Commissioner of Income Tax vs O.P. Seth

In respect of the assessment years 1982-83 and 1983-84, the petitioner prays that the following question of law be referred :

"Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was correct in law and on the facts in annulling the order passed by the Commissioner of Income Tax u/s 263 of the Income Tax Act, 1961 ?"

In respect of these two assessment years the late K. C. Seth, father of O. P. Seth, had filed Income Tax returns in which it had, inter alia, been claimed that he had received rent in respect of a plot of land in Loha Mandi, Naraina, New Delhi. This amount was taxed in the hands of the legal representative of K. C. Seth because at the time when the assessment was made K. C. Seth had expired.

Subsequent to his death, on October 12, 1983, a raid was conducted in the house of O. P. Seth and some cash and other valuables were recovered. The claim of O. P. Seth was that out of the total amount recovered, a sum of Rs. 80,000 was left behind by his father.

It is thereafter that on December 10, 11, 1985, notice u/s 263 was issued to Shri O. P. Seth in his capacity as legal heir of the late K. C. Seth and by the said notice the Commissioner of Income Tax sought to revise the order for the assessment years 1982-83 and 1983-84. This order was revised and the order of the Assessing Officer was set aside by the Commissioner of Income Tax. It was held by the Commissioner that in fact the said plot of Loha Mandi, Naraina, had never been let out and, Therefore, the order of the Income Tax Officer was prejudicial to the interests of the Revenue because the Income Tax Officer had not made any enquiry as to whether the plot had been let out or not.

In appeal the Tribunal reversed the finding of the Commissioner of Income Tax and came to the conclusion that the order u/s 263 was passed without any jurisdiction.

It is evident that before the raid was conducted in October, 1983, returns of income had been filed for the assessment years 1982-83 and 1983-84 and the rent from the plot in question was disclosed by the late K. C. Seth. By the Income Tax Officer the alleged receipt of money he could not be said to have acted prejudicial to the interests of the Revenue because if there was no genuine letting he would have had to delete the said receipt from the total income of the assessed. Had the raid taken place before the filling of the returns the position might have been different but when income has been returned and the same is taxed by the Income Tax Officer, even without any enquiry, then the burden is on the Department to show that when the taxing of the returned income is prejudicial to the interests of the Revenue. There is no such finding given by the Commissioner and in any case there are no facts which would warrant such a conclusion being arrived at. When the Commissioner issues a notice u/s 263 he is to judge the action of the Income Tax Officer as on the date when the assessment was made on the basis of the returns filed. In the present case, the Tribunal was right in coming to the conclusion that the order of the Income Tax Officer was not prejudicial to the interests of the Revenue and, Therefore, action u/s 263 was not called for.

It is contended by Shri Rajendra that the returns for the years 1982-83 and 1983-84 were antedated. We are unable to accept this contention for the simple reason that no such submission was made on behalf of the Department before the Income Tax Tribunal when the appeal was filed against the order passed u/s 263. Furthermore, even the Commissioner of Income Tax has not given any such finding. In the absence of any finding in this behalf we cannot accept a bald assertion on the part of the Revenue. The fact that such an averment has been made in the application u/s 256(1) of the Income Tax Act is not relevant.

We find no merit in this petition. The same is dismissed as such.