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National Agricultural Co-operative Marketing Federation Ltd. Vs. Central Board of Direct Taxes and ors. - Court Judgment

SooperKanoon Citation
SubjectDirect Taxation
CourtDelhi High Court
Decided On
Case NumberCivil Writ Appeal No. 51 of 1971
Judge
Reported inILR1971Delhi727; [1972]84ITR376(Delhi)
ActsIncome tax Act, 1961 - Sections 263
AppellantNational Agricultural Co-operative Marketing Federation Ltd.
RespondentCentral Board of Direct Taxes and ors.
Advocates: N.D. Karkhami,; H.K. Puri,; G.C. Sharma,;
Cases ReferredGuru Daft v. Sohan Singh
Excerpt:
income-tax act (1961) - section 263 --notice under --issued by additional commissioner of income-tax --validity of.; where it was contended that the notice dated 16-9-1970 issued by an additional commissioner of income-tax to the petitioner revising an order dated 23-12-1969 made by the income-tax officer district vi(6) in purported exercise of the power of the additional commissioner under section 263 of the income-tax act, 1961, was invalid, inasmuch as such an order could only be made by the commissioner and not by the additional commissioner of income-tax :; that in the present case, the additional commissioner of income-tax having been designated as an authority under the income-tax act, 1961 having concurrent jurisdiction with the commissioner of income-tax and having been..........the statute. (19) it was said that although under section 10(2) criminal procedure code, the addl. district magistrate was invested with all the powers of a district magistrate he was not district magistrate in law for he was below in rank. an other of detention made by him under rule 30(1)(b) of the defense of india rules was thereforee without authority. (20) an examination of that case however shows that section 3(1) of the defense of india act gave power to the central government by a notification in the official gazette to make such rules as appeared to it necessary or expedient for securing the defense of india and several other matters. section 3(2) provided for the making of rules for various purposes without prejudice to the generality of the power conferred by section 3(1). the.....
Judgment:

Hardayal Hardy, J.

(1) The only question raised in this petition under Article 226 of the Constitution is with respect to the notice dated 16-9-1970 issued by an Additional Commissioner of Income-tax to the petitioner revising an order dated 23-12-1969 made by the Income-tax Officer District Vi (6) in purported exercise of the power of the Additional Commissioner under Section 263 of the Income-tax Act, 1961.

(2) The contention urged on behalf of the petitioner is that such an order could only be made by the Commissioner and not by the Additional Commissioner of Income-tax. It appears that before the Finance Act of 1970 was passed by Parliament there were the following classes of Income-

(A)the Central Board of Direct Taxes constituted under the Central Boards of Revenue Act, 1963, (b) Directors of Inspection, (c) Commissioners of Income-tax, (d) Assistant Commissioner of Income-tax, who may be either Appellate Assistant Commissioners of Income-tax or Inspecting Assistant Commissioners of Income-tax, (e) Income-tax Officers, and (f) Inspectors of Income-tax.

(3) By that Act Section 116 was amended by the substitution of the following clause for (c). namely;-

'(C)Commissioners of Income-tax and Additional Commissioners of Income-tax.'

(4) Section 117 was also amended by the insertion of the words 'Additional Commissioners of Income-tax' after the words 'Directors of Inspection, Commissioners of Income-tax' in sub-section (1). In place of S. 130 the following new section was ordered to be substituted, namely :- '130. Commissioner competent to perform any functions-

(1)In respect of any function to be performed by Commissioner under any provision of this Act in relation to an assessed, the Commissioner referred to therein shall-(a) in a case where only one Commissioner has jurisdiction over such assesseds, be such Commissioner; (b) in a case where two or more Commissioners have concurrent jurisdiction over such assessed, be the commissioner empowered to perform such function by the Board. (2) Subject to the provisions of sub-section (1) for the purposes of sections 253, 254, 256, 263 and 264, the Commissioner referred to therein shall, in relation to an assessed, be the Commissioner having for the time being jurisdiction over the assessed.'

(5) The petitioner is a co-operative society and its members are themselves co-operative societies at the state levels. For the assessment year 1965-66 (accounting period 1-7-1963 to 30-6-1964) the petitioner submitted under Section 139 of the Income-tax Act, 1961 a return of its total income. In the return filed by the petitioner, in Part I of section of the return it claimed exemption of business profits amounting to Rs. 6,16,213/8 under the provisions of Section 81(1)(c) and Section 83 of. the Income-tax Act. 1961, The petitioner also furnished statements of profit and loss, balance sheet etc. along with the return. It also produced all account books before the Income-tax Officer and claimed exemption from tax. The Income-tax Officer accepted the claim and made no assessment by his order dated 23-12-1969.

(6) By a letter dated 22-6-1970 the Income-tax Officer made certain inquiries and called upon the petitioner to state the nature and details of the imports made during the accounting year relevant to the assessment year 1965-66 with break up of sales of each commodity and also asked for details regarding the sale of agricultural produce made by the members of the Society who were engaged in agricultural operations. It was also stated in that letter that the provisions of Section 81(1)(c) or Section 83 could not be invoked to claim exemption.

(7) By letter dated 20-7-1970 the petitioner reiterated the facts and claimed that the entire income was exempt from Income-tax. Jurisdiction of the Income-tax Officer to make any inquiry was also challenged on the ground that the assessment had become final and no revision or re-assessment could be made by mere change of opinion. It was also pointed out that the Income-tax Officer had no jurisdiction as the period of limitation run out.

(8) On 16-9-1970 the Additional Commissioner of Income-tax Delhi-11 issued a notice to the petitioner staling that the assessment order made by the Income-tax Officer was in his opinion prejudicial to the Revenue and he proposed to revise the same. The petitioner was also given an opportunity to be beared in person or through a representative duly authorised on its behalf. In reply to that notice the petitioner stated that the Additional Commissioner of Income-tax Dehi-II had no jurisdiction to issue the said notice. According to the petitioner, the exercise of such drastic powers could only be by the Commissioner of Income-tax and none else. It was also stated that the Income-tax Officer had also proposed to re-open the assessment on the ground that the income had escaped tax. Such simultaneous action by the authorities amounted to double jeopardy which was repugnant to the rules of natural justice. There was subsequent correspondence between the petitioner and the Additional Commissioner of Income-tax Delhi-11 whereby the Commissioner was asked to withdraw the notice.

(9) The Additional Commissioner having declined to withdraw the notice, the present petition has been filed by the petitioner for a direction that the notice issued by the Additional Commissioner of Income-tax under Section 263 of the Income-tax Act, 1961 should be quashed and that the said respondent be prohibited from proceeding under that section.

(10) On behalf of the respondents an affidavit has been filed by Shri S. S. Seth, Additional Commissioner of Income-tax Delhi-11 wherein the main defense taken by the respondents is that by the amendments made by the Finance Act 1970 concurrent jurisdiction has been conferred on the Additional Commissioner of Income-tax along with the Commissioner of Income-tax inter alia, in respect of the powers which were previously conferred on the Commissioner of Income-tax under Section 263 and 264 of the Income-tax Act, 1961.

(11) It is stated that the said amendments were made by the Finance Act 1970 as urgent necessity was felt for strengthening the machinery of the Income-tax department. By the said amendments the Income-tax Act was suitably amended with a view to enabling the Additional Commissioners of Income-tax to perform various statutory functions. The conferment of jurisdiction in the matter of revision under Sections 263 and 264 of the Act, was one such function. Forty Additional Commissioners of Income-tax were appointed with the powers conferred on them by notification No. S.O. 2162, dated May 29, 1970 issued by the Central Board of Direct Taxes.

(12) For the quarter ending September 1970, the number of revision petitions under Section 264 disposed of by 22 Additional Commissioners of Income-tax was 3664 and the Additional Commissioners of Income-tax also passed a large number of orders under Section 263 as well. A claim has also been made in the said affidavit that the Addl. Commissioners have been appointed as Heads of departments and are not subordinate to the Commissioner of Income-tax.

(13) The question that falls for determination is whether the power of revision under Sections 263 and 264 of the Income-tax Act, 1961 is one of the powers which the Addl. Commissioner of Income-tax is required to exercise concurrently with the Commissioner of Income-tax and whether that power has been validly conferred on the said authority.

