Orissa Rural Housing Development Corporation Ltd. V. The Assistant Commissioner of Income Tax, Circle-I(I), Bhubaneswar and Another

RVWPET/8/2012

AI Insights

The case involves M/s. Orissa Rural Housing Development Corporation Ltd., which filed a review petition against a judgment concerning income tax assessments. The review petition challenged the original judgment on several grounds, including the sequence of notices under Sections 142(1) and 143(2) of the Income Tax Act, the ability to make fresh claims of exemption, and the powers of the Commissioner of Income Tax under Section 264. The court dismissed the review petition, stating that the issues raised were already addressed in the original judgment and that the review did not meet the legal standards for a review.

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 805693 (HC-MISC)
• Appeal Type: Others
• Pronouncement Date: 17-10-2012
• Assessment Year: misc
• Other Referred Cases: Goetze (India) Ltd. V. CIT; 284 ITR 323 (SC), C. Parikh & Co. v. CIT, 122 ITR 610 (Guj HC), Smt. Phool Lata Somani V. CIT, 276 ITR 216 (Cal. HC), OCM Ltd. (London) v. ITO, 110 ITR 722 (All. HC), M. Chettyappa v. Comr. Of Agri. Income Tax, 110 ITR 684 (Mad.HC), Smt. Sheh Lata Jain v. CIT, 140 Taxman 156 ( J & K HC), Ramdev Exports v. CIT, 251 ITR 873 (Guj. HC), Digvijay Cement v. CIT, 210 ITR 797 (Guj. HC), Karnataka State Road Transport Corporation v. Ashrafulla Kahan & others, AIR 2002 SC 629, Sirsi Municipality by its President, Sirsi v. Cecelia Kom. Francis Tellis, AIR 1973 S.C. 855, Northern India Caterers (India) Ltd. \/ Lt. Governor of Delhi, AIR 1980 SC674, Haridas Das Vs. Usha Rani Banik (Smt) and others, AIR 2006 SC 1634, M/s. Thungabhadra Industries Ltd. \/ The Government of Andhra Pradesh, represented by the Deputy Commissioner of Commercial Taxes, Anantapur, AIR 1964 SC 1372, Devaraju Pillai Vs. Sellayya Pillai, AIR 1987 SC 1160, Delhi Administration Vs. Gurdip Singh Uban & Ors., AIR 2000 SC 3737, Jain Studios Ltd., through its President Vs. Shin Satellite Public Co. Ltd., AIR 2006 SC 2686
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: A K MOHAPATRA
• Assessee Lawyers: B K MOHANTI; BIBEK A MISHRA
• Keywords: Assessment Order; Error apparent; Income Tax; Jurisdiction; Premature notice; Review petition; Revised return
• Section: 142(1); 143(2); 264; 139(5); 226; 227

Judgement Text

"HIGH COURT OF ORISSA: CUTTACK RVWPET NO. 8 OF 2012 This review petition arises out of judgment dated 15.12.2011 passed by a Single Bench of this Court in W.P.(c) No.4554 of 2011. --------- M/s. Orissa Rural Housing Development Corporation Ltd., a Govt. of Orissa Company Incorporated under the Companies Act, 1956 Represented through its Managing Director Sri Ashok Kumar Ray, having its office At 3rd Floor, Ashok Nagar, Bhubaneswar, Dist: Khurda. ………… Petitioner -Versus- The Assistant Commissioner of Income Tax, Circle-I(I),Bhubaneswar And another. ………. Opp. Parties. For Petitioner : M/s. B. Panda, B.B. Sahu, Bijay Panda & N.L. Das. Mr.B.K.Mohanti, (Sr. Advocate) M/s. Bibek A. Mohanti S.K.Mishra, A.R.Mohanty, M. Raul & M. Wright. For Opp. Parties: Mr. A.K. Mohapatra Standing Counsel ( I.T. Deptt.) -------- P R E S E N T: THE HONOURABLE THE CHIEF JUSTICE SHRI V. GOPALA GOWDA AND THE HONOURABLE SHRI JUSTICE B.N. MAHAPATRA Date of Judgment: 17.10.2012 B.N.Mahapatra,J. This review petition has been filed with a prayer to review the judgment dated 15.12.2011 passed by this Court in W.P.(c) No.4554 of 2011 on the ground that the said judgment suffers from error/mistake due to incorrect appreciation of facts and circumstances involved as well as the same is contrary to the settled position of law with respect to the issues involved. 2. Besides the ground of challenge stated above, which is general in nature, Mr. N.L. Das, learned counsel appearing for the review petitioner challenges the impugned judgment on the following specific grounds; (i) The notice under Section 143(2) of the Income Tax Act, 1961 (in short, ‘the Act’) was issued to the petitioner on 10.10.2007 followed by the notice under Section 142(1) of the Act on 03.10.2008. According to Mr. N.L. Das, the notice under Section 42(1) is the initiating point of an assessment. Section 142 of the Act states “Inquiry before Assessment” and the hearing under Section 143 is “Assessment”. Thus, the very intent of the statute in designating such hearing is clearly manifested in the idea that there has to be an initiation of assessment proceeding under Section 142(1) and only after such initiation, the actual assessment proceeding can begin by issuing a notice under Section 143(2). However, in the present case, the assessment proceeding ought to be vitiated since the notice under Section 143(2) was premature due to lack of notice under Section 142(1) of the Act. (ii) Learned C.I.T. was erred in arriving at a conclusion that the petitioner was raising a fresh claim of relief before the Assessing Officer and thus declined to interfere with the assessment order. This Court, while deciding the question Nos. (i) to (iii), came to a conclusion that the petitioner-assessee was not entitled to make any fresh claim of exemption either before the A.O. or before the C.I.T. otherwise then by way of filing revised return under Section 139(5). The only way that was available to the petitioner to claim such exemption is 2 by filing a revised return under Section 139(5). The Court erred in arriving at such conclusion on a wrongful assumption of law. (iii) The judgment of the Supreme Court in the case of Goetze (India) Ltd. V. CIT; 284 ITR 323 (SC) is in relation to the powers of the Assessing Officer as to whether he can entertain fresh claims of exemption except by way of revised return. However, in the present case, the petitioner has filed a petition under Section 264 before the learned CIT seeking allowance of the claim of deduction. Since the judgment of the Supreme Court relates to power of the Assessing Officer and the case of the petitioner relates to the revisionary power of learned CIT under Section 264, the said judgment of the Hon’ble Supreme Court is not applicable to the present case. (iv) The powers of CIT under Section 264 are very wide and are not restricted to just a mere supervision of the order of the A.O. The CIT has to apply his mind to the claim of the assessee that the error that has crept into its return of income ought to have been rectified. There is nothing under Section 264 which places any restriction on the CIT’s revisional power to give relief to the assessee in a case where the assessee detects the mistake on account of which he was over-assessed after the assessment was completed. In fact, it is open to the CIT, while exercising revisional powers to entertain even a new ground that was never urged before the lower authorities. (v) The petitioner-assessee has correctly preferred the revised statement to modify its return instead of filing revised return. The A.O. was competent enough to allow the claim of deduction subsequently 3 reflected in the revised statement. Opp. Parties have jurisdiction to examine the question arising from the revised statement filed to uphold the tax liability, if any, of the petitioner if it was not raised correctly before the A.O. The purpose of scrutiny/assessment was to assess correctly the tax liability of the petitioner in accordance with law. (vi) The CIT (Appeals) has refused to interfere with the assessment order on the wrongful and unjustified reasoning that the petitioner by preferring a petition under Section 264 had waived its right of appeal under Section 246-A and accordingly dismissed the appeal. The jurisdiction under Section 246-A gives power of appeal to an assessee where as jurisdiction u/s 264 gives a power of seeking revision of assessment order to the assessee. Therefore, High Court erred in concluding that both the revisional power under Section 264 and appeal power under Section 246 are alternative remedies. 3. To deal with the grounds of challenge taken by Mr. Das, for the purpose of review of the impugned judgment, it is necessary to know the questions decided by this Court while disposing of the writ petition. Questions decided by this Court in the impugned judgment are as follows: (i) Whether an assessee can revise its return of income by way of filing a revised statement of income after filing original return other than by way of filing revised return as contemplated under Section 139(5) of the I.T. Act? (ii) Whether the learned Assessing Officer as well as the Commissioner of Income tax is justified in holding that 4 the petitioner-assessee has no right to claim fresh exemption before the learned Assessing Officer after filing of the original return other than by way of filing revised return? (iii) Whether an assessee who follows Mercantile system of accounting and furnishes the return of income on the basis of accrued interest income can revise its return of income by way of filing a revised statement of income on the ground that the interest on NPA account was wrongly recognised in contravention of NHB guidelines and expenses were claimed in contravention of Section 43D of the I.T. Act: (iv) Whether the National Housing Bank Act, 1987 overrides the Income Tax Act, 1961? (v) Whether there is any sequence prescribed under the Income tax Act as to in what manner two notices, i.e. , notice under Sections 142(1) and 143(2) of the I.T. Act are to be issued so far production of documents and/or accounts is concerned? (vi) Whether the Commissioner of Income Tax (Appeals) is justified in holding that the appeal filed by the petitioner after rejection of its petition under Section 264 by the Commissioner of Income Tax is not maintainable under the Income tax Act? (vii) Whether any refund can be granted to the petitioner by exercising power under Articles 226 and 227 of the Constitution when refund does not flow from an order passed under the Statute? 4. Perusal of the grounds taken by the review petitioner and the questions considered by this Court in the judgment under review 5 reveals that all the grounds taken in review petition have been dealt with in detail in the judgment under review. 5. First ground of challenge in the review petition is with regard to the legality of issuance of notice under Section 143(2) prior to issuance of notice under Section 142(1). This issue has been dealt with as question no.(v) in the judgment under review. At paragraph 24 of the judgment, this Court elaborately dealt with the question extracting relevant provisions of Sections 142(1), 143(2) and held that the purpose of service of notices issued under Section 142(1) and 143 (2) is different. There is no sequence prescribed as to in which manner two notices are to be issued. Therefore, there is nothing to show that the notice under Section 142(1) should precede notice under Section 143(2) as far as production of documents/accounts is concerned. Rearguing a point, while addressing on the review petition on the point already argued and decided by the Court in the judgment does not come within the scope and purview of review petition. Therefore, the judgment cannot be reviewed on the first ground of challenge. 6. The second ground of challenge in the review petition is that the C.I.T. in exercise of his power under Section 264 is not justified in declining to interfere with the assessment order. This Court is also erred in arriving at a conclusion that the petitioner-assessee could not have made any fresh claim of exemption either before the A.O. or before the CIT and the only way that was available to the petitioner to claim such an exemption was by way of filing a revised return under Section 139(5) of the I.T. Act. The above issue has already been dealt with in question 6 nos.(i), (ii) and (iii) and while dealing with these questions this Court referring to Section 139(5) of the Act and the judgment of the Hon’ble Supreme Court in the case of Goetze (India) Ltd. (supra) held that there is no provision in the Income tax Act to enable an assessee to revise his income by way of filing a revised statement of income as has been done by the petitioner. In the instant case, a revised statement of income was filed on 8.12.2008 before the Assessing Officer after commencement of assessment proceedings. If such revised statement of income is accepted, then the very purpose of enacting Section 139(5) under the I.T. Act for filing revised return shall be frustrated and provision of said section becomes redundant. This Court further held that there is a distinction between the revised return and correction in the originally filed return. If an assessee files an application for correcting a return already filed or for making some amendment therein, it would not certainly mean that he has filed a revised return. Such a petition is not recognised under the Income Tax Act. Basis of assessment is the return filed by the assessee. If the revised return is filed under Section 139(5) of I.T. Act, the assessment can be completed only on the basis of revised return and not other wise. This Court further held that the Assessing Officer is fully justified in completing the assessment under Section 143(3) of the I.T. Act on the basis of the original return filed under Section 139(1) of the Act without taking into consideration the revised statement filed on 08.12.2008 in absence of the revised return as contemplated under Section 139(5) of the I.T. Act and the CIT is also justified in confirming the view of the learned Assessing Officer. 7 7. Now it is found that in a review petition, the petitioner has taken a new stand that the power of the Commissioner under Sec. 264 is very wide and it is not restricted to just supervise the order of the Assessing Officer. Mr. Das further submitted that the CIT has to apply his mind to the claim of the assessee and rectify the same. It was further argued that in fact, it is open to the CIT, while exercising revisional power, to entertain even a new ground that was never urged before the lower authorities. In support of his contention, Mr. Das relied upon the following decisions of different High Courts: C. Parikh & Co. v. CIT, 122 ITR 610 (Guj HC) Smt. Phool Lata Somani V. CIT, 276 ITR 216 (Cal. HC) OCM Ltd. (London) v. ITO, 110 ITR 722 (All. HC) M. Chettyappa v. Comr. Of Agri. Income Tax, 110 ITR 684 (Mad.HC) Smt. Sheh Lata Jain v. CIT, 140 Taxman 156 ( J & K HC) Ramdev Exports v. CIT, 251 ITR 873 (Guj. HC) Digvijay Cement v. CIT, 210 ITR 797 (Guj. HC) 8. The above ground now urged in the review petition has neither been taken in the writ petition nor urged while argument was advanced in the writ petition out of which the present review petition arises. On this solitary ground the claim of the petitioner to review the impugned judgment is rejected. (See Bhagwati Singh Vrs. Deputy Director of Consolidation & Another, AIR 1977 All. 163). Otherwise also, the contention of the petitioner that the power of CIT (Appeals) under Section 264 is very wide and by exercising such revisional power the Commissioner can entertain even a new claim which was never urged before the Assessing Officer is not legally sustainable. First of all no new claim was raised in the proceedings Under 8 Section 264 of the Act. The petitioner filed his revised statement of income before the Assessing Officer. The Assessing Officer having not entertained the same, he filed a petition under Section 264 of the Act. The question was raised whether by way of filing revised statement instead of filing revised return as contemplated under Section 139 (5) of the Act, the assessee can revise his income disclosed in its original return. Needless to say that the basis of Section 264 petition is the assessment order seeking revision of the original order. The CIT relying on the decision of the Supreme Court in Goetze(India) Ltd. (supra) rejected the petition under Section 264 of the Act. Secondly, if the statute requires to do certain thing in certain way, the thing must be done in that way or not at all and other methods or modes of performance are impliedly and necessarily forbidden. Therefore, since there is no provision in the Income Tax Act authorising/enabling the assessee to file any revised statement of income, the Commissioner, who is the creature of the statute, by exercising revisional power under Section 264 cannot allow the petitioner-assessee to revise his income by way of filing a revised statement of income. The CIT being the creature of the statute, is bound to function within the frame work of the statute and cannot travel beyond the statutory provision. The Commissioner cannot do a thing indirectly which he cannot do directly under the statute. 9. It is settled proposition of law that what cannot be done “per directum is not permissible to be done per obliquum”, meaning thereby, whatever is prohibited by law to be done, cannot legally be effected by an 9 indirect and circuitous contrivance on the principle of “quando aliquid prohibetur, prohibeture at omne per quod devenitur ad illud.” In Jagir Singh Vs. Ranbir Singh and another, AIR 1979 SC 381, the Hon’ble Supreme Court has observed that an authority cannot be permitted to evade a law by “shift or contrivance”. While deciding the said case, the Hon’ble Supreme Court placed reliance on the judgment in Fox Vs. Bishop of Chester, (1824) 2 B 7 C 635, wherein it has been observed as under :- “To carry out effectually the object of a statute, it must be considered as to defeat all attempts to do, or avoid doing in an indirect or circuitous manner that which it has prohibited or enjoined.” 