COMMISSIONER OF INCOME TAX Vs. GIRDHARILAL

JUDGEMENT

(1.) THE following question has been referred by the Income-tax Appellate Tribunal, Delhi Bench 'A' (for short "the Tribunal ") to this court for answer :

(2.) THE assessee-respondent is an individual. THE assessment year is 1961-62. THE assessee-respondent filed a return for the assessment year 1961-62 on June 4, 1965. THE assessee had income from a lime kiln business at Banner. He had income from contract for removal of coal ash from Northern Railway, income from trucks and jeeps, income from confectionery business and also income from property and share income from a firm. THE return showed an income of Rs. 3,000. No basis for the return was given by the assessee. THE ITO completed the assessment on a total income of Rs. 97,511 on March 10, 1966, under Section 143(3) of the I.T. Act (No. XLIII of 1961) (for short 'the Act')). THE Commissioner of Income-tax (CIT) was of the opinion that the ITO ought to have charged while completing the assessment, interest from the assessee under Section 18A(3) of the Indian I.T. Act, 1922 ("the old Act" herein) read with Section 217 of the Act. Section 18A(3) of the old Act provided that the assessee should furnish an estimate of its income in advance and also pay income-tax in advance. THE assessee had neither filed an estimate nor paid advance-tax in respect of the assessment year 19.61-62. THE CIT was of the opinion that interest was chargeable under the above provision. As the ITO failed to charge such interest, the CIT considered the order dated March 10, 1966, of the ITO to be prejudicial to the interest of the Revenue. He, therefore, initiated proceedings under Section 263 of the Act for revision of the assessment order. THE CIT issued a letter dated February 3, 1969, to the assessee asking him to show cause why action should not be taken under Section 263 of the Act for restoring loss to the Revenue caused in the said matter. Show-cause notice was not served and it was received back with the postal remark "left without address". THE CIT issued another notice to the assessee fixing February 24, 1968, for hearing. This notice was served on Shri Rawat Singh, who held a power of attorney for the assessment year 1961-62 from the assessee. THE power of attorney dated March 31, 1965, in favour of Shri Rawat Singh, is as follows : "Stamp for Rs. 3/-

(3.) THE material portion of Section 263 of the Act reads as under: "263(1). THE Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Income-tax Officer is erroneous in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment......