Citation Codes

Equivalent Citations

citation codes

Case Number

Taxation Case Nos. 28, 29, 60 and 61 of 1974

Judges

Nagendra Prasad Singh
Ashwini Kumar Sinha

Acts

Section 256(1) of the I.T. Act, 1961 (hereinafter
SECTION 263 INCOME TAX ACT
Act, i. e., the Indian I.T. Act, 1922.
Sub-section (2) of Section 139
Sub-section (5) of Section 124
Sub-section (1) of Section 263
Sub-section (3) of Section 124
Sub-section (1) of Section 139

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Smart Summary

Structured Summary of the Opinion (Taxation Cases Nos. 28, 29, 60 & 61 of 1974)

Factual and Procedural Background

Four taxation cases arise from assessment orders passed against the same assessee for assessment years 1966-67, 1967-68, 1968-69 and 1969-70. The Income-tax Appellate Tribunal referred similar questions under Section 256(1) of the Income-tax Act, 1961 to this court; the cases were heard and disposed of together by a common order.

The detailed factual narrative in the opinion concerns Taxation Case No. 28 of 1974 (assessment year 1966-67). For that year:

Return was filed for the assessee on October 7, 1966 before the ITO, B-Ward.
The file was transferred to the ITO, D-Ward, who passed the assessment on May 27, 1969.
On May 7, 1971 the Addl. Commissioner issued a notice proposing to pass an order under Section 263(1) of the Act on the ground that the assessment was prejudicial to the revenue.
After hearing, on May 21, 1971 the Addl. Commissioner cancelled the assessment dated May 27, 1969 (made by ITO, D-Ward) and directed a fresh assessment by ITO, Ward-B, because the ITO, Ward-D, purportedly had no jurisdiction over the assessee at the relevant time.
The assessee appealed to the Tribunal. The Tribunal set aside the Addl. Commissioner’s order under Section 263(1) on the ground that the Addl. Commissioner had not shown how the assessment was erroneous or prejudicial to the interests of the Revenue and had not identified materials to support that conclusion. The Department applied for a reference to this court.

Legal Issues Presented

Whether, on the facts and in the circumstances of the case, the Tribunal was correct in cancelling the orders under Section 263 of the Income-tax Act for the assessment years 1966-67 and 1967-68 (and analogous questions for the subsequent assessment years).

Arguments of the Parties

Department's Arguments (as advanced by Mr. B. P. Rajgarhia)

Once it is established that the ITO who passed the assessment had no jurisdiction over the assessee on the relevant date, that fact alone renders the assessment order erroneous and prejudicial to the interests of the Revenue.
Therefore, where an assessment was made by an ITO without jurisdiction, the Commissioner need not further demonstrate in what other respect the order is erroneous or prejudicial in order to exercise power under Section 263(1). The Department relied on Supreme Court decisions such as Rampyari Devi Saraogi v. CIT and Smt. Tara Devi Aggarwal v. CIT to support this contention.

Assessee's Arguments

Reliance on Section 124(5) of the Act: an assessee may be barred from calling in question the jurisdiction of an ITO after prescribed periods; this indicates that an order by an ITO over whom he did not have jurisdiction is not a nullity in the absolute sense that it can be attacked at any time.
Even if an ITO’s assessment is assumed to be illegal because of lack of jurisdiction, that fact by itself does not entitle the Commissioner to set aside the assessment under Section 263(1) unless the Commissioner is satisfied that the assessment is erroneous “in so far as it is prejudicial to the interests of the Revenue.”

