P.A. Mohammed, J.
1. The petitioner is an 'assessee' under the Income-tax Act, 1961 (for short 'the Act'). The question raised in this writ petition relates to the correctness and legality of an order passed by the Commissioner of Income-tax under Section 264 of the Act.
2. The facts involved in this case are briefly summarised thus ; For the assessment year 1980-81, the first respondent passed exhibit P-1 order of assessment fixing the total income of the assessee as Rs. 1,31,810 and the total tax payable as Rs. 70,483. As against it, the assessee filed an appeal and by exhibit P-2 dated December 12, 1983, the Appellate Assistant Commissioner rejected the appeal. The petitioner filed a further appeal before the Income-tax Appellate Tribunal as I. T. A. No. 231 (Coch) of 1984. It was allowed as per exhibit P-3. Consequently, the application of the assessee for rectification under Section 154 was allowed, as a result of which the depreciation in respect of buses had been fixed at the rate of 40 per cent. Subsequently, the first respondent issued exhibit P-4 order giving effect to exhibit P-3 order thereby allowing refund of the total amount of Rs. 11,554 being the excess amount paid. As against exhibit P-3 order of the Tribunal, the Commissioner of Income-tax came before this court in Income-tax Reference No. 548 of 1985. This court by exhibit P-5 judgment answered the questions referred in the negative, i.e., in favour of the Revenue and against the assessee. In other words exhibit P-3 order of the Tribunal was set aside by this court. Subsequently by exhibit P-6, the Income-tax Officer demanded an amount of Rs. 36,649 towards interest under Section 220(2) of the Act. The petitioner thereafter filed a revision petition against the said order before the Commissioner of Income-tax under Section 264 of the Act. It was dismissed by exhibit P-9 order which is challenged in this writ petition. '
3. Section 264 authorises the Commissioner of Income-tax either of his own motion or on an application by the assessee for revision, to call for the record of any proceeding under the Act in which any such order has been passed by an authority subordinate to him and may make such inquiry or cause such inquiry to be made and subject to the provisions of the Act, may pass such order thereon, not being an order prejudicial to the assessee, as he thinks fit. Under this provision wide discretion has been conferred on the Commissioner of Income-tax to revise an order passed by an authority subordinate to him. It cannot be said that this power is not judicial or quasi-judicial in character. What is vouchsafed is sound and honest discretion to be exercised carefully applying the mind to the facts and circumstances of each case. In substance it is a power coupled with a duty to exercise it in the interest of justice to the asses-see.
4. The prime point urged by counsel for the petitioner is that the Commissioner has failed to apply his mind to the case of the assessee for waiver of interest under Section 220(2A) of the Act which runs as follows :
'Notwithstanding anything contained in Sub-section (2), the Chief Commissioner or Commissioner may reduce or waive the amount of interest paid or payable by an assessee under the said sub-section if he is satisfied that--
(i) payment of such amount has caused or would cause genuine hardship to the assessee ;
(ii) default in the payment of the amount on which interest has been paid or was payable under the said sub-section was due to circumstances beyond the control of the assessee ; and
(iii) the assessee has co-operated in any inquiry relating to the assessment or any proceeding for the recovery of any amount due from him.'
5. Under this provision, the Commissioner has power to reduce or waive the amount of interest paid or payable by an assessee in case he is satisfied with all the three requirements provided therein. The satisfaction of one of the conditions alone will not be sufficient inasmuch as the three requirements are conjunctive and not alternative. ' Sub-section (2) of Section 220 provides that if the amount specified in any notice of demand under Section 156 is not paid within the period limited under Sub-section (1), the assessee shall be liable to pay simple interest at one and one-half per cent. for every month or part of a month. Therefore, the amount contemplated under Sub-section (2A) is an amount specified in any notice of demand under Section 156. In the present case it was pointed out that by exhibit P-3 order of the Tribunal, the appeal preferred by the assessee had been allowed and consequently refund was ordered. Therefore, the contention of the assessee is that the respondents are not entitled to recover interest under Section 220(2) of the Act. In support of this, the assessee has relied on the decision of the Supreme Court in ITO v. Seghu Buchiak Setty : [1964]52ITR538(SC) wherein it was held that the amount of tax assessed having been reduced as a result of the orders of the Appellate Assistant Commissioner a fresh demand notice had to be served on the assessee before he could be treated as a defaulter under the Act. Senior standing counsel for the Department has vehemently attacked this plea. Further, he has brought to my notice a decision of Kochu Thommen J. (as he then was of this court) in New Woodlands v. CIT : [1982]138ITR795(Ker) . There the learned judge took notice of Section 3 of the Taxation Laws (Continuation and Validation of Recovery Proceedings) Act, 1964, and then observed (page 800) :
'A notice of demand is a consequential order made on the basis of the original order of assessment. If a fresh notice of demand is not required under the Act where the original order of assessment was superseded by an appellate order reducing the amount of tax, I see no reason why fresh notice is required where the appellate authority has set aside the original order of assessment and remanded the case for fresh consideration. The fate of the demand is the same in both cases. The notice of demand remains valid and effective to the extent that the tax is finally determined to be due and payable by the assessee.'
