1998 (2) TMI 82 - HC - Income Tax

Summary

Issues:
1. Jurisdiction of the Commissioner of Income-tax under section 263 of the Income-tax Act, 1961.
2. Exercise of power under section 263 in conformity with statutory provisions.
3. Distinction between revisional and appellate powers.
4. Nature of the power conferred under section 263.
5. Appealability of orders under section 263.
6. Just and fair exercise of power under section 263.

Analysis:

The judgment pertains to an application under Article 226 of the Constitution challenging an order by the Commissioner of Income-tax proposing action under section 263 of the Income-tax Act, 1961. The Commissioner had set aside assessment orders for the years 1994-95 and 1995-96, directing a re-computation in compliance with the law. The subsequent notice proposing to exercise power under section 263 was challenged on the grounds of jurisdiction and compliance with statutory provisions.

The petitioner argued that the power under section 263 must be exercised strictly in conformity with statutory provisions and cannot be used for a roving enquiry. It was emphasized that the Commissioner's power is revisional and not appellate in nature. On the other hand, the Revenue contended that the impugned notice was issued within the powers conferred by the Act, providing the petitioner with an opportunity to respond.

The judgment highlighted that the power under section 263 is discretionary but must be exercised objectively, responsibly, and in the interests of justice for both the assessee and the Revenue. It was noted that the order under section 263 is appealable before the Income-tax Appellate Tribunal, emphasizing the quasi-judicial nature of the power conferred on the Commissioner.

Ultimately, the court dismissed the writ petition, stating that it was not inclined to intervene under Article 226 of the Constitution. The court suggested that the petitioner could address their concerns before the Commissioner of Income-tax, who could then pass a necessary order in accordance with the law. The judgment underscored the importance of just and fair exercise of power under section 263, emphasizing the need for objective and dispassionate decision-making in the interest of justice.

In conclusion, the judgment provides a comprehensive analysis of the jurisdiction and exercise of power under section 263 of the Income-tax Act, emphasizing the need for fairness, objectivity, and compliance with statutory provisions in the revisional process.