TMI Blog2004 (9) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... opinion to this court: "1. Whether, on the facts and circumstances of the case, the Tribunal was correct in holding that the assessment order passed by the Income-tax Officer without initiating penalty proceeding under section 273(c) for committing breach of section 212(3A) by the assessee, was not erroneous and prejudicial to the interests of the Revenue within the meaning of section 263 of the Income-tax Act, 1961? 2. Whether, on the facts and circumstances of the case, the Tribunal was correct in holding that the Commissioner of Income-tax exceeded the powers vested in him under section 263 in cancellation of the entire assessment order to enable the Department to initiate penalty proceeding, while upholding the order of the Commissioner of Income-tax under section 263 of the Income-tax Act, regarding direction to the Income-tax Officer to charge interest under section 217(1A) of the Income-tax Act?" Briefly stated the facts giving rise to the present reference are as follows: The reference relates to the assessment year 1977-78. The respondent is assessed to income-tax as an individual. For the assessment year 1977-78, a notice under section 210 was issued by the Incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wer to remand the matter and direct for initiation of penalty proceedings also. He relied upon the following decisions: (1) Addl. CIT v. Saraya Distillery [1978] 115 ITR 34 (All); and (2) Malabar Industrial Co. Ltd. v. CIT [2000] 243 ITR 83 (SC). Shri R. R. Kapoor learned counsel for the respondent submitted that omission to initiate penalty proceedings under section 273(1) of the Act by the Income-tax Officer while passing the assessment order did not amount to an order which could be revised by the Commissioner of Income-tax under section 263 of the Act. While supporting the decision of the Tribunal, he relied upon the following decisions: (1) Addl. CIT v. J. K. D'Costa [1982] 133 ITR 7 (Delhi); (2) Addl. CIT v. Achal Kumar Jain [1983] 142 ITR 606 (Delhi); and (3) CIT v. Nihal Chand Rekyan [2000] 242 ITR 45 (Delhi). Having heard learned counsel for the parties, we find that the Delhi High Court in the case of J. K. D'Costa [1982] 133 ITR 7 has held that the assessment cannot be said to be erroneous or prejudicial to the interests of the Revenue because of the failure of the Income-tax Officer to record his opinion about the leviability of penalty in the case. It has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid to be a factor vitiating the assessment order in any respect. An assessment cannot be said to be erroneous or prejudicial to the interest of the Revenue because of the failure of the Income-tax Officer to record his opinion about the leviability of penalty in the case." The aforesaid decision has been consistently followed by the Delhi High Court in the cases of Achal Kumar Jain [1983] 142 ITR 606 ; P. C. Puri v. CIT [1985] 151 ITR 584 ; Addl. CIT v. Precision Metal Works [1985] 156 ITR 693; CWT v. A. N. Sarvaria [1986] 161 ITR 694; Addl. CIT v. Sudershan Talkies [1993] 200 ITR 153; CIT v. Sudershan Talkies [1993] 201 ITR 289 and CIT v. Nihal Chand Rekyan [2000] 242 ITR 45. A similar view has been taken by the Rajasthan High Court in the case of CIT v. Keshrimal Parasmal [1986] 157 ITR 484 the Gauhati High Court in the case of Surendra Prasad Singh v. CIT [1988] 173 ITR 510, the Calcutta High Court in the case of CIT v. Linotype and Machinery Ltd. [1991] 192 ITR 337 and the Madras High Court in the case of CIT v. C.R.K. Swamy [2002] 254 ITR 158. On the other hand the Madhya Pradesh High Court has taken a contrary view in the case of Addl. CIT v. Indian Pharmaceuticals [19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case of Achal Kumar Jain [1983] 142 ITR 606 had considered the decisions of the Madhya Pradesh High Court in the cases of Indian Pharmaceuticals [1980] 123 ITR 874; Kantilal Jain [1980] 125 ITR 373; Nathoolal Balaram [1980] 125 ITR 596 and Narpat Singh Malkhan Singh [1981] 128 ITR 77 and while disagreeing has held as follows: "On a cursory examination, it appeared to us that the view of the Madhya Pradesh High Court as indicated in the above mentioned decisions is correct, but on closer scrutiny we respectfully disagree with the same. In any case, the matter is not res integra as far as this court is concerned. In Addl. CIT v. J. K. D.'Costa, Income-tax Reference No. 82 of 1974, disposed of by us on April 27, 1981-reported in [1982] 133 ITR 7 (Delhi), we held on similar facts that the Commissioner could not pass an order pertaining to penalty under section 263 of the Act. We held that the penalty proceedings do not form part of the assessment proceedings. Further, the failure of the Income-tax Officer to record his satisfaction or the lack of it in the assessment order, with regard to the leviability of penalty cannot be a factor vitiating the assessment orders." The other Hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g special leave to appeal; and (ii) hearing the appeal. This distinction is clearly demonstrated by the provision of Order XVI of the Supreme Court Rules framed in exercise of the power conferred by article 145 of the Constitution. Under rule 4, the petition seeking special leave to appeal filed before the Supreme Court under article 136 of the Constitution shall be in Form No. 28. No separate application for interim relief need be filed, which can be incorporated in the petition itself. If notice is ordered on the special leave petition, the petitioner should take steps to serve the notice on the respondent. The petition shall be accompanied by a certified copy of the judgment or order appealed from and an affidavit in support of the statement of facts contained in the petition. Under rule 10, the petition for grant of special leave shall be put up for hearing ex parte unless there be a caveat. The court, if it thinks fit, may direct issue of notice to the respondent and adjourn the hearing of the petition. Under rule 13, the respondent to whom a notice in special leave petition is issued or who had filed a caveat, shall be entitled to oppose the grant of leave or interim orders w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... binding and effective between the parties unless it is a nullity or unless the court may pass a specific order staying or suspending the operation or execution of the judgment, decree or order under challenge." In the case of Saurashtra Oil Mills Association v. State of Gujarat [2002] 3 SCC 202 the apex court has held that repeatedly it has been held that dismissal of special leave petition without a speaking order would only mean that the court was not inclined to exercise its discretion in granting leave to file the appeal. It does not attract the doctrine of merger and the view expressed in the impugned order does not become the view of this court. The dismissal of the special leave petition by a non-speaking order would remain a dismissal simpliciter in which permission to file the appeal to this court is not granted. This may be because of various reasons. It would not mean to be the declaration of law by this court. In a recent judgment of a three-member Bench in Kunhayammed v. State of Kerala [2000] 245 ITR 360 (SC) after exhaustive consideration of the entire case law this court has reaffirmed this position. The apex court in the case of Justice P. Venugopal v. Union o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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