10. In the fact situation, the decisions of different High Courts relied upon by Mr. Das are of no help to the assessee-petitioner for the purpose of reviewing the impugned judgment. The Hon’ble Supreme Court in Karnataka State Road Transport Corporation v. Ashrafulla Kahan & others, AIR 2002 SC 629 held that the High Court under Article 226 of the Constitution is required to enforce rule of law and not pass an order or direction which is contrary to what has been injuncted by law. In Sirsi Municipality by its President, Sirsi v. Cecelia Kom. Francis Tellis, AIR 1973 S.C. 855, the Supreme Court observed that the rules or regulations are binding on the authorities. 11. The third ground taken by the review petitioner seeking review of the judgment is that the CIT (Appeals) is not justified to refuse to interfere with the assessment order on the ground that the petitioner preferred a petition under Section 264 of the Act. This ground of review 10 has been considered by this Court in the judgment while dealing with question no.(vi). While dealing with that question, this Court held that the remedy available under Section 264, IT Act is an alternative remedy and not an additional remedy and the assessee is not permitted to avail both the remedies either simultaneously or one after another. Accordingly, this Court held that CIT (Appeals) is justified in not entertaining the appeal fled by the petitioner before him on the ground that the same is not maintainable. Therefore, since the ground of review has already been dealt with in the judgment, that cannot be a ground for review. 12. Thus it is seen that the grounds taken by the review petitioner seeking review of the judgment passed in W.P.(c) No.4554 of 2011 have already been dealt with in detail in the said judgment. Therefore, it is not open to the review petitioner to reargue the matter which had already been argued and decided by this Court in judgment under review. 13. At this juncture, it may be relevant to refer to Section 114 read with Order XLVII, Rule 1 of the CPC and some of the judicial pronouncements of the Privy Council and Hon’ble Supreme Court. Section 114 read with Order XLVII, Rule 1, CPC prescribes the limitations for entertaining a review petition. The limitations are that the party filing the application for review has discovered a new and important matter or evidence after exercise of due diligence, which was not within his knowledge or could not be produced by him at the time when the decree or order was passed, or on account of some mistake or error apparent on 11 the face of the record or ‘for any other sufficient reason’. The aforesaid limitations are prescribed in a crystal clear language. The expression ‘any other sufficient reason” contained in Order XLVII, Rule 1, means ‘sufficient reason’ which is analogous to those specified immediately to it in the provision of Order XLVII, Rule 1, CPC. 14. In Chhajju Ram Vs. Neki & Ors., AIR 1922 PC 112, it was held by the Privy Council that analogy must be discovered between two grounds specified therein namely; (i) discovery of new and important matter or evidence; and (ii) error apparent on the face of record, before entertaining the review on any other sufficient ground. 15. The Hon’ble Supreme Court in Haridas Das Vs. Usha Rani Banik (Smt) and others, AIR 2006 SC 1634, held that a perusal of the Order XLVII, Rule 1 shows that review of a judgment or an order could be sought: (a) from the discovery of new and important matter or evidence which after exercise of due diligence was not within the knowledge of the applicant; (b) such important matter or evidence could not be produced by the applicant at the time when the decree was passed or order made; (c) on account of some mistake or error apparent on the face of record or any other sufficient reason. Therefore, some mistake or error, if made ground for review, it must be apparent on the face of record and if a party files an application on the ground of some other sufficient reason, it has to satisfy that the said sufficient reason is analogous to the other conditions mentioned in the said rule i.e. discovery of new and important matter or evidence which it could not discover with due diligence or it was not within his knowledge and, thus, 12 could not produce at the initial stage. Apparent error on the face of record has been explained to include failure to apply the law of limitation to the fact found by the Court or failure to consider a particular provision of a statute or a part thereof or a statutory provision has been applied though it was not in operation. Review is permissible, if there is an error of procedure apparent on the face of the record e.g. the judgment is delivered without notice to the parties, or judgment does not effectively deal with or determine any important issue in the case though argued by the parties. There may be merely a smoke-line demarcating an error simpliciter from the error apparent on the face of record. But there cannot be a ground for entertaining the review petition in the former case. “Sufficient reason” may include disposal of a case without proper notice to the party aggrieved. Thus, if a person comes and satisfies the Court that the matter has been heard without serving a notice upon it, review is maintainable for the “sufficient reason” though there may be no error apparent on the face of record. 