(14) We have already said that by the amendment of sections 116 and 117 and by the insertion of a new section 130, the post of an Additional Commissioner of Income-tax has been newly created. The post of Additional Commissioner of Income-tax has been placed in clause (c) of Section 116. He has thereforee been placed in the same category with the post of Commissioner of Income-tax. In Section 117 the post of Additional Commissioner of Income-tax has been inter-posed between the posts of Directors of Inspection and Appellate or Inspecting Assistant Commissioners of Income-tax along with the Commissioners of Income-tax. The effect of amendment of these sections is that the Additional Commissioner of Income-tax is an authority in the same class with the Commissioner of Income-tax in Sections 116 and 117. Section 130 consists of two sub-sections. Clause (a) of sub-section (1) provides that in a case where only one Commissioner has jurisdiction over an assessed, the function to be performed by the Commissioner will be by that Commissioner. Clause (b) provides that in a case where two or more Commissioners have concurrent iurisdiction over such assessed it shall be the Commissioner empowered to perform such functions by the Board. The word 'Commissioner' here obviously includes the Additional Commissioner.

(15) SUB-SECTION (2) lays down that subject to the provisions of sub-section (1) for the purposes of sections 253, 254, 256, 263 and 264 the Commissioner referred to therein shall, in relation to an assessed, be the Commissioner having for the time being jurisdiction over the assessed. If the assessed thereforee is subject to jurisdiction of two or more Commissioners who have concurrent jurisdiction over him, it is the Commissioner who for the time being has jurisdiction over the assessed that shall have jurisdiction to hear the matters that come within the purview of Sections 253, 254, 256, 263 and 264.

(16) The jurisdiction of Commissioners is laid down by section 121 of the Income-tax Act. Sub-section (1) of that section states that the Commissioners shall perform their functions in respect of such areas or of such persons or classes of persons or of such income or of such cases or classes of cases as the Board may direct. By notification No. S.O. 2162, dated May 29, 1970 the Central Board of Direct Taxes, in exercise of its powers under sub-section (1) of Section 121 of the Income-tax Act, 1961 directed that the Additional Commissioners of Income-tax and Additional Commissioners of Income-tax (recovery) specified in column 3 of Annexure A appointed by the said notification, will have concurrent jurisdiction along with Commissioners of Income-tax specified in column 2 of Annexure A and will perform all or any of the functions performed by the respective Commissioners of Income-tax in respect of jurisdiction vested in them under the Board's notifications issued from time to time.

(17) In the present case we are not concerned with the Additional Commissioners of Income-tax (recovery) nor are we concerned with the Additional Commissioners of Income-tax for other areas in India. Under Seriall No. 9, the Additional Commissioner of Income-tax Delhi-11, New Delhi has been given concurrent jurisdiction with the Commissioner of Income-tax Delhi-11 New Delhi just as the Additional Commissioner of Income-tax Delhi-1. New Delhi has been given concurrent jurisdiction with the Commissioner of Income-tax Delhi-1, New Delhi under Seriall No. 8. The Additional Commissioner of Income-tax Delhi-11 has thereforee the same powers as the Commissioner of Income-tax Delhi Ii in matters inter alia, relating to revision under Section 263 and Section 264 of the Income-tax Act.

(18) Counsel far the petitioner referred us to a decision of the Supreme Court in Ajaib Singh v. Gurbachan and others AIR 1965 Sc 1619 and stated that the word Commissioner in Section 263 of the Income-tax Act, 1961 was person a designata and the notification issued by the Central Board of Direct-Taxes could not thereforee enable the Addl. Commissioners of Income-tax to perform statutory functions of the Commissioner of Income-tax under Section 263. Where the power is to be exercised by the Commissioner of Income-tax as persona designata the Additional Commissioner of Income-tax though he may exercise all the powers of a Commissioner cannot perform the functions which are specifically allotted to him by the statute.

(19) It was said that although under Section 10(2) Criminal Procedure Code, the Addl. District Magistrate was invested with all the powers of a District Magistrate he was not District Magistrate in law for he was below in rank. An other of detention made by him under rule 30(1)(b) of the defense of India Rules was thereforee without authority.