6. This decision of the learned judge was reversed by this court in New Woodlands Hotel v. CIT : [1991]188ITR137(Ker) . However, the Supreme Court in CIT v. Chittoor Electric Supply Corporation : [1995]212ITR404(SC) did not agree with the above decision of the Division Bench of this court in New Woodlands Hotel v. CIT : [1991]188ITR137(Ker) . In other words, the Supreme Court agreed with the view expressed by Kochu Thommen J. in New Woodlands v. CIT : [1982]138ITR795(Ker) . The following observation of the Supreme Court in CIT v. Chittoor Electric Supply Corporation : [1995]212ITR404(SC) is very relevant (headnote) :
'Where an assessment order is set aside and a fresh assessment is directed to be made, the assessment must be deemed to be still pending, which has to be completed. In such a case the question of an amount being refundable does not arise. It arises only when a fresh assessment is made and the amount properly chargeable is ascertained. When the assessment proceedings for an assessment year are still pending, it is idle to talk of any amount of refund becoming due to the assessee in respect of that assessment year, particularly, in the light of Section 237 of the Income-tax Act, 1961.'
7. No doubt, under Section 264 the Commissioner is not (sic) empowered to pass an order 'not being an order prejudicial to the assessee'. By the impugned order, exhibit P-9, the revision filed by the assessee has been dismissed. That does not mean it is an order 'prejudicial to the assessee' and hence the Commissioner has no power to pass such an order. Of course, the Commissioner in the exercise of his revisional power under Section 264 may grant relief to the assessee but in terms of the section, the Commissioner in no case can pass an order prejudicial to the asses-see. The Privy Council in CIT v. The Tribune Trust [1948] 16 ITR 214 observed that the expression 'prejudicial to the assessee' means (page 226) :
'It appears to them tbat an order made by the Commissioner under Section 33 can only be said to be prejudicial to the assessee when he is, as a result of it, in a different and worse position than that in which he was placed by the order under review.'
8. It also reveals from the above decision that the incidence and operation of the tax on the assessee after the order passed on revision did not certainly leave him in a worse position than he was in, prior to the revision. This view is now given statutory effect by Explanation I which enacts that the order by the Commissioner declining to interfere shall not be an order prejudicial to the assessee.
9. Can it be said exhibit P-9 is invalid for want of application of mind by the Commissioner to the parameters prescribed for waiver of interest under Section 220(2) ?
10. The Commissioner has observed that the entire tax demanded in respect of the assessment year 1980-81 has not been paid by the assessee even at the time of passing exhibit P-9. The case of the assessee is that he could not remit the tax in time inasmuch as he had to raise funds for the construction of the theatre building. That means the assessee was diverting the money for other purposes without paying the tax as and when it was due. This would establish that the assessee has not co-operated in the proceeding for recovery of tax legally due from him. The Commissioner further observes that this is not a case where genuine financial hardship is caused to the assessee inasmuch as he derives income from the transport business regularly. That means there would not be any genuine hardship to the assessee for the payment of tax. The assessee has no case that the default in the payment of tax was caused due to circumstances beyond the control of the assessee. In sum and substance the Commissioner is not satisfied as to the requirements contemplated under Sub-section (2A) of Section 220 of the Act. Of course, the Commissioner has not specifically mentioned in exhibit P-9 order that he is not satisfied with the requirements 1, 2 and 3 contained in Sub-section (2A). Because of non-mentioning of these provisions in the impugned order, I cannot attribute any infirmity to it when the substance of the reason for dissatisfaction is crystalline. The Commissioner apparently in view of the non-compliance of the aforesaid provisions found that there is no reason to waive the interest. After anxious consideration of the entire matter, I do not find my way to attribute any infirmity to exhibit P-9 order passed by the Commissioner. I do not see any miscarriage of justice ; nor are there any errors apparent on the face of the record which attract interference in the present proceeding. The power of this court to interfere with an order passed by the Commissioner under Section 264 of the Act is not automatic ; it has its own limitations. Exhibit P-9 order is accordingly confirmed.
11. In view of the discussion hereinabove, this writ petition is liable to be dismissed. It is accordingly dismissed. No order as to costs.