9911796707
TMI Blog2012 (12) TMI 903X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 per the law then existing on 30.3.1997. However, the Commissioner of Income Tax (Revision) initiated proceedings under Section 263 of the Income Tax Act to revise the order of the assessment on the ground that the same was erroneous and prejudicial to the interest of the Revenue. The proceedings before the Commissioner of Income Tax related to certain additions to be made based on the documents seized. The assessee objected to the invoking of proceedings under Section 263 of the Income Tax Act, on the ground that the block assessment was already completed on 28.2.1997 after obtaining approval from the Commissioner of Income Tax under Section 158 BG of the Act. In the circumstances, after the completion of the assessment on the approval of the Commissioner, there could be no authority vested with the Commissioner to invoke jurisdiction under Section 263 of the Income Tax Act. Rejecting the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Aggrieved by the said order, the present appeal has been filed by the assessee before us. 5. Learned senior counsel appearing for the assessee placed reliance on the decision of the Karnataka High Court reported in [2012] C.I.T. v. SMT.ANNAPOORNAMMA CHANDRASHEKAR, wherein under similar circumstances, the Karnataka High Court held that when the Commissioner had given his approval for passing the block assessment order under Section 158BG, it meant that the Commissioner had full knowledge of the contents of what was approved by him. In the circumstances, in exercise of his revisional jurisdiction under Section 263, the Commissioner could not revise the order made under Chapter XIVB. The Karnataka High court pointed out that even though Section 158BH expressly provided that all other provisions of the Act would apply to the assessment made under this Chapter, yet, the opening words of Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 search initiated under Section 132 or books of account, other documents or any assets requisitioned under Section 132A, after 30.6.1995 but before 1.1.1997, in respect of block assessment made under Section 158BC, the assessee had the right to file appeal directly to the Income Tax Appellate Tribunal under Section 253(1)(b). However, after the amendment under the Income Tax (Amendment) Act, 1997 with effect from 1.1.1997, with the jurisdiction for granting approval for passing block assessment order vesting with the Joint Commissioner, an appeal remedy as against the order of assessment under Section 158BC is provided for under Section 246A(1)(k) before the Commissioner of Income Tax (Appeals). Thus, considering the amendments that had taken place from 01.01.1997, it stands to reason that as against the order passed by the Officer under Section 158BC after obtaining the approval of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 documents or any assets requisitioned under Section 132A, after the 30th day of June, 1995 but before the 1st day of January, 1997; (b) the Joint Commissioner or the Joint Director, as the case may be, in respect of search initiated under Section 132 or books of account, other documents or any assets requisitioned under Section 132A on or after the 1st day of January 1997. " 14. Section 253 of the Act deals with appeals to the Appellate Tribunal. Sub Section (1) lists out appealable orders to the Income Tax Appellate Tribunal. Section 253(1)(b) of the Act relates to an order passed by the Assessing Officer under Clause (c) of Section 158BC in respect of search initiated under Section 132 after 30th June 1995 but before 1st January 1997. Thus, skipping over one appeal remedy before the Commissioner of Income Tax (Appeals) as against the order of assessment made under Chapter XIVB, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ANDRASHEKAR, 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 Commissioner can exercise his revisional jurisdiction under Section 263 of the Act in respect of block assessment order passed by the Assessing Authority under Section 14B when the Commissioner has accorded his approval to such order?. In the context, the Karnataka High Court pointed out to the meaning of 'approval' as contained in Section 158BG. We respectfully agree with the line of reasoning which reads as under:- "........... The question arises if to make the said order, previous approval of the Commissioner is a condition precedent, was the Commissioner not expected to look into the draft block assessment order placed before him for approval to find out whether the said order is lawful and whether the said order is prejudicial to the interest of the revenue. If it was prejudicial to the interest of the revenue or if it is not lawful he was not obliged to accord approval. What he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der 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 Section 142(3), the requirement of affording a hearing was fully made. Thus, there was no need at all for giving an opportunity at the time of making an order under Section 142(2A) of the Act. Rejecting the said contention, the Supreme Court pointed out that with the growth of administrative law, the distinction between a judicial act and an administrative act had whithered away. When a purely administrative order entailed civil consequences, it is the civil consequence which obliterates the distinction between quasi-judicial and administrative function. Moreover, with the growth of the administrative law, the old distinction between a judicial act and an administrative act has withered away, therefore, it hardly needs reiteration that even a purely administrative order which entails civil consequences, must be consistent with the rules of natural justice. (Also see MRS.MANEKA GANDH ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 fall for consideration under Section 147 proceedings. In this connection, the decision of the Apex Court reported in AIR 1970 SUPREME COURT 1 SHANKAR v. KRISHNA, relied on by the learned senior counsel for the assessee, needs to be seen. Even though the said decision was with reference to the dismissal of the revision petition under Section 115 of the Code of Civil Procedure by the High Court and may not have a direct bearing on the issue, yet, one may note the observation of the Apex Court on the scope of revisional jurisdiction under Section 115 of CPC that the jurisdiction exercised is a part of the general appellate jurisdiction of the High Court as a superior court. 19. Keeping this theme in the background, when one looks at the scheme of the revisional powers of the Commissioner given under Section 263 and 264 of the Act, we find, Section 263 is a jurisdiction exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 mind before granting the approval. The Apex Court in the decision reported in AIR 2006 SC 2879 ASHOK KUMAR SAHU v. UNION OF INDIA held that the expression 'approve' means to have or express a favourable opinion of to accept as satisfactory as to the content of the assessment made under Section 158BC. The Karnataka High Court pointed out the difference between the approval and permission by referring P. Ramanatha Aiyar's Law Lexicon and held that when approval is given it means the approving authority has full knowledge about the contents of what is approved and confirmed authoritatively the order of the lower authority. 21. In the light of the phraseology used in 158BG, we respectively agree with the view expressed by the Karnataka High Court reported in C.I.T. v. SMT.ANNAPOORNAMMA CHANDRASHEKAR. In the circumstances, we have no hesitation in setting aside the o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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