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court in this Opinion
Barium Chemicals Ltd. v. Company Law Board [1966] 36 Comp Cas 639 (SC)	Illustrates that statutory language vesting discretion ("if it appears", "if he is satisfied") does not make the satisfaction purely subjective; discretion must be exercised with an objective assessment of circumstances.	The court invoked this and related Supreme Court authorities to state that though Section 263(1) uses subjective terms, the Commissioner must judge circumstances objectively and on materials.
Rampur Distillery and Chemical Co. Ltd. v. Company Law Board [1970] 40 Comp Cas 916 (SC)	Part of the series of Supreme Court decisions emphasizing objective assessment even when discretion appears subjective.	Used as part of the judicial background for the proposition that discretion under statutory language must not be treated as purely subjective.
Purtabpur Company Ltd. v. Cane Commissioner of Bihar, AIR 1970 SC 1896	Part of the line of authority that a discretion expressed as "if he is satisfied" requires objective assessment.	Cited alongside other Supreme Court authorities to support the requirement of objective evaluation by the Commissioner under Section 263(1).
M. A. Rasheed v. State of Kerala, AIR 1974 SC 2249	Another authority in the same series on objective assessment of discretion.	Referred to as part of the precedent base establishing that statutory discretion must be objectively exercised.
CIT v. R. K. Metal Works [1978] 112 ITR 445 (P & H)	Holds that the Commissioner must state in what manner the order was erroneous and prejudicial and give the basis for such a conclusion; without such reasons the revisional order cannot be sustained.	The court relied on this decision (including a quoted passage of Justice O. Chinnappa Reddy) to affirm that the Commissioner must indicate the basis on materials for concluding an assessment is prejudicial to the Revenue.
Russell Properties Pvt. Ltd. v. A. Chowdhury, Addl. CIT [1977] 109 ITR 229 (Cal)	Affirms that there must be material before the Commissioner to justify concluding that an assessment is erroneous and prejudicial; reasonable opportunity should be given and intimation of the materials is required (principles of natural justice).	The court cited this case to emphasize the requirement that the Commissioner must have relevant material and must afford reasonable opportunity and intimation of materials to the affected person before exercising Section 263 powers.
Rampyari Devi Saraogi v. CIT [1968] 67 ITR 84 (SC)	In the reported facts the Commissioner cancelled an assessment under a provision parallel to Section 263 because the ITO lacked jurisdiction and had passed the assessment without necessary inquiry or evidence; the Supreme Court approved cancellation on the basis of the detailed reasons shown.	The court considered this precedent relied upon by the Department but observed that the Supreme Court’s approval in that case depended not only on lack of jurisdiction but also on concomitant procedural and evidentiary failings that made the assessment prejudicial to the Revenue.
Smt. Tara Devi Aggarwal v. CIT [1973] 88 ITR 323 (SC)	Supreme Court affirmed cancellation under the old provision; the Court noted additional reasons (for example, assessments made to assist another person) making an assessment erroneous and prejudicial.	The court distinguished this authority from the Department's broad submission: the Supreme Court did not hold that lack of jurisdiction alone sufficed; other substantive considerations were present.

Court's Reasoning and Analysis

The court examined Section 263(1) of the Income-tax Act (quoted in the opinion) and observed that it vests a supervisory power in the Commissioner to call for and examine records of proceedings and to pass any order the circumstances justify, including cancellation of assessments. However, the court emphasized the statutory pre-condition: the Commissioner must be satisfied that the order is "erroneous in so far as it is prejudicial to the interests of the Revenue."

The court analyzed whether the phrase "in so far as it is prejudicial to the interests of the Revenue" requires proof of loss to the revenue or other objective material showing prejudice. It held that before exercising power under Section 263(1) the Commissioner must be satisfied on the basis of materials on record that the order has caused, or is likely to cause, prejudice to the interests of the Revenue. Although the provision is in subjective terms, the court applied established Supreme Court authority to hold that such satisfaction must be reached by an objective evaluation of relevant materials and reasoning.

Applying this to the facts of Taxation Case No. 28, the court found that the Addl. Commissioner’s order did not identify or analyze materials showing underassessment or otherwise demonstrate how the ITO’s assessment was prejudicial to the Revenue. The Addl. Commissioner had used general observations (for example, that the ITO "appears to have made an under-assessment" when compared to certain records) but did not indicate on what material facts that conclusion was based. The Tribunal was therefore correct in concluding that the condition precedent for exercise of Section 263(1) — satisfaction on materials that the assessment was erroneous and prejudicial — had not been met.

The court considered the Department’s reliance on earlier Supreme Court decisions where assessments by officers without jurisdiction were cancelled. However, the court distinguished those authorities on their facts: in the cited Supreme Court cases the cancellation was supported by additional findings of substantive procedural and evidentiary defects (for example, lack of enquiry, absence of evidence, and assessments made to assist another person) which rendered the assessment prejudicial. Thus those cases did not stand for the proposition that lack of jurisdiction alone, without more, automatically satisfies the condition in Section 263(1).

The court reiterated that when the Commissioner sets aside an assessment and directs reassessment, he should ordinarily indicate, briefly, on what materials he is satisfied that the order was prejudicial to the Revenue — sufficient to justify the exercise of the revisional power — while avoiding conclusive findings that would pre-empt the subordinate authority’s fresh consideration. Because the Addl. Commissioner failed to indicate the material basis for his satisfaction, the Tribunal was justified in setting aside his order.

