account that the assessment order made by the Income-tax Officer following the decision of this court is erroneous within the meaning of Section 263. It is well-settled that for invoking the power under Section 263, two grounds must exist, namely, (i) the order proposed to be revised must be erroneous and (ii) it must be prejudicial to the Revenue. The second ground may be said to have been satisfied in this case, but not the first one. Just because an appeal is pending, the decision of this court cannot be treated as not final, nor can it be ignored. It is binding upon the authorities within the territories of this State. The Income-tax Officer had no option but to follow this decision of this court in the case of this assessee.