TMI Blog2012 (12) TMI 903X X X X Extracts X X X X X X X X Extracts X X X X ..... ARAMAN AND MR. K. RAVICHANDRABAABU JJ. For Appellant: Mr. Aravind P.Datar, Senior Counsel for Mr. Rishi Kumar Dugar For Respondent: Mr. M. Swaminathan ------- J U D G M E N T (Judgment of the Court was delivered by CHITRA VENKATARAMAN,J.) The above Tax Case Appeal is filed at the instance of the assessee against the order of the Income Tax Appellate Tribunal for block assessment period 1987-88 to 1996-97. The above Tax Case (Appeal) was admitted on the following substantial question of law:- "Whether in law the Commissioner Administration could validly exercise revisional powers under Section 263 after having accorded statutory approval under Section 158 BG in respect of Section 158 BC assessment order passed in relation to search and seizure action initiated under Section 132 of the Income Tax Act, 1961 prior to 1.1.97?" 2. It is seen from the facts given that the assessee was originally assessed under Chapter XIVB for the block assessment period 1987-88 to 1996-97. The said assessment was made consequent on the search conducted on 13.2.1996. Aggrieved by the assessment, the assessee preferred an appeal before the Income Tax Appellate Tribunal as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned about the jurisdictional question raised by the assessee on the order passed by the Commissioner under Section 263 of the Act. 4. The Tribunal rejected the assessee's appeal, thereby confirmed the view of the Commissioner of Income Tax as regards the assumption of jurisdiction under Section 263 of the Act to revise the order under Section 158BC. It reasoned out that the revisional powers of the Commissioner under Section 263 of the Act being of wide amplitude, the Commissioner of Income Tax has every jurisdiction to revise even an order made under Section 158BC of the Act, if the assessment had failed to take into consideration, materials, thus making the assessment under Section 158 BC erroneous and prejudicial to the interests of the Revenue. Thus, there could be no reason as to why the Commissioner should not revise the assessment. Referring to the decision reported in 231 ITR 53 CIT v. SHREE MANJUNATHESWARE PACKING PRODUCTS AND CAMPHOR WORKS, the Tribunal viewed that the Commissioner has every right to revise the order of the block assessment, even though approval was granted by the Commissioner to pass such an order of assessment under Section 158BC of the Act. Aggrieve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s placed on record to show that the Commissioner had applied his mind, it being a jurisdiction to do a specific act as provided for under the statute, it has to be presumed that the Commissioner had gone into records and applied his mind. Consequently, the block assessment order made on the approval given by the Commissioner before 1.1.1997 could not be the subject matter of the jurisdiction under Section 263 of the Act. Learned senior counsel appearing for the assessee also pointed out to the decision reported in (2008) 14 SCC 151 SAHARA INDIA (FIRM) v. CIT and submitted that as held by the Apex Court, even though the approval is administrative in nature, considering the consequences that flow from the exercise viz., the passing of the assessment order, the Commissioner of Income Tax (Appeals) was not justified in assuming jurisdiction under Section 263 of the Act. The provisions relating to the appeal remedy before the Commissioner of Income Tax and the Tribunal as against the orders of the block assessment also assumes significance in understanding the issue herein. 7. Learned senior counsel appearing for the assessee submitted that prior to the award in 1997 in respect of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the admission stage itself. 12. Before going into the contention of the learned senior counsel appearing for the assessee, Section 158BG as it stood during the material point of time needs to be noted. Section 158 BG reads thus: "Section 158 BG. Authority competent to make the block assessment - The order of assessment for the block period shall be passed by an Assessing Officer not below the rank of an Assistant Commissioner: Provided that no such order shall be passed without the previous approval of the Commissioner *[or Director, as the case may be] * IT (Amend.) Act, 1997, wef 1.1.1997. " 13. Section 158 BG of the Act, however, was amended and substituted by the Income Tax (Amendment) Act, 1997, with effect from 1.1.1997, which reads as follows:- Section 158BG - "The order of assessment for the block period shall be passed by an Assessing Officer not below the rank of an Assistant Commissioner or an Assistant Director as the case may be: Provided that no such order shall be passed without the previous approval of - (a) the Commissioner or Director, as the case may be, in respect of search initiated under Section 132 or books of account, other documen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Assistant