For the remaining three taxation cases (Nos. 29, 60 and 61 of 1974) the facts and orders were identical in substance (differing only by year and dates), and the court applied the same reasoning to those cases.

Holding and Implications

Holding:

The questions referred were answered in the affirmative and against the Department; the Tribunal was correct in cancelling the orders passed by the Addl. Commissioner under Section 263(1) for the assessment years in question.

Implications / Consequences:

Direct effect: The Addl. Commissioner’s orders cancelling the ITO assessment orders were set aside by the Tribunal and that conclusion was upheld by this court for all four taxation cases (1966-67, 1967-68, 1968-69 and 1969-70).
The court requires that a Commissioner invoking Section 263(1) indicate the material basis on which he is satisfied that an assessment order is erroneous in so far as it is prejudicial to the interests of the Revenue; a mere finding that the assessing officer lacked jurisdiction is not by itself sufficient unless supported by materials showing prejudice.
The opinion does not purport to lay down any broader novel legal principle beyond applying existing authorities; it confines itself to the application of Section 263(1) to the facts and to the established requirement that discretionary satisfaction must be grounded on material.

Order as to costs: There shall be no order as to costs (as stated in the opinion).

Judge(s): Ashwini Kumar Sinha, J. (opinion), with a concurrence indicated ("I agree.")

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Commissioner Of Income Tax v. Shantilal Agarwalla

1. These four taxation cases arise out of four assessment orders passed against the same assessee in respect of four assessment years, 1966-67, 1967-68, 1968-69 and 1969-70. In all the four cases similar question has been referred by the Income-tax Appellate Tribunal (hereinafter to be referred to as "the Tribunal ") under Section 256(1) of the I.T. Act, 1961 (hereinafter to be referred to as "the Act"), for the opinion of this court, and, as such, they are being disposed of by a common order. . In Taxation Cases Nos. 28 and 29 of 1974, the question referred to this court for opinion is as follows :

"Whether, on the facts and in the circumstances of the case, the Tribunal was correct in cancelling the orders under Section 263 of the Income-tax Act for the assessment years 1966-67 and 1967-68 ?"

2. Same question has been referred in the other two taxation cases for the other two assessment years.

3. I shall first take up Taxation Case No. 28 of 1974. For the assessment year 1966-67, return was filed on behalf of the assessee on October 7, 1966, before the ITO, B-Ward, Dhanbad. Later on, this file was transferred to the ITO, 'D' Ward, who passed the assessment order aforesaid on May 27, 1969. On May 7, 1971, the Addl. Commissioner of Income-tax issued notice to the assessee informing him that he intended to pass an order under Section 263(1) of the Act as, according to him, the assessment order passed in respect of the aforesaid year was prejudicial to the interests of the Revenue. The Addl. Commissioner heard the assessee and passed an order on May 21, 1971 cancelling the aforesaid order of assessment dated May 27, 1969, made by the ITO, D-Ward, and directed a fresh assessment to be made for that assessment year by the ITO, Ward-B who had the jurisdiction over the assessee at the relevant time. This order was passed, because the ITO, Ward-D, had no jurisdiction over the asssessee at the relevant time and the assessment order could have been passed only by the ITO, Ward-B, Against that order, the assessee filed an appeal before the Tribunal. According to the Tribunal, the power under Section 263(1) of the Act could have been exercised only if the Addl. Commissioner had come to the conclusion that the assessment order in question was prejudicial to the interests of the Revenue. The Tribunal pointed out that the Addl. Commissioner had not at all shown in what respect underassessment had been made and how the assessment made was prejudicial to the interests of the Revenue. According to the Tribunal, no materials had been mentioned in the order of the Addl. Commissioner on the basis of which the aforesaid conclusion could have been arrived at. On the aforesaid view, the Tribunal cancelled the order of the Addl. Commissioner. On an application being filed on behalf of the Department, reference has been made to this court, as already stated above.

4. Learned standing counsel for the Department, Mr. B. P. Rajgarhia, submitted that when the Tribunal has found that on the relevant date the ITO, Ward-D, had no jurisdiction over the assessee in question, then there was no occasion for the Tribunal to cancel the order passed by the Addl. Commissioner under Section 263(1) cancelling the order of assessment of the ITO.

