TMI Blog2003 (3) TMI 301X X X X Extracts X X X X X X X X Extracts X X X X ..... der Foreign Exchange (Immunity) Scheme, certifying the receipt of foreign gifts by certain parties. A list of persons involved in this fraud, who had obtained fabricated evidence of such gifts, was forwarded by the CBI to the CIT, Kolhapur. The list included the names of the three assessees before us. Based on this information, the ITO, Ward-1(6), Kolhapur, who was assigned jurisdiction over these cases by the CIT, Kolhapur, issued notice under section 148 to the three assessees which was served on them at Kolhapur on 13-8-1996. The assessees, who were all minors at the relevant time, instead of filing the returns in response to notice under section 148 at Kolhapur, filed the returns through their father as natural guardian at Rajkot on 11-9-1996. These returns were described as revised returns and were superscribed with the words "In response to notice under section 148". The returns were regularized by issuance of notice under section 148 by the Rajkot ITO on 22-10-1996. Subsequently, letters dated nil were filed by the asses sees before the Rajkot ITO on 11-12-1996 stating that returns filed on 11-9-1996 be treated as filed in response to notice under section 148 dated 22-10-199 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee. The Assessing Officer is directed to transfer the records to the ITO at Kolhapur, having jurisdiction over the case of the assessee, for further necessary action as per law." 4. The ld. counsel for the assessee drew our attention to the fact that the assessment order was held to be erroneous primarily for two reasons, viz. (a) for not initiating penalty proceedings, and (b) that the Assessing Officer at Rajkot had no jurisdiction over the case. So far as the first reason is concerned, it was argued by the ld. counsel that this cannot be a ground for holding the order to be erroneous because it is the satisfaction of the Assessing Officer that matters for initiation of such proceedings. As regards the second ground, it was submitted that the assessees are old assessees having filed their returns at Rajkot way back in 1993. It was submitted that the question of jurisdiction could not be gone into by the CIT as this issue was not before the Assessing Officer. The files and the returns were before him and hence the Assessing Officer assessed the income. It was argued that when income was assessed and tax was collected, there was no question of any prejudice being ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roval was withdrawn in 1987 with retrospective effect from 13-12-1982. Section 263 was invoked to hold the assessment order to be erroneous and prejudicial to the interests of the revenue. It was held by the Calcutta High Court that there was no scope for reopening the assessment on a subsequent event or on any new material. We fail to see any connection between this decision and the case on hand and hence in our opinion, the same cannot be of any help. 8. In the case of Bhupindra Foods Malt Industries, ITO, Shimla had sought to reopen the assessment for assessment year 1964-65 under section 147 of the Act. The ITO, Solan came into being only in 1977. Hence, it was claimed by the assessee that ITO, Shimla had no jurisdiction. The High Court held that there was no lack of inherent jurisdiction in ITO, Shimla and hence he could reopen the assessment under section 147. In the present case, it is not shown how ITO, Kolhapur did not have jurisdiction, who had issued notice under section 148. Moreover, the assessee in our case had filed the return described as revised return and later on the ITO, Rajkot issued notice under section 148 to regularize the same. Thus, the facts in our case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner to set aside the assessment. 11. Before the Supreme Court, it was contended on behalf of the assessee that the Commissioner had no jurisdiction to cancel the assessment made by the Income-tax Officer inasmuch as it cannot be said that where an assessee has been assessed to tax, it was prejudicial to the interests of revenue on the ground that no assessment could have been made in respect of the income of which she made a voluntary return. In this connection, it would be advantageous to reproduce the observations of the Supreme Court which are at page 328 of 88 ITR: "This contention in our view is unwarranted by the language of section 33B. The words of the section enable the Commissioner to call for and examine the record of any proceeding under the Act and to pass such orders as he deems necessary as the circumstances of the case justify when he considers that the order passed was erroneous in so far as it is prejudicial to the interests of the revenue. It is not, as submitted by the learned advocate, prejudicial to the interests of the revenue only if it is found that the assessment for the year was disclosed on the basis that an income had been earned which is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s well established that it was only the ITO, Kolhapur who had proper jurisdiction over the assessee. Enquiries revealed that the three assessees never stayed at the Rajkot address. It is also on record that the names of the assessees appear in the electoral rolls at Kolhapur and they also hold ration cards there. At the relevant time, the father of the assessees was carrying on business at Kolhapur. Thus, it is quite clear that it was only the ITO, Kolhapur who had proper jurisdiction of the assessees. The fact that the assessees were once assessed at Rajkot over the original return, will not, in our opinion, make any difference and hence, ITO, Kolhapur was justified in issuing notices under section 148 on the basis of the information supplied by CBI. 14. The main point, which now comes for consideration is as to how the order passed by the ITO, Rajkot is prejudicial to the interests of the revenue when the assessees have offered the foreign gifts for taxation and have paid tax thereon. As mentioned earlier, it is evident that notice under section 148 was issued by the Kolhapur ITO on the basis of enquiry conducted by the CBI. The ITO, Kolhapur obviously had to conduct detailed e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng a conception of acts or orders which are subversive of the administration of revenue. There must be some grievous error in the order passed by the Income-tax Officer, which might set a bad trend or pattern for similar assessments, which on a broad reckoning, the Commissioner might think to be prejudicial to the interests of Revenue administration. There might be cases where the Commissioner might wish to interfere with an order of the Income-tax Officer in order to safeguard the fair name and reputation of the Income-tax Department without any thought of going into the particular aspects of the assessment. Assessments which are mala fide, politically and communally motivated may be, however, set aside as being prejudicial to the interests of the Revenue. It is unnecessary, for us to illustrate the point any further. All that we wishes to observe is that the scope of the interference under this section is not to set aside merely unfavourable orders and bring to tax some more money to the treasury. Nor is the section meant to get at sheer escapement of revenue which, as is well known, is taken care of by provisions elsewhere in the Act such, for instance, as section 147 of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X
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