LexCOMMISSIONER OF INCOME TAX, SHIMLA versus M/S. GREENWORLD CORPORATION, PARWANOO
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~ [2009] 8 S.C.R. 175 , / COMMISSIONER OF INCOME TAX, SHIMLA A v. MIS. GREENWORLD. CORPORATION, PARWANOO (Civil Appeal No. 3312 of 2009) MAY 6, 2009 B [S.B. SINHA AND DR. MUKUNDAKAM SHARMA, JJ.] Income Tax Act, 1961: Sections 148, 149, 253 and 263 - Jurisdiction under c Section 263 - Power to exercise of suo motu of revision is in the nature of supervisory jurisdiction when the order is erroneous, or by such erroneous order prejudice has been caused to the interest of Revenue - Not otherwise - In the instant case the order under s.263 and consequential notice D under·s.148 not maintainable - However, on the facts of the case, in order to do complete justice between the parties assessment directed to be reopened - Constitution of India, Article 142. Constitution of India, 1950: E Article 136 - Jurisdiction under - In the event an appropriate case is made out, Supreme Court may either refuse to exercise its discretionary jurisdiction or quash both the order if it is found that setting aside of the illegal order F would give rise to another illegality. In these appeals, the principal question that arose for consideration was as.to whether the order of assessment was passed at the instance of higher authority. G Disposing of the appeals, the Court HELD: 1. An Income Tax Officer while passing an order of assessment performs judicial function. An 175 H 176 SUPREME COURT REPORTS [2009] 8 S.C.R. A appeal lies against his order before the Appellate Authority. A Revision Application would also lie before the Commissioner of Income Tax. It is trite that the jurisdiction exercised by the Revisional Authority B pertains to his Appellate jurisdiction. [Para 20] [197-G-HJ Shankar Ramchandra Abhyankar vs. Krishnaji Dattatraya Bapat AIR (1970) SC 1 relied on. 2. Considering the jurisdiction of the Commissioner of Income-tax to issue notice in terms of Section 263 of C the Income Tax Act, 1961, it is noticed that it provides for a revisional power. It has its own limitations. An order can be interfered suo motu by the said authority not only when an order passed by the Assessing Officer is erroneous but also when it is prejudici<1I to the interests of the D Revenue. Both the conditions precedent for exercising the jurisdiction under Section 263 of the Act are conjunctive and not disjunctive. [Para 23] [201-D-FJ 2.2. An order of assessment passed by an lncome- E tax Officer, therefore, should not be interfered with only because another view is possible. The Commissioner of Income-tax, however, has specified a number of reasons in support of its order, namely, (1) on non-fulfillment of pre-requisite conditions for deduction under Section 80- IA/80-18 - it was held that the activities of the assessee F do not amount to manufacturing; (2) little consumption of electricity and thus manufacturing is without the aid of power; (3) non-employment of requisite workers in manufacturing process; (4) non-fulfillment of the condition of new plant and machinery; (5) extra-ordinary G high profits; (6) abrupt closure of business; (7) no reason for more than ordinary profits; (8) books of accounts incomplete and unreliable; (9) the manufacturing units at Parwanoo were not genuinely run; (10) high profits have H • ·I COMMNR. OF INCOME TAX, SHIMLA v. GREENWORLD 177 CORP. PARWANOO been declared. [Para 24] (201-G-H; 202-A-B] 3.1. The scope of provisions of Section 263 of the Act is no longer res integra. The power to exercise of suo motu of revision in terms of Section 263(1) is in the nature of supervisory jurisdiction and same can be exercised only if the circumstances specified therein, viz., (1) the order is erroneous; (2) by virtue of the order being erroneous prejudice has been caused to the interest of the revenue, exist. [Para 29] (208-A-B] 3.2. It is beyond any doubt or dispute that only in terms of the directions issued by the Commissioner dated 12.7.2004 under Section 263 of the Act, notices under Section 148 of the Act were issued. [Para 29] [209-G-H; 210-A] 3.3. Indisputably, CIT (Shimla) had no jurisdiction to issue directions. Notices issued pursuant thereto would be bad in law. [Para 30] [210-A] Malabar Industrial Co. Ltd. vs. CIT 243 ITR 83 (SC) : (2000) 2 SCC 718; Commissioner of Income-Tax vs. Max India Ltd. (2007) 295 ITR 28~ (SC); Income-Tax Officer, A- Ward, Sitapur vs. Murlidhar Bhagwan Das 52 ITR 335 (SC); S.C. Prashar vs. Vasantsen D
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