5. In view of Section 124(1), the ITOs have to perform their functions in respect of such areas or of such persons or classes of persons or of such incomes or classes of income or of such cases or classes of cases as the Commissioner may direct. Sub-section (3) of Section 124 says that within the limits of the area assigned to him the ITO shall have jurisdiction in respect of any person carrying on a business or profession, if the place at which such person carries on his business or profession is situate within the area. Sub-section (4) thereof is a provision under which if there is any dispute on the question as to whether an ITO has jurisdiction to assess any person, it can be decided by the Commissioner. Sub-section (5) of Section 124, which is relevant, is as follows :

"(5) No person shall be entitled to call in question the jurisdiction of an Income-tax Officer-

(a) after the expiry of one month from the date on which he has made a return under Sub-section (1) of Section 139 or after the completion of the assessment, whichever is earlier ;

(b) where he has made no such return, after the expiry of the time allowed by the notice under Sub-section (2) of Section 139 or under Section 148 for the making of the return."

6. The counsel for the assessee has placed reliance on Sub-section (5) of Section 124 aforesaid in support of his contention that an order passed by an ITO in respect of an assessee over whom he had no jurisdiction shall not be a nullity in the sense that in the eye of law it does not exist. According to the learned counsel, if an order passed by an ITO in respect of an assessee, who is carrying on business at a place which is beyond the area allotted to such an ITO, was to be a nullity, then there was no occasion to make a provision like Sub-section (5) saying that no person shall be entitled to call in question the jurisdiction of an ITO after the period prescribed under that sub-section, because an order, or a proceeding, which is a nullity can be challenged at any time. Learned counsel further urged that an order wholly without jurisdiction in the sense being non est cannot become a valid order after the expiry of a period fixed, within which an objection could have been entertained. However, the learned counsel for the assessee submitted that for the purpose of the present case even if it is assumed that an order passed by an ITO in respect of the assessee who is not within his jurisdiction is an illegal order, still on that ground itself the Commissioner cannot set aside the order in question in exercise of the power conferred on him by Section 263 of the Act, unless the Commissioner is also satisfied that the assessment order of the ITO is erroneous "in so far as it is prejudicial to the interests of the Revenue".

7. Sub-section (1) of Section 263 of the Act, which is relevant for the present case, is as follows :

"263. (1) The Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Income-tax Officer is erroneous in so far as it is prejudicial to the interests of the Revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment."

8. On a plain reading, this sub-section vests a supervisory power in the Commissioner to enable him to call for and examine the record of any proceeding under the Act and to pass any order which the circumstances of the case may justify, including cancellation of the assessment order. But before that he must be satisfied that the order in question is erroneous in so far as it is prejudicial to the interests of the Revenue.

9. Now the question which has to be examined is as to whether the expressions "in so far as it is prejudicial to the interests of the Revenue" have to be read in context with the loss of revenue to the Department. In other words, can the Commissioner exercise the power under Section 263 in cases where on examination he is satisfied that the assessment order has been properly made so far as the assessee in question is concerned, but the ITO who made the assessment had no jurisdiction over the assessee in question ? The primary object of the section is to vest a supervisory power in the Commissioner to modify, or cancel any order, including an assessment order made by an ITO, if he is of the opinion that such an order is erroneous in so far as it is prejudicial to the interests of the Revenue. This prejudice to the interests of the Revenue may be either an immediate one or in future. As such, before the power under Sub-section (1) of Section 263 is exercised, the Commissioner must be satisfied on the materials on record that the order has caused prejudice to the interests of the Revenue or was likely to cause such a prejudice. It is true that Sub-section (1) of Section 263 vests power in the Commissioner in subjective terms, but it has been pointed out by the Supreme Court in a series of judgments that even when an enactment vests discretion in any authority saying "if it appears", "if he is satisfied", "if he considers necessary", that does not mean that it is a matter of only a subjective satisfaction and such authority has not to judge the circumstances in an objective manner. Reference in this connection may be made to the well-known cases of Barium Chemicals Ltd. v. Company Law Board [1966] 36 Comp Cas 639 (SC), Rampur Distillery and Chemical Co. Ltd. v. Company Law Board [1970] 40 Comp Cas 916 (SC), Purtabpur Company Ltd. v. Cane Commissioner of Bihar, AIR 1970 SC 1896, and M. A. Rasheed v. State of Kerala, AIR 1974 SC 2249. The Tribunal has pointed out that the Addl. Commissioner having held that the ITO concerned had no jurisdiction over the assesses during the relevant year of assessment, has not pointed out as to how the order of assessment was prejudicial to the interests of the Revenue. Learned counsel for the assessee has drawn our attention to that part of the order of the Addl. Commissioner. It appears to me that the Addl. Commissioner never examined the assessment order in the light as to whether the assessment order was prejudicial to the interests of the Revenue. In para. 5 of the order he has simply observed that there was question of underassessment and/or wrong computation of income in the case. He has then observed that the ITO "appears to have made an under-assessment if one looked to the assessee's records and profits shown by others in the same line". But, he has not pointed out how it was a case of underassessment. I am inclined to agree with the view expressed by the Tribunal that the condition precedent to the exercise of jurisdiction under Section 263(1) is that the Commissioner must be satisfied on materials that the order in question was erroneous in so far as it was prejudicial to the interests of the Revenue. While setting aside the assessment order and directing reassessment, the Commissioner is expected to point out briefly as to how the order in question was prejudicial to the interests of the Revenue. The Tribunal has pointed out that there was nothing in the order or on the record of the case on the basis of which the Commissioner could have exercised the power tinder that section.

