TMI Blog1996 (9) TMI 204X X X X Extracts X X X X X X X X Extracts X X X X ..... ao on 1st December, 1984 at 1800 hrs. and was expected to sail by 3rd December, 1984 after loading a quantity of about 43200 metric tons of iron ore. The No objection certificate was required by the Patvolk, Division of Gokak Patel Volkart Ltd. for the production to the Assistant Collector of Customs, Mormugao for obtaining the clearance for the said vessel. The No objection certificate, on the request of Patvolk, Division of Gokak Patel Volkart Ltd., was issued by the ITO on 30-11-1984. As per the Guarantee Bond, the agents were responsible for filing the return as required under section 172 of the Income-tax Act and also to pay the tax on the income declared. 3. The said Patvolk, thereafter filed the return of income under section 172(3) of the Income-tax Act. Along with the return of income, the Agents had also filed (1) Charter Party dated 23rd November, 1984, (2) Freight manifest received from South India Corporation Agencies (P.) Ltd., and (3) Photocopy of the Bill of Lading issued to the Minerals Metals Trading Corporation of India Ltd. It was pointed out to the Assessing Officer that the document, Charter Party was drawn on Standard Form of Iron Ore Charters under the M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case, the Agent was not liable to pay any tax in India. The Agent, therefore, requested the Commissioner to give appropriate relief to the Agent. The Commissioner disposed of the petition under section 264 from the Agent vide his order dated 20-12-1985. The Commissioner observed : "However, as indicated earlier, the fact that at the time of the original assessment, no effort had been made to gather the facts, cannot be ignored. In order that a proper order is passed by the ITO, I will set aside the order under consideration with a direction to the ITO to re do the assessment afresh after taking into consideration all the relevant facts and applying the provisions of law, and after affording the assessee an opportunity of being heard." 7. The set-aside assessment was completed by the Assessing Officer, vide his order dated 20th January, 1986. In the said order, there was no variation to the income disclosed by the Agent in the return filed under section 172(3) or the tax payable determined at Rs. 4,44,168 vide order dated 16-8-1985. The Assessing Officer, however, was of the view that the Agents had misrepresented the facts and had wrongly claimed that no tax was payable by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y clauses 28, 29, 35, 38 and 42 and pointed out that from these facts, it is absolutely clear that in fact the assessee was not liable to pay any tax here in India. In any way, there was no misrepresentation by the assessee and, therefore, the observations of the Assessing Officer were factually incorrect. 11. He also pointed out that the tax liability of the assessee was determined by the Assessing Officer at Rs. 4,44,168 vide his order dated 16-8-1985. In that order, the Assessing Officer did not give any finding that the assessee was guilty of concealment of income. As a matter of fact, there was no initiation of penalty proceedings in the said order. The assessee filed a petition under section 264 to the Commissioner after the said order of the Assessing Officer. As the Commissioner set aside the order of the Assessing Officer and directed the Assessing Officer to reframe the assessment afresh, the decision to initiate penalty proceedings was taken by the Assessing Officer in his order under section 172(4) read with section 264 of the Income-tax Act. The learned counsel pleaded that initiation of penalty proceedings in the second order was not justified on the facts of the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (9) Burmah-Shell Oil Storage Distributing Co. of India Ltd 's case, (10) Associated Cement Companies Ltd v. Dy. CIT [1992] 40 ITD 70 (Bom.), (11) CIT v. Indian Metals Ferro Alloys Ltd. [1995] 211 ITR 35 (Ori.), (12) ITO v. Rajyalakshmi Mahal [1994] 48 ITD 248 (Hyd.) (SMC), (13) Impulse India (P.) Ltd v. ITO [1992] 40 ITD 36 (Delhi), (14) Auto Bharti v. ITO [1994] 49 ITD 583 (Nag.), (15) CIT v. G.D. Naidu [1987] 165 ITR 63/[1986] 24 Taxman 255 (Mad.), (16) ITO v. Sallitho Ores (P.) Ltd [IT Appeal No. 246 (Bang.) of 1986]. 13. The learned counsel also pleaded that neither the Commissioner in his order under section 264, nor the Assessing Officer properly appreciated the import of the decision of the Supreme Court in the case of Union of India v. Gosalia Shipping (P.) Ltd [1978] 113 ITR 307. As a matter of fact, the case of the assessee is fully covered by the aforesaid decision. 14. The learned counsel delt at length on the issue that the Assessing Officer had initiated the penalty proceedings for concealment. The Assessing Officer, however, levied the penalty under section 271(1)(c) for filing the inaccurate particulars. If the initiation is for concealment, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s passed by an authority subordinate to him, the Commissioner may, either of his own motion or on an application by the assessee for revision, call for the record of any proceeding under this Act in which any such order has been passed and may make such inquiry or cause such inquiry to be made and, subject to the provisions of this Act, may pass such order thereon, not being an order prejudicial to the assessee, as he thinks fit." From the above, it is apparent that the proceeding under section 264 is thought of by the Legislature only to meet the situation faced by an aggrieved assessee who is unable to approach the appellate authorities for relief and has no other alternative remedy under the Act. This revisional power by the Commissioner could be used suo motu or as a request of an assessee. As this procedure in revision essentially involves the adjudication of rights and liabilities of the parties, it is undoubtedly a quasi-judicial proceeding in the disposal of which the statutory authority ultimately vests or divests rights of citizens, it should not lightly use their discretion and refuse to interfere on ground which are neither reasonable nor proper. As a matter of fact, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r against the interest of the assessee. When he set aside the first order of the Assessing Officer, he must have done it with a view to find out whether the assessee was entitled to some relief. Therefore, the scope of the Assessing Officer was limited by the Commissioner to find out whether the assessee was entitled to some relief on the facts. The Assessing Officer was not given any power by the Commissioner to pass an order prejudicial to the interest of the assessee. The Commissioner also did not direct the Assessing Officer to initiate the penalty proceedings under section 271(1)(c) of the Income-tax Act. Perhaps, this was never the intention of the Commissioner when he set aside the order of the Assessing Officer. In our view, therefore, the Assessing Officer had gone beyond his powers and was, therefore, not justified in initiating penalty proceedings while passing the assessment order in pursuance to the directions under section 264 of the Act. Moreover, in the reassessment proceedings, the Assessing Officer did not find any concealment on the part of the assessee. The assessee had fully disclosed all the material facts at the time of original assessment. The request of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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