TMI Blog2005 (3) TMI 44X X X X Extracts X X X X X X X X Extracts X X X X ..... private limited company which is in liquidation and is being represented by the official liquidator. The following three questions have been referred by the Income-tax Appellate Tribunal, Ahmedabad Bench "C", under section 256(1) of the Income-tax Act, 1961 ("the Act"), at the instance of the assessee: "(1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that powers under section 263 could be exercised by the Commissioner of Income-tax in respect of an order of the Income-tax Officer which was to the following effect: 'The assessee-company untraceable, proceedings dropped.' (2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in rejecting the plea of the assessee to the effect that powers under section 263 could not have been exercised by the Commissioner of Income-tax in respect of the order in question on the ground that the said order had not been served on the assessee? (3) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in recording a finding that the order of the Income-tax Officer dropping assessment proceedings was erroneous and prejudicial to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its order dated December 16, 1992. Heard Mr. S.N. Soparkar, learned senior advocate for the applicant-assessee. It was contended by Mr. Soparkar that, firstly, there was no order made by the Assessing Officer, much less an order of assessment, and hence, the Commissioner of Income-tax could not have invoked section 263 of the Act; secondly, even if the noting of the Assessing Officer could be termed to be an order, such an order had not been served on the assessee, and hence, was not amenable to action under section 263 of the Act; and thirdly, there was no error or prejudice which would permit the Commissioner of Income-tax to assume jurisdiction under section 263 of the Act. He placed reliance on the following decisions: (1) CIT v. Gabriel India Ltd. [1993] 203 ITR 108 (Bom); (2) Ramlal Kishore Lal v. CIT [1972] 84 ITR 138 (All); and (3) Smt. Jijeebai Shinde v. CGT [1986] 157 ITR 122 (MP). Mrs. M.M. Bhatt, learned standing counsel appearing on behalf of the respondent-Revenue, submitted that the Tribunal's order was correct in the facts and circumstances of the case as well as the legal position in relation to exercise of jurisdiction under section 263 of the Act. She p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missioner of Income-tax to invoke section 263 of the Act and exercise jurisdiction. The action of the Assessing Officer in not making a best judgment assessment under section 144 (a) of the Act, despite failure of the assessee to file a return of income upon being served with a notice under section 139(2) of the Act, was itself an action which was erroneous in law. The assessee itself having submitted a statement of advance tax payable declaring income of more than Rs. 1,35,000 and having paid advance tax to the tune of Rs. 74,001, itself indicated that the assessee-company was having positive income in the year under consideration and the assessee-company believed such a state of affairs to exist. Therefore also, the action of the Assessing Officer of dropping the proceedings had resulted in causing prejudice to the interests of the Revenue and the second limb of section 263 of the Act also stood satisfied. Therefore, once the twin conditions for exercise of jurisdiction under section 263 of the Act were shown to be fulfilled, the Commissioner of Income-tax was perfectly justified in taking action under the said provision and exercising his revisional powers. In the aforesaid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to decide the effect of non-service of an order. The court, after referring various-decisions of the apex court, summarised the law by holding that non-service of an order would result in deprivation of a valuable right of appeal, and hence, no action could be taken if the order was not served on the assessee. In the present case, it is not shown that non-service of the order made by the Assessing Officer resulted in causing any prejudice to the assessee. In fact, as the noting made by the Assessing Officer shows that the proceedings had been dropped, there was no assessment and the assessee was not even called upon to make payment of any tax. In these circumstances, there was no occasion for the assessee to challenge such an order by way of an appeal by exercising statutory right of appeal. Section 263 of the Act states that the Commissioner may call for and examine the record of any proceeding under the Act, and if he considers that any order is erroneous, in so far as it is prejudicial to the interests of the Revenue, he may, pass such order thereon as the circumstances of the case justify after giving the assessee an opportunity of being heard and after making or causing any ..... X X X X Extracts X X X X X X X X Extracts X X X X
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