PHOOL LATA SOMANI Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) BY this application the petitioner has challenged the impugned order of the Commissioner of Income-tax dated March 17, 1997, whereby and whereunder the Commissioner has declined to entertain the application for revision made under Section 264 of the Income-tax Act, 1961 (hereinafter referred to as "the said Act"). Of course, he has recorded reasons for not entertaining the revision application. He has said in his cryptic order that from the perusal of the assessment records and the report of the Assessing Officer it appears that despite opportunity being given the assessee failed to produce evidence regarding investment made by the petitioner. The assessee-petitioner was also asked to produce personal drawings but no particulars were produced. Therefore, the Commissioner felt that discretion should not be exercised in entertaining the application for revision for making an enquiry. Mr. Khaitan, learned counsel appearing for the petitioner, while assailing the impugned order contends that the impugned order is bad patently as the Commissioner has failed to consider the scope and purview of Section 264 of the said Act, which fortunately is much wider than the power vested under Section 263. Power of Section 263 is exercised in a case where the impugned order sought to be revised is erroneous and prejudicial to the interests of the Revenue. Upon comparative study of both the sections it will appear that the power of Section 263 can be exercised suo motu, and to protect the interests of the Revenue if affected or prejudiced by the impugned order, whereas power of Section 264 can be exercised amongst others on an application from the assessee or even suo motu. In other words the assessee has no right to apply under Section 263 of this Act. He further contends that the Commissioner ought to have enquired into this matter as to whether the petitioner-assessee failed to produce evidence or furnish particulars. The only exception is that in exercise of the power the Commissioner cannot pass any order prejudicial to the interests of the Revenue. He contends further that his client produced copies of the documents showing investments, which are required to be exempted. All required particulars were furnished with the application for revision. It is true that at the time of assessment his client could not produce the documents for a variety of reasons but, in exercise of this plenary jurisdiction the Commissioner should have done justice by allowing to furnish these documents so as to get exemption. According to him records means what are available at the time of the decision of the Commissioner, not limited at the time of passing order by the Assessing Officer. In support of his contention Mr. Khaitan has relied on decisions of various courts reported in CIT v. Shree Manjunathesware Packing Products and Camphor Works [1998] 231 ITR 53 (SC); Parekh Brothers v. CIT [1984] 150 ITR 105 (Ker); C. Parikh and Co. v. CIT [1980] 122 ITR 610 (Guj) and Ramdev Exports v. CIT [2001] 251 ITR 873 (Guj). Next he has cited [1991] 187 ITR (St.) 73 in order to show that the judgment of the Kerala High Court was sought to be assailed by filing an SLP, which has ultimately been dismissed by the Supreme Court. Mr. Deb, learned counsel appearing for the Revenue, contends that if one reads Section 264 of the said Act it will appear that it is absolutely a discretionary power, and the Commissioner, after having perused the records and report furnished by the Assessing Officer under the said section, thought it fit not to interfere with the order passed by the Assessing Officer. He further contends drawing my attention to Explanation 1 to Section 264 that an order by the Commissioner declining to interfere shall, for the purposes of the section, be deemed not to be an order prejudicial to the interests of the assessee. The Commissioner in lawful exercise of jurisdiction has found that the petitioner was always a defaulter and in spite of opportunity being given, the documents of investment and particulars thereof were not shown. As such the Commissioner will not give a premium to the lapses or laches of the assessee-petitioner. His further contention is that the petitioner-assessee is not affected in any manner by the order of the Assessing Officer, which was sought to be impugned before the Commissioner. Under those circumstances, he contends that this court in exercise of its extraordinary power should not interfere with the impugned order passed upon discretion. His next contention is that the question of principles of natural justice in this case does not arise. Moreover, he has reminded me of the applicability of the principles of natural justice. He further contends that each and every order is not necessarily required to be passed upon compliance with natural justice. One has to establish affectation of lawful right and that such right is sought to be taken away by the judicial and quasi-judicial authority in exercise of power. Here a report was furnished and copy thereof was not supplied to the petitioner and such non-supply of the report does not take away the petitioner's right of natural justice. In support of his contention he has relied on the following decisions : (1) CIT v. The Tribune Trust [1948] 16 ITR 214 (PC) ; (2) Jacob v. Additional Deputy Commissioner of Agricultural Income-tax [1986] 158 ITR 596 (Ker) [FB] ; (3) Managing Director, ECIL v. B. Karunakar [1994] 84 FJR 210 ; [1993] 4 SCC 727 ; (4) State Bank of Patiala v. S.K. Sharma, AIR 1996 SC 1669. His next contention is that the report of dismissal of the SLP is not a binding precedent. Dismissal of an SLP at the threshold is not the law laid down under article 141 of the Constitution of India. So this information of dismissal of SLP filed against the Kerala High Court judgment is of no help in this case. From the facts and disputes agitated before me by the parties through their learned counsel it is clear the issue is whether the impugned order by the Commissioner of Income-tax dated March 17, 1997, has been passed in lawful exercise of jurisdiction vested unto him under Section 264 of the Income-tax Act, 1961 (hereinafter referred to as "the said Act"), or not. It appears from the impugned order, I find the Commissioner declined to entertain the application of the writ petitioner under Section 264 of the said Act on the merits, because Mr. Khaitan's client was found to have failed to produce the evidence relating to the investment made by her despite repeated opportunity being given. Both learned counsel agreed to one point that the power of the Commissioner under Section 263 of the said Act is different from that of Section 264 of the said Act. From a comparative reading of both the sections it seems to me as correctly addressed by Mr. Khaitan that the provision of Section 263 of the said Act can be exercised when the Commissioner considers that any order passed by the Assessing Officer is erroneous and to the extent the same is prejudicial to the interests of the Revenue. The aforesaid provision cannot be applied at the instance of the assessee or even at the instance of the Revenue, it can only be done by the Commissioner himself. The provision of Section 264 of the said Act can be exercised by the Commissioner either of his own motion or on an application by the assessee. In this case the assessee made the application. It is the duty coupled with the power of the Commissioner to make an enquiry or call for records for enquiry. He is competent to pass such order as he may think fit but the same shall not be prejudicial to the interests of the assessee. Section 264 of the said Act for better understanding is quoted hereunder :