Commissioner Of Income-Tax vs Sudershan Talkies
1992 Latest Caselaw 278 Del

JUDGMENT

1. These references are connected with Income-tax References Nos. 48-50 of 1975 (Addl. CIT v. Sudershan Talkies - see [1993] 200 ITR 153 (Delhi)), which have been disposed of by judgment delivered today. Briefly stated, the facts are that, in respect of assessment years 1967-68 to 1969-70, the Income-tax Officer passed assessment orders but did not levy any interest under section 217 nor initiate proceedings under section 273(b)of the Act because of the non-compliance by the assessed with the provisions of section 212 of the Act.

2. The Commissioner of Income-tax then exercised jurisdiction under section 263 and set aside the assessment order and directed the Income-tax Officer to charge interest under section 217 and also to initiate penalty proceedings under section 273(b) of the Act. The decision of the Commissioner of Income-tax was set aside by the Tribunal. The Tribunal upheld the decision of the Commissioner of Income-tax in so far as it related to the charging of interest under section 217. The Tribunal, however, set aside the order of the Commissioner of Income-tax which had directed the initiation of proceedings under section 273 against the assessed. Against that decision, reference applications were filed being Income-tax References Nos. 48-50 of 1975 (see [1993] 200 ITR 153) which have been decided in favor of the assessed.

3. Pursuant to the order passed by the Commissioner of Income-tax and setting aside of the assessment order, the Income-tax Officer, in respect of those very years, namely, 1967-68, 1968-69 and 1969-70 passed fresh assessment orders. Interest was sought to be charged under section 217 and show cause notice was also directed to be issued under section 273. Against this order, appeals were filed and it was held by the Appellate Assistant Commissioner that, because of the directions given by the Tribunal against the order passed under section 263, the assessments were no longer valid and were accordingly annulled. It was, however, directed that the Income-tax Officer can charge interest under section 217. The Tribunal, on further appeal, upheld the decision of the Appellate Assistant Commissioner. The Tribunal has referred the following question of law to this court :

"Whether, on the facts and circumstances of the case, the Tribunal was correct in holding that the question of charging interest under section 217 and levying penalty under section 273(b) were totally extraneous to the scope of the assessment order, and as such it could not be covered by recourse to section 263 of the Income-tax Act, inasmuch as it was neither prejudicial to the interests of the Revenue nor was it erroneous ?"

4. It is clear from our decision in Income-tax References Nos. 48 to 50 of 1975 (see [1993] 200 ITR 153) that the fresh assessment which was made by the Income-tax Officer was rightly annulled by the Appellate Assistant Commissioner. The decision of the Tribunal against the order passed under section 263 has been upheld by us in Income-tax References Nos. 48 to 50 of 1975 and as a consequence thereof, only interest can be charged but no proceedings under section 273 could be initiated. This has been reaffirmed by the Appellate Assistant Commissioner and the Tribunal in the present case. The question of law is, therefore, answered in favor of the assessed. There will be no order as to costs.