10. In the case of CIT v. R. K. Metal Works [1978] 112 ITR 445 (P & H), the Tribunal had pointed out that the Commissioner had failed to indicate the material or the nature of the evidence before him on the basis of which he came to the conclusion that the order of the ITO was erroneous and prejudicial to the interests of the Revenue. The Tribunal had also observed in that case that the Commissioner had not given any reason to justify his satisfaction that the order passed by the ITO was prejudicial to the interests of the Revenue. Justice O. Chinnappa Reddy (as he then was) observed (p. 447) :

"It was necessary for the Commissioner to state in what manner he considered that the order of the Income-tax Officer was erroneous and prejudicial to the interests of the Revenue and what the basis was for such a conclusion. After indicating his reasons for such a conclusion, it would certainly have been open to him to remand the matter to the Income-tax Officer for such other investigation or enquiry as might be necessary. But that was not the course which the Commissioner pursued. The Tribunal was, therefore, justified in setting aside the order of the Income-tax Commissioner."

11. In the case of Russell Properties Pvt. Ltd. v. A. Chowdhury, Addl. CIT [1977] 109 ITR 229 (Cal), it was pointed out (p. 242) :

"... there must be material before the Commissioner before he passes the order to come to the conclusion that the order sought to be rectified was erroneous in so far as it was prejudicial to the interests of the Revenue. To such a conclusion the Commissioner can come on relevant material facts in respect of which reasonable opportunity must be given to the person sought to be affected and such reasonable opportunity again, on the principles of natural justice, requires that the person to be affected should be given intimation of the materials."

12. On behalf of the Department, it was submitted that once it is established that the ITO in question had no jurisdiction to pass the assessment order on the relevant date, that itself shall make the assessment order erroneous and prejudicial to the interests of the Revenue. According to Mr. Rajgarhia, in such cases, for the exercise of power under Sub-section (1) of Section 263 of the Act the Commissioner need not examine as to how that assessment order is erroneous on any other ground or it is prejudicial to the interests of the Revenue. In support of this contention, reliance was placed on a judgment of the Supreme Court in the case of Rampyari Devi Saraogi v. CIT [1968] 67 ITR 84. In that case. assessment had been made under the old Act, i. e., the Indian I.T. Act, 1922. Under the exercise of the power under Section 33B, which was a provision parallel to Section 263 of the present Act, the Commissioner had cancelled the said assessment order on the grounds that from the enquiries made it was revealed that the assessee concerned did not reside nor carried on any business at the place mentioned in the return. It was further pointed out by the Commissioner in that case that the ITO was not justified in accepting the initial capital, the gift received and the sale of jewelleries, the income from business, etc., without any enquiry or evidence whatsoever. A writ was filed against that cancellation order. That writ was dismissed by the High Court, taking the view that sufficient opportunity had been given to the assessee to show cause against the proposed order of cancellation, and there were materials on which the Commissioner could have proceeded under Section 33B. The Supreme Court, while affirming the order of the High Court, observed that the order of the Commissioner was a detailed order in which it had also been pointed out that the ITO who passed the assessment order had no jurisdiction over the assessee, because the assessee never resided nor carried on any business at the place mentioned in the return. The Supreme Court further approved the reason mentioned by the Commissioner as well as by the High Court for cancelling the assessment order in question, that the ITO without making any enquiry to satisfy himself regarding the declaration given by the assessee in respect of initial capital, ornaments and presents received at the time of marriage, other gifts received from her father-in-law and without making any enquiries to satisfy himself had passed the assessment order in question. It was also pointed out that the assessee had not produced any bank account or any proper books of account before the ITO; no evidence whatsoever was produced in respect of the money-lending business and the interest shown to have been received by the assessee; no names were given as to the parties to whom the loans were advanced, with amounts and rate of interest and as to when the interest income was received. On the basis of all the aforesaid reasons given by the Commissioner and the High Court, the Supreme Court approved the order passed under Section 33B aforesaid. According to Mr. Rajgarhia, this judgment should be read to lay down that no sooner it is found that an order of assessment has been passed by an ITO who had no jurisdiction over the assessee, that by itself shall amount to an erroneous order which is prejudicial to the interests of the Revenue. In my opinion, the Supreme Court never purported to lay down anything like that in the aforesaid case. The Supreme Court has clearly pointed out that not only the assessment order was without jurisdiction, but at the same time it had been passed without taking into consideration the relevant materials and in a hurry which was bound to be prejudicial to the interests of the Revenue.

