The Commissioner's show cause notice before revising my assessment was defective. Does that knock out his jurisdiction to revise at all?
No. The Supreme Court held that the revision section, unlike the reassessment section, prescribes no notice at all. It requires only that the Commissioner give the assessee an opportunity of being heard before he reaches his decision, not before he begins the enquiry. That requirement belongs to natural justice, not to jurisdiction. A breach of it may make the resulting order illegal, but it does not take away the Commissioner's power to proceed. Since no notice was a condition precedent, the question what the notice should have contained did not arise. The Calcutta High Court's contrary view was set aside.
Decided by the Supreme Court (Supreme Court of India; judgment delivered by K.S. Hegde J) on 1971-09-02, reported as (1971) 82 ITR 824; (1972) 1 SCR 589; 1972 Tax LR 1014; (1972) 1 SCJ 209; (1972) 1 ITJ 134. It bears on section 263, section 263(1), section 148 of the Income Tax Act 1961, in Revision & Rectification and Assessment & Scrutiny matters.
This is the decision that separates two arguments practitioners often run together in revision proceedings. The first is that the notice was bad, so there was no jurisdiction. The second is that the assessee was not properly heard, so the order is bad. The Court held that only the second is open under this section, because the section prescribes no notice for the Commissioner to get wrong. The contrast drawn with the reassessment section is the point of the case: there, service of the prescribed notice is a condition precedent to jurisdiction, and defects in it are fatal; in revision there is no such precondition. The Court expressly refrained from deciding what natural justice requires in a revision enquiry, so the case settles the jurisdictional question and leaves the fairness question open on the facts of each case.
Binding on every court and authority in India.
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The business was started by Baidyanath Gorai in 1949 and he was assessed as sole proprietor up to assessment year 1958-59. On 2 January 1958 he purported to enter into a partnership with his mother-in-law and son-in-law, taking 40 per cent of the profits and losses himself and giving them 30 per cent each. The Income-tax Officer registered the firm under section 26A of the 1922 Act for assessment year 1959-60 and renewed the registration for 1960-61. On examining the records the Commissioner considered those orders erroneous and prejudicial to the interests of the revenue, on the footing that there were prima facie grounds to hold the partnership was not genuine. He issued a notice dated 18 July 1962 setting out that view, proposing to cancel the registration orders under section 33B unless cause was shown, and fixing 3 August 1962 for hearing. The Tribunal held the notice was not one required by the Act, so its validity did not affect jurisdiction, and that in any event it was valid. On reference, the Calcutta High Court held the notice invalid and the Commissioner therefore without jurisdiction, and did not answer the two other referred questions.
The appeals brought by special leave were allowed. The answer given by the High Court was discharged and the question re-answered: the notice issued did not contravene section 33B and the Commissioner validly exercised his jurisdiction under that section. Section 33B, unlike section 34, prescribes no notice; the assumption of jurisdiction under it does not depend on any condition precedent. The Commissioner must give the assessee an opportunity of being heard and make such enquiry as he thinks necessary before reaching his decision, not before commencing the enquiry, and those requirements pertain to natural justice rather than jurisdiction. The question what the notice should have contained therefore did not arise. Because the High Court had not answered the other two referred questions, the cases went back to it for that purpose. The Court expressly declined to spell out what principles of natural justice a section 33B enquiry must observe, and did not consider whether the order actually made was vitiated. The companion appeals brought on certificates were dismissed as not maintainable, the certificates not being in accordance with law, with no order as to costs.
The Court read the section as it stands. Section 33B(1) empowers the Commissioner to call for and examine the record of any proceeding, and if he considers an order of the Income-tax Officer erroneous in so far as it is prejudicial to the interests of the revenue, to pass such order as the circumstances justify after giving the assessee an opportunity of being heard and after making such enquiry as he deems necessary. Nowhere does it speak of a notice. Section 34, by contrast, prescribes a notice, and service of that notice is a condition precedent to the assumption of jurisdiction to reassess. The High Court's error was to overlook that difference in language and to import the stricter requirement into the revision power. Once it is seen that no notice is prescribed, two consequences follow. First, jurisdiction under section 33B is not dependent on the fulfilment of any condition precedent, so nothing turns on the form or content of whatever notice the Commissioner chooses to issue. Second, the hearing requirement is located in time before the decision, not before the enquiry, and its source is the principle of natural justice. A breach of natural justice may affect the legality of the order made; it does not touch the Commissioner's jurisdiction to make one. The Court followed its own decision in Gita Devi Aggarwal, which had held that section 33B does not in express terms require a notice to be served as section 34 does, and that the stringent service requirement of section 34 cannot be applied to a section 33B proceeding.
Breach of the principles of natural justice may affect the legality of the order made but that does not affect the jurisdiction of the Commissioner.
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Handle my notice → Ask a CA on WhatsAppNo. The Supreme Court held that the revision section, unlike the reassessment section, prescribes no notice at all. It requires only that the Commissioner give the assessee an opportunity of being heard before he reaches his decision, not before he begins the enquiry. That requirement belongs to natural justice, not to jurisdiction. A breach of it may make the resulting order illegal, but it does not take away the Commissioner's power to proceed. Since no notice was a condition precedent, the question what the notice should have contained did not arise. The Calcutta High Court's contrary view was set aside. This was decided by the Supreme Court (Supreme Court of India; judgment delivered by K.S. Hegde J) and bears on section 263, section 263(1), section 148 of the Income Tax Act 1961. It is reported as (1971) 82 ITR 824; (1972) 1 SCR 589; 1972 Tax LR 1014; (1972) 1 SCJ 209; (1972) 1 ITJ 134. This is the decision that separates two arguments practitioners often run together in revision proceedings. The first is that the notice was bad, so there was no jurisdiction. The second is that the assessee was not properly heard, so the order is bad. The Court held that only the second is open under this section, because the section prescribes no notice for the Commissioner to get wrong. The contrast drawn with the reassessment section is the point of the case: there, service of the prescribed notice is a condition precedent to jurisdiction, and defects in it are fatal; in revision there is no such precondition. The Court expressly refrained from deciding what natural justice requires in a revision enquiry, so the case settles the jurisdictional question and leaves the fairness question open on the facts of each case. If it applies to you, the first step is this: Do not frame a challenge to a revision order as a jurisdictional attack on the notice; the section prescribes no notice, so a defect in it does not go to jurisdiction.
The business was started by Baidyanath Gorai in 1949 and he was assessed as sole proprietor up to assessment year 1958-59. On 2 January 1958 he purported to enter into a partnership with his mother-in-law and son-in-law, taking 40 per cent of the profits and losses himself and giving them 30 per cent each. The Income-tax Officer registered the firm under section 26A of the 1922 Act for assessment year 1959-60 and renewed the registration for 1960-61. On examining the records the Commissioner considered those orders erroneous and prejudicial to the interests of the revenue, on the footing that there were prima facie grounds to hold the partnership was not genuine. He issued a notice dated 18 July 1962 setting out that view, proposing to cancel the registration orders under section 33B unless cause was shown, and fixing 3 August 1962 for hearing. The Tribunal held the notice was not one required by the Act, so its validity did not affect jurisdiction, and that in any event it was valid. On reference, the Calcutta High Court held the notice invalid and the Commissioner therefore without jurisdiction, and did not answer the two other referred questions. The matter was decided on 1971-09-02 by the Supreme Court (Supreme Court of India; judgment delivered by K.S. Hegde J). On those facts the Supreme Court held as follows. The appeals brought by special leave were allowed. The answer given by the High Court was discharged and the question re-answered: the notice issued did not contravene section 33B and the Commissioner validly exercised his jurisdiction under that section. Section 33B, unlike section 34, prescribes no notice; the assumption of jurisdiction under it does not depend on any condition precedent. The Commissioner must give the assessee an opportunity of being heard and make such enquiry as he thinks necessary before reaching his decision, not before commencing the enquiry, and those requirements pertain to natural justice rather than jurisdiction. The question what the notice should have contained therefore did not arise. Because the High Court had not answered the other two referred questions, the cases went back to it for that purpose. The Court expressly declined to spell out what principles of natural justice a section 33B enquiry must observe, and did not consider whether the order actually made was vitiated. The companion appeals brought on certificates were dismissed as not maintainable, the certificates not being in accordance with law, with no order as to costs.
The Court read the section as it stands. Section 33B(1) empowers the Commissioner to call for and examine the record of any proceeding, and if he considers an order of the Income-tax Officer erroneous in so far as it is prejudicial to the interests of the revenue, to pass such order as the circumstances justify after giving the assessee an opportunity of being heard and after making such enquiry as he deems necessary. Nowhere does it speak of a notice. Section 34, by contrast, prescribes a notice, and service of that notice is a condition precedent to the assumption of jurisdiction to reassess. The High Court's error was to overlook that difference in language and to import the stricter requirement into the revision power. Once it is seen that no notice is prescribed, two consequences follow. First, jurisdiction under section 33B is not dependent on the fulfilment of any condition precedent, so nothing turns on the form or content of whatever notice the Commissioner chooses to issue. Second, the hearing requirement is located in time before the decision, not before the enquiry, and its source is the principle of natural justice. A breach of natural justice may affect the legality of the order made; it does not touch the Commissioner's jurisdiction to make one. The Court followed its own decision in Gita Devi Aggarwal, which had held that section 33B does not in express terms require a notice to be served as section 34 does, and that the stringent service requirement of section 34 cannot be applied to a section 33B proceeding. In the words reproduced by the source cited on this page: "Breach of the principles of natural justice may affect the legality of the order made but that does not affect the jurisdiction of the Commissioner."