Commissioner under Section 144A and 144B of the Act as the case may be and submitted that a comparative reading of Sections 144A and 144B and Section 263 and 158BG, along with appellate remedies provided for under Section 253 and 246A, thus makes the position clear that as far as revisional remedy available to the Revenue is concerned, an order to be revised by the Commissioner must be one which is made by the authority below the rank of the Commissioner and that wherever the order is passed with the approval of the Commissioner and there is a direct appeal remedy to the Tribunal, the Act does not contemplate an exercise of revisional jurisdiction under Section 263 of the Act to revise the order passed by an Officer of the same rank. We agree with the reasoning of the assessee. 15. In the decision of COMMISSIONER OF INCOME TAX, BANGALORE v. SMT. ANNAPOORNAMMA CHANDRASHEKAR, the Karnataka High Court considered the phrase "previous approval" under Section 158BG but as relatable to an administrative approval and hence, no opportunity need be granted to the assessee before grant of approval. Nevertheless the question posed before the High Court was whether the Commiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on the subjective satisfaction. Thus, as far as the Commissioner is concerned, the approval to be granted for passing an order under Section 158BC thus show that the approval itself rests on the subjective satisfaction approving the order of assessment under Section 158BC based on the materials and it is not a technical approval giving a nod or signal for passing the order of assessment. 16. Similar line of reasoning was held by the Andhra Pradesh High Court in the decision reported in 243 ITR 425 SREE RAMA MEDICAL SURGICAL AGENCIES v C.I.T. Learned senior counsel for the assessee referred to the decision reported in (2008) 14 SCC 151 - SAHARA INDIA (FIRM) v. CIT., wherein the Apex Court considered the question of affording an opportunity of pre-decisional hearing before referring the matter to special audit under Section 142(2A) of the Act. The Revenue reasoned that an order of special audit under Section 142(2A) of the Act was only a step towards assessment. Being in the nature of an enquiry before making the assessment order and purely an administrative act, at that stage, a pre-decisional hearing was not required. However, before passing the order of assessment under S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 158BC rests on the previous approval of the Commissioner. On a reading of Section 158BG, particularly the proviso, reveal the mandatory nature of such an approval, that the proviso reads as "provided that no such order shall be passed without the previous approval of the commissioner ... ". In the background of the above-said provisions, in keeping the law declared by the Apex Court in the decision reported in (2008) 14 SCC 151 SAHARA INDIA (FIRM) v. CIT that with civil consequences flowing out of such an approval, we have no hesitation in accepting the plea of the assessee that in the face of such an approval granted to the order passed under Section 158BC, there can be no assumption of jurisdiction by an authority of the same rank under Section 263 of the Act. 18. It is no doubt true that the availability of an appeal remedy cannot pronounce on the scope of Section 263 of the Act vis-a-vis Section 158 BG of the Act. Yet, a reading of Section 263 shows that it is more in the nature of a corrective mechanism in cases where the Revenue may not have a chance to correct the error in the order of assessment, which is prejudicial to the interest of the Revenue, which does not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... medy to the Commissioner of Income Tax (Appeal) thereon is provided under the Act as against the original appeal remedy before the Income Tax Appellate Tribunal, we hold that going by the scheme of Act. Thus, once approval is given by the Commissioner in respect of proceedings made before 1.1.1997, the "approval" being an expression indicating application of mind on the part of the higher authority viz., the Commissioner, to the materials seized leading to the block assessment and the approving authority not being lower in rank than that of the revisional Appellate Authority himself and hence an appeal remedy thereupon before the Tribunal alone is provided thereon, we do not find any justifiable ground to accept the plea of the Revenue that the approval on the order passed under Section 158BC would be a mere administrative nod and hence, the assessment is amenable to be proceeded under Section 263 of the Act. As pointed out by the Karnataka High Court in the decision C.I.T. v. SMT.ANNAPOORNAMMA CHANDRASHEKAR, the act of approval is not for a mere passing of an order under Section 158BC, but an approval which takes note of the subject matter of assessment and there is application of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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