The Commissioner set aside my assessments in revision relying on enquiries he never showed me. Is his order bad for want of a fair opportunity?
No, on these facts. The Supreme Court dismissed the appeal. The Commissioner had used material from his own enquiries which was never put to the assessee, but the Court held that this was supporting material and not the basic ground of the order. On the face of the record the assessments were prejudicial to the revenue: a new assessee had filed nine years' voluntary returns at once, her own declaration about initial capital, marriage ornaments and gifts should have put any officer on his guard, no books or bank account existed, and short stereotyped orders followed within days without any enquiry.
Decided by the Supreme Court (Supreme Court of India - J.C. Shah and S.M. Sikri, JJ (judgment delivered by Sikri, J)) on 1967-05-01, reported as (1968) 67 ITR 84 (SC). It bears on section 33B of the Indian Income-tax Act, 1922, section 263 of the Income Tax Act 1961, in Revision & Rectification matters.
This is the case cited for two things a practitioner meets constantly. First, that an assessment made without the enquiry the material called for is erroneous and prejudicial to the interests of the revenue, so that revision lies - which is the proposition the Department leans on in almost every revision notice. Second, that a defect in the opportunity given at the revision stage may not vitiate the order, because setting aside an assessment for a fresh assessment leaves the assessee free to make his whole case to the officer, including on jurisdiction and on the correctness of the income assessed. The Court also noted, pointedly, that the assessee had not appealed to the Tribunal and could have taken the want-of-opportunity ground there while pursuing the constitutional point elsewhere.
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The assessee was a new assessee who filed voluntary returns for nine assessment years, 1952-53 to 1960-61, at one time. The return for 1953-54 was undated; those for 1952-53 and 1954-55 to 1957-58 were dated 21 March 1961 and those for 1958-59 to 1960-61 were dated 26 April 1961. On 21 March 1961 she made a declaration about her initial capital, ornaments and presents received at marriage and other gifts from her father-in-law. The Income-tax Officer, D Ward, Howrah, passed short stereotyped assessment orders on 30 March 1961 for the first six years and on 26 April 1961 for the last three, without enquiry; no bank account or proper books were maintained or produced. In the sample order reproduced by the Commissioner, speculation profit of Rs 3,085 and interest of Rs 600 were shown, with Rs 500 added for want of books, and no evidence at all was produced about the money-lending business, the parties to whom loans were advanced, the amounts, the rates or the receipt of interest. On 8 March 1963 the Commissioner issued a notice under section 33B saying the orders were erroneous and prejudicial to the revenue because enquiries had revealed she neither resided nor carried on business at the declared address, and because the officer had accepted the initial capital, the gift, the sale of jewellery and the business income without any enquiry or evidence. The hearing was fixed for 15 March 1963 with no adjournment. Her consultant replied that the notice was vague and that she could not produce evidence without copies of the enquiries. She appeared on 15 March 1963 and the Commissioner passed his order that day, cancelling the assessments and directing fresh assessments after proper enquiry into jurisdiction, the carrying on of business, the initial capital, the gifts and the sources of the moneys invested in her name. Her writ petition failed before a single judge and a Division Bench of the Calcutta High Court.
The appeal was dismissed with costs. On jurisdiction, the Court followed its judgment delivered the same day in Kalawati Devi Harlalka and held the Commissioner had jurisdiction under section 33B to revise the assessments for 1952-53 to 1960-61. On the additional point, the High Court was right to reject the complaint of want of opportunity. The Commissioner's order was a detailed one and did mention facts never communicated to the assessee - that the Income-tax Officer had no jurisdiction over her, that local enquiries showed she never resided or carried on business at the declared address, that her father-in-law and his sons carried on a foodgrains business and owned a rice factory elsewhere, and that her name had been given in reverse order so as to fall within the alphabetical jurisdiction of the particular officer. But all of that was supporting material and did not constitute the basic grounds of the order. There was ample material to show the assessments had been made in undue hurry. On the face of the record the orders were prejudicial to the interests of the revenue, and even if the results of the enquiries had been indicated to the assessee the result would have been the same.
The Court separated the grounds of the revision from the material used to support them. The grounds - that the officer had accepted the initial capital, the gifts, the sale of jewellery and the business income without enquiry or evidence - were stated in the notice and were made out by the record itself: nine years of returns from a new assessee, a declaration that should have put any officer on his guard, no books and no bank account, and stereotyped orders passed within nine days of the first batch of returns. The material about jurisdiction and the reversed name went to explain how this had come about, but the order did not stand or fall by it. From that the Court drew the conclusion on prejudice: the assessee had suffered nothing from not being shown the enquiry results, because the outcome would have been the same. It added a second answer on prejudice. The order did not decide anything against her on the merits; it directed fresh assessments, in which she would have full opportunity to show whether the officer had jurisdiction and whether the income originally assessed was correct. Finally the Court observed that she had not appealed to the Tribunal, and rejected the explanation that she could not pursue two remedies concurrently, holding there was nothing to prevent an appeal confined to the question of opportunity.
on the face of the record the orders were prejudicial to the interest of the revenue
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Handle my notice → Ask a CA on WhatsAppNo, on these facts. The Supreme Court dismissed the appeal. The Commissioner had used material from his own enquiries which was never put to the assessee, but the Court held that this was supporting material and not the basic ground of the order. On the face of the record the assessments were prejudicial to the revenue: a new assessee had filed nine years' voluntary returns at once, her own declaration about initial capital, marriage ornaments and gifts should have put any officer on his guard, no books or bank account existed, and short stereotyped orders followed within days without any enquiry. This was decided by the Supreme Court (Supreme Court of India - J.C. Shah and S.M. Sikri, JJ (judgment delivered by Sikri, J)) and bears on section 33B of the Indian Income-tax Act, 1922, section 263 of the Income Tax Act 1961. It is reported as (1968) 67 ITR 84 (SC). This is the case cited for two things a practitioner meets constantly. First, that an assessment made without the enquiry the material called for is erroneous and prejudicial to the interests of the revenue, so that revision lies - which is the proposition the Department leans on in almost every revision notice. Second, that a defect in the opportunity given at the revision stage may not vitiate the order, because setting aside an assessment for a fresh assessment leaves the assessee free to make his whole case to the officer, including on jurisdiction and on the correctness of the income assessed. The Court also noted, pointedly, that the assessee had not appealed to the Tribunal and could have taken the want-of-opportunity ground there while pursuing the constitutional point elsewhere. If it applies to you, the first step is this: Answer a revision notice on the merits, not only on its vagueness; the assessee here objected that the notice was vague and produced nothing, and the Court held the record alone made out the case against her.
The assessee was a new assessee who filed voluntary returns for nine assessment years, 1952-53 to 1960-61, at one time. The return for 1953-54 was undated; those for 1952-53 and 1954-55 to 1957-58 were dated 21 March 1961 and those for 1958-59 to 1960-61 were dated 26 April 1961. On 21 March 1961 she made a declaration about her initial capital, ornaments and presents received at marriage and other gifts from her father-in-law. The Income-tax Officer, D Ward, Howrah, passed short stereotyped assessment orders on 30 March 1961 for the first six years and on 26 April 1961 for the last three, without enquiry; no bank account or proper books were maintained or produced. In the sample order reproduced by the Commissioner, speculation profit of Rs 3,085 and interest of Rs 600 were shown, with Rs 500 added for want of books, and no evidence at all was produced about the money-lending business, the parties to whom loans were advanced, the amounts, the rates or the receipt of interest. On 8 March 1963 the Commissioner issued a notice under section 33B saying the orders were erroneous and prejudicial to the revenue because enquiries had revealed she neither resided nor carried on business at the declared address, and because the officer had accepted the initial capital, the gift, the sale of jewellery and the business income without any enquiry or evidence. The hearing was fixed for 15 March 1963 with no adjournment. Her consultant replied that the notice was vague and that she could not produce evidence without copies of the enquiries. She appeared on 15 March 1963 and the Commissioner passed his order that day, cancelling the assessments and directing fresh assessments after proper enquiry into jurisdiction, the carrying on of business, the initial capital, the gifts and the sources of the moneys invested in her name. Her writ petition failed before a single judge and a Division Bench of the Calcutta High Court. The matter was decided on 1967-05-01 by the Supreme Court (Supreme Court of India - J.C. Shah and S.M. Sikri, JJ (judgment delivered by Sikri, J)). On those facts the Supreme Court held as follows. The appeal was dismissed with costs. On jurisdiction, the Court followed its judgment delivered the same day in Kalawati Devi Harlalka and held the Commissioner had jurisdiction under section 33B to revise the assessments for 1952-53 to 1960-61. On the additional point, the High Court was right to reject the complaint of want of opportunity. The Commissioner's order was a detailed one and did mention facts never communicated to the assessee - that the Income-tax Officer had no jurisdiction over her, that local enquiries showed she never resided or carried on business at the declared address, that her father-in-law and his sons carried on a foodgrains business and owned a rice factory elsewhere, and that her name had been given in reverse order so as to fall within the alphabetical jurisdiction of the particular officer. But all of that was supporting material and did not constitute the basic grounds of the order. There was ample material to show the assessments had been made in undue hurry. On the face of the record the orders were prejudicial to the interests of the revenue, and even if the results of the enquiries had been indicated to the assessee the result would have been the same.
The Court separated the grounds of the revision from the material used to support them. The grounds - that the officer had accepted the initial capital, the gifts, the sale of jewellery and the business income without enquiry or evidence - were stated in the notice and were made out by the record itself: nine years of returns from a new assessee, a declaration that should have put any officer on his guard, no books and no bank account, and stereotyped orders passed within nine days of the first batch of returns. The material about jurisdiction and the reversed name went to explain how this had come about, but the order did not stand or fall by it. From that the Court drew the conclusion on prejudice: the assessee had suffered nothing from not being shown the enquiry results, because the outcome would have been the same. It added a second answer on prejudice. The order did not decide anything against her on the merits; it directed fresh assessments, in which she would have full opportunity to show whether the officer had jurisdiction and whether the income originally assessed was correct. Finally the Court observed that she had not appealed to the Tribunal, and rejected the explanation that she could not pursue two remedies concurrently, holding there was nothing to prevent an appeal confined to the question of opportunity. In the words reproduced by the source cited on this page: "on the face of the record the orders were prejudicial to the interest of the revenue"
It was decided by the Supreme Court on 1967-05-01 and is reported as (1968) 67 ITR 84 (SC). 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 33B of the Indian Income-tax Act, 1922, section 263, 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 appeal was dismissed with costs. On jurisdiction, the Court followed its judgment delivered the same day in Kalawati Devi Harlalka and held the Commissioner had jurisdiction under section 33B to revise the assessments for 1952-53 to 1960-61. On the additional point, the High Court was right to reject the complaint of want of opportunity. The Commissioner's order was a detailed one and did mention facts never communicated to the assessee - that the Income-tax Officer had no jurisdiction over her, that local enquiries showed she never resided or carried on business at the declared address, that her father-in-law and his sons carried on a foodgrains business and owned a rice factory elsewhere, and that her name had been given in reverse order so as to fall within the alphabetical jurisdiction of the particular officer. But all of that was supporting material and did not constitute the basic grounds of the order. There was ample material to show the assessments had been made in undue hurry. On the face of the record the orders were prejudicial to the interests of the revenue, and even if the results of the enquiries had been indicated to the assessee the result would have been the same. It arises in Revision & Rectification matters, on section 33B of the Indian Income-tax Act, 1922, section 263 of the Income Tax Act 1961, and was decided by Supreme Court of India - J.C. Shah and S.M. Sikri, JJ (judgment delivered by Sikri, 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. Where the Commissioner relies on his own enquiries, ask for their results in writing - but be ready to show that the outcome would have been different had you seen them, because that is what carried the day against the assessee here. Appeal to the Tribunal against a revision order even if you are also moving the High Court; the Court held there was nothing to prevent an appeal confined to the opportunity point. On the assessment side, make the enquiry visible on the record - source of capital, gifts, jewellery, names and amounts of loans and interest - because a stereotyped order passed within days of the return invites revision.
Still good law. One of the most cited decisions on revision; the harvested page records it as cited in over four hundred later decisions. No later decision doubting it was read as part of this exercise. Section 263 of the 1961 Act, which corresponds to section 33B, has since acquired Explanations dealing expressly with orders passed without enquiries or verification; those were not before the Court. 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.
Decided under section 33B of the Indian Income-tax Act, 1922; the batch line's section 263 of the 1961 Act is the corresponding provision but was not construed, and its later Explanations did not exist. The jurisdiction question was not decided here at all - it was governed by Kalawati Devi Harlalka, delivered the same day and not read as part of this exercise. The Court did not decide whether the Income-tax Officer in fact lacked jurisdiction, nor whether the assessee's income was correctly assessed; both were expressly left to the fresh assessments. Nor does the judgment lay down when a failure to disclose the Commissioner's material would vitiate a revision order; it holds only that on these facts the result would have been the same. The harvested page carries no headnote. 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 appeal was dismissed with costs. On jurisdiction, the Court followed its judgment delivered the same day in Kalawati Devi Harlalka and held the Commissioner had jurisdiction under section 33B to revise the assessments for 1952-53 to 1960-61. On the additional point, the High Court was right to reject the complaint of want of opportunity. The Commissioner's order was a detailed one and did mention facts never communicated to the assessee - that the Income-tax Officer had no jurisdiction over her, that local enquiries showed she never resided or carried on business at the declared address, that her father-in-law and his sons carried on a foodgrains business and owned a rice factory elsewhere, and that her name had been given in reverse order so as to fall within the alphabetical jurisdiction of the particular officer. But all of that was supporting material and did not constitute the basic grounds of the order. There was ample material to show the assessments had been made in undue hurry. On the face of the record the orders were prejudicial to the interests of the revenue, and even if the results of the enquiries had been indicated to the assessee the result would have been the same.
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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