(20) An examination of that case however shows that Section 3(1) of the defense of India Act gave power to the Central Government by a notification in the official Gazette to make such rules as appeared to it necessary or expedient for securing the defense of India and several other matters. Section 3(2) provided for the making of rules for various purposes without prejudice to the generality of the power conferred by Section 3(1). The relevant portion of the 15th clause which provided for detention laid down that the authority empowered to detain was in no case lower in rank than that of a District Magistrate. The source of power under Section 3(2) read with clause (15)(1) thereforee was that the authority empowered to detain shall not be lower in rank than that of District Magistrate. An Additional District Magistrate was admittedly an authority lower in rank than the District Magistrate. Sh. Lal Singh who was Additional District Magistrate Amritsar in that case was no doubt invested with all the powers of District Magistrate under the code. He also carried on the duties of the office of the District Magistrate, but at the same time no other officer was posted as District Magistrate nor was there any order under Section 10(1) of the Code appointing Shri Lal Singh as District Magistrate of Amritsar. In the absence of an order under Section 10(1) appointing Shri Lal Singh as District Magistrate of Arnritsar he could not be the District Magistrate of Arnritsar for the purposes of passing an order of detention under the Rules and the Act whatever might be his powers to carry on the administration of the district.

(21) In the present case, the Additional Commissioner of Income-tax having been designated as an authority under the Income-tax Act, 1961 having concurrent jurisdiction with the Commissioner of Income-tax and having been appointed as such by the order of the Board there can be no question of want of authority in his case as an Addl. Commissioner of Income-tax. He was equal in rank to the Commissioner of Income-tax and had all the powers and functions which had been assigned to him under the Board's notification No. S.O. 2162 dated May 29, 1970, the revisionery powers under Sections 263 and 264 being one of those powers.

(22) The next case to which our attention was invited by the counsel for the petitioner is a Bench decision of Punjab High Court in Guru Daft v. Sohan Singh (1964 Plr 111 6). This was a case of an election petition under Section 121 of the Punjab Panchayat Samities and Zila Parishads Act. The petition had to be presented to the Deputy Commissioner within whose jurisdiction the Panchayat or Zila Parishad was situated as. per rule 4 of the relevant Election Rules. It was held that the Deputy Commissioner alone was competent to deal with the petition and that he being a persona designata the petition could not be transferred to or disposed of by an Addl. Deputy Commissioner.

(23) The ratio of the decision is that the Deputy Commissioner being a persona designata alone could perform the functions which the statute and the rules made there under had conferred on him. The order of the Governor declaring the ex-cadre posts of Additional Deputy Commissioners to be equivalent in status and responsibility to the cadre posts of Deputy Commissioners did not and indeed could not modify the statutory provision according to which an election petition had to be presented to the Deputy Commissioner because an officer specially appointed to perform the functions of a Deputy Commissioner was expressly debarred from performing any function in respect of which the decision of the Deputy Commissioner was made final.

(24) In the present case, the statute itself having declared that an Additional Commissioner of Income-tax was an authority equal in rank to the Commissioner of Income-tax could perform the same functions which the Commissioner alone was required to perform. It could not thereforee be said that he was not a Commissioner of Income-tax. As an Additional Commissioner of Income-tax and when Sections 263 and 264 provided that the revisionary powers were to be exercised by the Commissioner he had the same powers as the Commissioner had in respect of that matter.

(25) The case decided by the Punjab High Court had thereforee no application to the facts of the present case. There was no statutory provision in that case which made the Additional Deputy Commissioner equal in rank to the Deputy Commissioner. There was only a Government declaration to the effect and that was not enough for the purpose.

(26) This being the only question raised before us the other question whether the Additional Commissioner of Income-tax is subordinate to the Commissioner of Income-tax which was raised in the respondents' affidavit and was also taken up by the petitioner, does not appear to us to be necessary to be decided in this case, although prima facie speaking there is a great deal of force in the submission made on behalf of the respondents. In any case, in view of the amendments made in the Income-tax Act, 1961 by the Finance Act 1970 the notification issued by the Central Board of Direct Taxes is intra virus the statute and there is no question of the Commissioner of Income-tax having been designated as persona designata.

(27) The petition has thereforee no merit and is dismissed with costs. Counsel's fee Rs. 200.00.


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