ADDITIONAL COMMISSIONER OF INCOME TAX Vs. INDIAN PHARMACEUTICALS

JUDGEMENT

(1.) THIS is a reference made by the Income-tax Appellate Tribunal, Indore. The question of law referred by the Tribunal is :

(2.) THE assessee is a registered firm of three partners. It filed its returns of income for the assessment years 1967-68 and 1968-69 on 31st October, 1968. THE accounting period for these two years followed by the assessee was the financial year ending on 31st March, 1967, and 31st March, 1968. THE income returned in each year was accepted with slight modifications by the ITO who completed the assessments on the same day, i.e., 7th January, 1969, under Section 143(3) of the I.T. Act, 1961 (hereinafter referred to as " the Act"), determining the assessable income at Rs. 59,118 and 1,08,044. THE Additional Commissioner set aside both these orders exercising jurisdiction under Section 263 of the Act on the ground that the assessee had not paid any tax on self-assessment basis nor had it filed any estimate or paid, any advance tax in terms of Section 212(3). THE ITO completed the assessments without issuing any penalty notice under Section 273(b). No notices were also issued even for delay in submitting these returns nor any penalty was levied in terms of Section 271(1)(a) of the Act, THE Commissioner, therefore, felt that prima facie the orders passed by the ITO were erroneous and prejudicial to the interests of the revenue.

(3.) LEARNED counsel appearing for the assessee on the other hand contended that Section 263 of the Act confers jurisdiction on the Commissioner only in cases where there is any error in the order passed by the ITO and that error is prejudicial to the interests of the revenue. He contended that the orders of assessment passed by the ITO in the instant case have not been found to be erroneous as apparently it could not be contended that there is any error in those orders under Section 143 of the Act. He contended that what their Lordships of the Supreme Court in the two cases cited by learned counsel for the revenue held was that it is in the proceedings for assessment that jurisdiction could be exercised for imposition of penalty as, according to their Lordships, the term "assessment" is used in a wider sense. But learned counsel contended that it could not be said that if the ITO has failed to notice certain facts which could attract the provisions contained in Section 271(1)(a), the order of assessment is erroneous. He, therefore, contended that the case relied upon by the Tribunal is the case which applies with full force and the Tribunal was right in following that case.