It was decided by the Supreme Court on 1971-09-02 and is reported as (1971) 82 ITR 824; (1972) 1 SCR 589; 1972 Tax LR 1014; (1972) 1 SCJ 209; (1972) 1 ITJ 134. Binding on every court and authority in India. A Supreme Court decision binds every assessing officer, every Commissioner (Appeals), every bench of the Income Tax Appellate Tribunal and every High Court in India. An officer who declines to follow it is acting contrary to law, and that refusal is itself a ground of appeal. On section 263, section 263(1), section 148, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the department, and it appears in this library for that reason — you need to know what the Assessing Officer will cite against you. The appeals brought by special leave were allowed. The answer given by the High Court was discharged and the question re-answered: the notice issued did not contravene section 33B and the Commissioner validly exercised his jurisdiction under that section. Section 33B, unlike section 34, prescribes no notice; the assumption of jurisdiction under it does not depend on any condition precedent. The Commissioner must give the assessee an opportunity of being heard and make such enquiry as he thinks necessary before reaching his decision, not before commencing the enquiry, and those requirements pertain to natural justice rather than jurisdiction. The question what the notice should have contained therefore did not arise. Because the High Court had not answered the other two referred questions, the cases went back to it for that purpose. The Court expressly declined to spell out what principles of natural justice a section 33B enquiry must observe, and did not consider whether the order actually made was vitiated. The companion appeals brought on certificates were dismissed as not maintainable, the certificates not being in accordance with law, with no order as to costs. It arises in Revision & Rectification and Assessment & Scrutiny matters, on section 263, section 263(1), section 148 of the Income Tax Act 1961, and was decided by Supreme Court of India; judgment delivered by K.S. Hegde J. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Attack the order instead on natural justice: show what material the Commissioner used that was not put to you, what you were not told, and what you would have said. Record it in the reply at the time. Keep the reassessment analogy out of the argument. The Court held the High Court erred precisely by carrying the section 34 notice requirement across. Check that the show cause notice at least identifies the orders proposed to be revised, why they are said to be erroneous and prejudicial, and gives a date to be heard, and answer that case on the merits rather than resting on form.
Still good law. The source page records the decision as cited in more than sixty later cases and it is the standard authority for the proposition that a defective notice does not oust revisional jurisdiction. It construes section 33B of the 1922 Act, whose successor is section 263 of the 1961 Act, which likewise requires only an opportunity of being heard and prescribes no notice. Section 263 has since acquired Explanations, a limitation period and, for orders passed under the faceless scheme, a different procedure, none of which was before the Court. Its later history was not separately traced in this session. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The batch line gave the sections as 263, 263(1) and 148. The judgment decides section 33B of the Indian Income-tax Act, 1922, whose 1961 Act equivalent is section 263. Section 34 of the 1922 Act, the reassessment section whose 1961 equivalents are sections 147 and 148, is discussed only by way of contrast and is not decided. The harvested page carries a reporter's headnote above the judgment, which has been disregarded. The judgment as printed does not name the bench beyond the judge who delivered it. The text carries transcription errors, including the appeal numbers printed once as 1168 to 1471 of 1971 against 1168 to 1171 elsewhere. The Court did not decide whether the partnership was genuine, whether the registration was rightly cancelled, or what natural justice requires in a revision enquiry; those questions went back to the High Court. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The appeals brought by special leave were allowed. The answer given by the High Court was discharged and the question re-answered: the notice issued did not contravene section 33B and the Commissioner validly exercised his jurisdiction under that section. Section 33B, unlike section 34, prescribes no notice; the assumption of jurisdiction under it does not depend on any condition precedent. The Commissioner must give the assessee an opportunity of being heard and make such enquiry as he thinks necessary before reaching his decision, not before commencing the enquiry, and those requirements pertain to natural justice rather than jurisdiction. The question what the notice should have contained therefore did not arise. Because the High Court had not answered the other two referred questions, the cases went back to it for that purpose. The Court expressly declined to spell out what principles of natural justice a section 33B enquiry must observe, and did not consider whether the order actually made was vitiated. The companion appeals brought on certificates were dismissed as not maintainable, the certificates not being in accordance with law, with no order as to costs.
Every entry in this library links to where it was found, so you can check it yourself rather than take our word for it.
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