13. Mr. Rajgarhia also placed reliance on another judgment of the Supreme Court in the case of Smt. Tara Devi Aggarwal v. CIT [1973] 88 ITR 323. In that case also it had been found that the ITO had no jurisdiction to make the order as it related to an area which was not within his jurisdiction. The High Court while considering the question as to whether the Commissioner could have exercised the power under Section 33B of the old Act, held that the order was erroneous and it was prejudicial to the interests of the Revenue. The main emphasis given by the High Court was on the fact that the ITO concerned had no jurisdiction to pass the assessment order in question. The Supreme Court while affirming the view of the High Court, gave other reasons as well. It will appear from p. 328 of the report that the Supreme Court observed as follows :

"Even where an income has not been earned and is not assessable, merely because the assessee wants it to be assessed in his or her hands in order to assist some one else who would have been assessed to a larger amount, an assessment so made can certainly be erroneous and prejudicial to the interests of the Revenue. If so--and we think it is so--the Commissioner under Section 33B has ample jurisdiction to cancel the assessment and may initiate proceedings for assessment under the provisions of the Act against some other assessee who according to the income-tax authorities is liable for the income thereof."

14. In my opinion, the Supreme Court in the said case did not hold the order of assessment erroneous and prejudicial to the interests of the Revenue merely on the ground that the ITO had no jurisdiction to make the order. The Supreme Court also pointed out that as the assessee in that case wanted to be assessed in order to assist someone else who would have been assessed to a larger amount, such assessment was certainly erroneous and prejudicial to the interests of the Revenue.

15. It is true that when a power has been vested under Section 124 in the Commissioner to direct different ITOs to perform their functions in respect of different areas or different classes of persons, they are bound by such directions. But, merely because there has been a contravention on that account, the power under Section 263(1) cannot be exercised by the Commissioner unless he is also satisfied that the assessment order in question is prejudicial to the interests of the Revenue. He has to point out, while cancelling such orders, on materials on record as to how the order is prejudicial to the interests of the Revenue.

16. Mr. Rajgarhia then submitted that on many occasions it may not be advisable while setting aside an assessment order to record categorical findings as to how it was prejudicial to the interests of the Revenue because that itself may prejudice the assessee when the matter is again heard by the ITO. It is true that while setting aside an order of assessment and directing a subordinate authority to reconsider the matter afresh, the appellate or revisional authority should not record conclusive findings on the questions involved, but at the same time it cannot be held that the orders passed by the subordinate authorities should be set aside without indicating the reasons, in exercise of the power which is circumscribed by the conditions mentioned in the very section. If in the instant case, the Commissioner had indicated some material on the basis of which he was satisfied that not only the order was without jurisdiction, but at the same time, it was prejudicial to the interests of the Revenue, there would have been no difficulty. In such a situation, I am left with no option but to answer the question in the affirmative and against the Department.

17. So far as the remaining three taxation cases, Taxation Case Nos. 29, 60 and 61 of 1974 are concerned, the orders of the Addl. Commissioner and the Tribunal are identical, the only difference being that they relate to the subsequent assessment years as mentioned above and the dates of the different orders are different. As such, identical questions framed in those cases are also-answered in the affirmative and against the Department.

18. There shall be no order as to costs.

Ashwini Kumar Sinha, J.

I agree.

Commissioner Of Income Tax v. Shantilal Agarwalla

Structured Summary of the Opinion (Taxation Cases Nos. 28, 29, 60 & 61 of 1974)

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Department's Arguments (as advanced by Mr. B. P. Rajgarhia)

Assessee's Arguments

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

Commissioner Of Income Tax v. Shantilal Agarwalla

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