Delhi High Court
Commissioner Of Income Tax vs Dhanpat Rai on 13 July, 2010
Author: Manmohan
7
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ ITA 837/2010
COMMISSIONER OF INCOME TAX ..... Appellant
Through: Ms. Prem Lata Bansal, Advocate
versus
DHANPAT RAI ..... Respondent
Through: Mr. Sanat Kapoor, Advocate
% Date of Decision: 13th July, 2010
CORAM:
HON'BLE THE CHIEF JUSTICE
HON'BLE MR. JUSTICE MANMOHAN
1. Whether the Reporters of local papers may be allowed to see the judgment?
2. To be referred to the Reporter or not? Yes
3. Whether the judgment should be reported in the Digest? Yes
MANMOHAN, J (Oral)
1. The present appeal has been filed under Section 260A of Income
Tax Act, 1961 (for brevity "Act 1961") challenging the order dated 24th
April, 2009 passed by the Income Tax Appellate Tribunal (in short
"ITAT"), for the assessment year 2006-2007.
2. Ms. Prem Lata Bansal, learned counsel for revenue stated that
ITAT erred in law in setting aside the order passed by the
Commissioner of Income Tax (Appeal) under Section 263 of Act, 1961
and restoring the assessment order passed by the Assessing Officer. In
this connection, Ms. Prem Lata Bansal, learned counsel for revenue
relied upon certain observations made by this Court in Gee Vee
Enterprises vs. Additional Commissioner of Income Tax, Delhi-I 99
ITR 375.
3. The ITAT in the impugned order has held as under:-
"12. In the present case, since the Ld. CIT has not
pointed out any error in the order of the AO but merely
directed to re-examine the issue, we hold that the Ld. CIT
was incorrect in terming the assessment order as
erroneous insofar as it is prejudicial to the interest of
Revenue. The AO having examined the matters and having
adopted the course which is legally permissible has not
committed any error. We, consequently, set aside the
impugned order passed by the Ld. CIT and restore that of
the AO."
4. In our opinion, Section 263 of the Act, 1961, does not visualize a
case of substitution of judgment by the Commissioner for that of the
Assessing Officer who passed the order. The Commissioner on perusal
of records may be of the opinion that the estimate made by the
Assessing Officer is on the lower side, but that would not vest the
Commissioner with the power to re-assess the accounts and determine
the income at a higher figure. This is because the Assessing Officer
exercises quasi judicial power vested in him in accordance with law and
arrives at a conclusion.
5. It is settled law that two conditions have to be fulfilled before the
Commissioner can invoke his power under Section 263 of the Act, 1961
namely, the order should be erroneous and further the assessing
officer's order should be prejudicial to the interest of Revenue. (Refer
to Malabar Industrial Co. Ltd. vs. Commissioner of Income Tax,
(2000) 243 ITR 83 (SC), CIT vs. Gabriel India Ltd., (1993)203 ITR
108 Bom.). Even in the case of Gee Vee Enterprises (supra), this Court
did not say that the aforesaid conditions precedent need not be fulfilled.
6. In the present case, we have perused the order passed by the
Commissioner of Income Tax ( Appeal) under Section 263 of the Act,
1961 and we find that in the said order the CIT(A) has neither found the
order passed by the assessing officer to be erroneous or prejudicial to
the interest of the revenue.
7. Consequently, as the two conditions for invoking jurisdiction
under Section 263 of the Act, 1961, are not made out, the CIT(A), in
our opinion, could not have exercised the said power. Accordingly, the
present petition being devoid of merits is dismissed in liminie but with
order as to costs.
MANMOHAN, J
CHIEF JUSTICE
JULY 13, 2010
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