Commissioner Of Income Tax v. Smt. Krishna Devi., Patna High Court, Judgment, Law, casemine.com

Factual and Procedural Background

This opinion concerns four references related to the assessment years 1970-71, 1971-72, 1972-73, and 1973-74. The references arose from questions about the validity of assessment orders passed by the Income-tax Officer under a government scheme aimed at assisting new taxpayers in small income groups. The Commissioner of Income-tax had assumed jurisdiction under section 263(1) of the Income-tax Act, 1961, to set aside these assessment orders. The Tribunal had held in favor of the assessments and against the Commissioner’s orders, prompting the references for this court's opinion.

Legal Issues Presented

Whether the Tribunal rightly held that the assessment orders passed by the Income-tax Officer after necessary enquiries under the government scheme were not erroneous so as to enable the Commissioner of Income-tax to assume jurisdiction under section 263(1) of the Income-tax Act, 1961.

Whether the Tribunal rightly held that the Commissioner of Income-tax did not follow the principles of natural justice before passing the impugned order, rendering it invalid.

Whether the Tribunal rightly held that the impugned order of the Commissioner of Income-tax was based on mere surmises and conjectures, and thus invalid.

Whether, in view of the Income-tax Appellate Tribunal, Patna decision in Smt. Rambha Devi v. ITO, the Tribunal rightly held that the Commissioner could not legally set aside an assessment order made under section 143(1) pursuant to the government scheme.

Whether the Tribunal rightly held that the Commissioner acted mechanically in setting aside the assessment order for the year 1973-74, invalidating that order.

Whether the Tribunal rightly cancelled the consolidated order passed by the Commissioner under section 263(1) of the Income-tax Act, 1961, for the assessment years 1970-71 to 1973-74.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Commissioner Of Income-Tax v. Pushpa Devi, [1987] 164 ITR 639	Principles regarding jurisdiction of Commissioner under section 263(1) and validity of assessment orders passed under the government scheme.	The court relied on this decision to answer the referred questions negatively, supporting the validity of the assessment orders and limiting the Commissioner’s jurisdiction.
Commissioner Of Income-Tax v. Smt. Rambha Devi, [1987] 164 ITR 658	Interpretation of section 263(1) and the limits on the Commissioner’s power to revise assessment orders made under section 143(1) under the government scheme.	The court applied this precedent to uphold the Tribunal’s view that the Commissioner could not legally set aside such assessment orders.
CIT v. Pushpa Devi, [1988] 173 ITR 445 (unreported decision disposed April 5, 1988)	Further clarification on the scope of the Commissioner’s jurisdiction under section 263(1) in the context of assessments made under the government scheme.	Supported the court’s conclusion that the Tribunal’s answers were correct and the Commissioner’s orders invalid.

Precedent

Rule or Principle Cited For

Application by the Court

Commissioner Of Income-Tax v. Pushpa Devi, [1987] 164 ITR 639

Principles regarding jurisdiction of Commissioner under section 263(1) and validity of assessment orders passed under the government scheme.

The court relied on this decision to answer the referred questions negatively, supporting the validity of the assessment orders and limiting the Commissioner’s jurisdiction.

Commissioner Of Income-Tax v. Smt. Rambha Devi, [1987] 164 ITR 658

Interpretation of section 263(1) and the limits on the Commissioner’s power to revise assessment orders made under section 143(1) under the government scheme.

The court applied this precedent to uphold the Tribunal’s view that the Commissioner could not legally set aside such assessment orders.

CIT v. Pushpa Devi, [1988] 173 ITR 445 (unreported decision disposed April 5, 1988)

Further clarification on the scope of the Commissioner’s jurisdiction under section 263(1) in the context of assessments made under the government scheme.

Supported the court’s conclusion that the Tribunal’s answers were correct and the Commissioner’s orders invalid.

Court's Reasoning and Analysis

The court analyzed the questions by reference to three prior decisions of this court, which dealt with identical issues concerning the Commissioner’s jurisdiction under section 263(1) of the Income-tax Act, 1961, and the validity of assessment orders made under the government scheme for small income group taxpayers. The court found that the Tribunal had correctly held that the assessments were not erroneous and that the Commissioner’s orders were invalid for lack of jurisdiction, failure to follow natural justice, and reliance on conjecture. The court also agreed that the Commissioner acted mechanically in setting aside the 1973-74 assessment. Consequently, the court answered all referred questions negatively in favor of the Revenue and against the assessee.

Holding and Implications

The court held that all the questions referred were to be answered in the negative, thereby upholding the Tribunal’s findings and rejecting the Commissioner of Income-tax’s orders under section 263(1) for the assessment years 1970-71 to 1973-74.

The direct effect of this decision is to confirm the validity of the assessment orders passed under the government scheme and to restrict the Commissioner’s jurisdiction to set aside such orders. No costs were imposed in the special circumstances of the case. The opinion does not establish any new precedent beyond affirming existing case law.

Commissioner Of Income Tax v. Smt. Krishna Devi.

1. These are four references in relation to assessment years 1970-71, 1971-72, 1972-73 and 1973-74. In these references, the following questions have been referred to us for our opinion:

“1. Whether, on the facts and in the circumstances of the case, the Tribunal has rightly held that the assessment orders, having been passed by the Income-tax Officer after necessary enquiries in pursuance of the scheme to help the new taxpayers in the small income groups' launched by the Government, were not erroneous so as to enable the Commissioner of Income-tax to assume jurisdiction under section 263(1) of the Income-tax Act, 1961?

2. Whether, on the facts and in the circumstances of the case, the Tribunal has rightly held that the Commissioner of Income-tax did not follow the principles of natural justice before passing the impugned order and so his order is not valid?

3. Whether, on the facts and in the circumstances of the case, the Tribunal has rightly held that the impugned order of the Commissioner of Income-tax is based upon mere surmises and conjectures and is, therefore, not valid?

4. Whether, in view of the decision of the Income-tax Appellate Tribunal, Patna, in the case of Smt. Rambha Devi v. ITO (I.T.A Nos. 1713 to 1715/1974-75), the Tribunal has rightly held that the Commissioner of Income-tax, acting under section 263(1) of the Income-tax Act, 1961, could not legally set aside an order of assessment made under sec tion 143(1) in pursuance of the scheme ‘to help the new taxpayers in the small income groups’ evolved by the Government?

5. Whether, on the facts and in the circumstances of the case, the Tribunal has rightly held that the Commissioner of Income-tax acted in a mechanical manner in setting aside the assessment order for the assess ment year 1973-74 and so his order for that year is invalid?

6. Whether, on the facts and in the circumstances of the case, the Tribunal has rightly cancelled the consolidated order passed by the Commissioner of Income-tax under section 263(1) of the Income-tax Act, 1961, for the assessment years 1970-71 to 1973-74?”

2. The questions referred to this court are all covered by three decisions of this court in Commissioner Of Income-Tax v. Pushpa Devi, [1987] 164 ITR 639, Commissioner Of Income-Tax v. Smt. Rambha Devi, [1987] 164 ITR 658 and the unreported decision of this court in Income-tax Cases Nos. 114 and 115 of 1979, disposed of on April 5, 1988 (CIT v. Puspha Devi— since reported in [1988] 173 ITR 445). Identical questions had been referred in those references.

3. For the reasons stated in these cases, all the questions referred to us in these references are thus answered in the negative, in favour of the Revenue and against the asses-see. In the special circumstances of the case, there shall be no order as to costs.

4. Let a copy of this judgment be transmitted to the Assistant Registrar, Income-tax Appellate Tribunal, Patna, in terms of section 260 of the Income-tax Act, 1961.