16. In the case of Northern India Caterers (India) Ltd. –Vrs.- Lt. Governor of Delhi, AIR 1980 SC674, it has been held that “a party is not entitled to seek a review of a judgment delivered by the Court merely for the purpose of a rehearing and a fresh decision of the case. The normal principle is that a judgment pronounced by the Court is final and departure from that principle is justified only when circumstances of a substantial and compelling character make it necessary to do so. Whatever may be the nature of the proceeding, it is beyond dispute that a review proceeding cannot be equated with the original hearing of the 13 case and the finality of the judgment delivered by the Court will not be reconsidered except where a glaring omission or a patent mistake or a grave error has crept in earlier by judicial fallibility.” 17. In Haridas vs. Usha Rani Banik (Smt.) & Ors., (supra) Hon’ble Supreme Court held that the parameters of review are prescribed in Order XLVII of the CPC. The former part of the rule deals with a situation attributable to the applicant, and the latter to a jural action which is manifestly incorrect or on which two conclusions are not possible. Neither of them postulates a rehearing of the dispute because a party had not highlighted all the aspects of the case or could perhaps have argued them more forcefully and/or cited binding precedents to the Court and thereby enjoyed a favourable verdict. This is amply evident from the Explanation to Rule 1 of Order XLVII which states that the fact that the decision on a question of law on which the judgment of the Court is based has been reversed or modified by the subsequent decision of a superior Court in any other case, shall not be a ground for review of such judgment. Where the order in question is appealable, the aggrieved party has adequate and efficacious remedy and the Court should exercise the power to review its order with the greatest circumspection. 18. In M/s. Thungabhadra Industries Ltd. –Vrs.- The Government of Andhra Pradesh, represented by the Deputy Commissioner of Commercial Taxes, Anantapur, AIR 1964 SC 1372, the Supreme Court held as follows: “There is a distinction which is real, though it might not always be capable of exposition, between a mere erroneous decision and a decision which could 14 be characterized as vitiated by “error apparent”. A review is by no means an appeal in disguise whereby an erroneous decision is reheard and corrected, but lies only for patent error. Where without any elaborate argument one could point to the error and say here is a substantial point of law which stares one in the face and there could reasonably be no two opinions entertained about it, a clear case or error apparent on the face of the record would be made out.” 19. Law is well settled that power of review cannot be confused with the appellate power. In Devaraju Pillai Vs. Sellayya Pillai, AIR 1987 SC 1160, the Hon’ble apex Court held that if the party is aggrieved by a judgment of a Court, the proper remedy for such party is to file an appeal against that judgment. A remedy by way of an application for review is entirely misconceived and if a Court entertained the application for review then it has totally exceeded its jurisdiction in allowing the review merely because it takes a different view on a construction of the document. 20. In Delhi Administration Vs. Gurdip Singh Uban & Ors., AIR 2000 SC 3737, the Hon’ble apex Court deprecated the practice of filing review application observing that review, by no means is an appeal in disguise and it cannot be entertained even if application has been filed for clarification, modification or review of judgment and order finally passed for the reason that a party cannot be permitted to circumvent or bypass the procedure prescribed for hearing a review application. 21. The Hon’ble Supreme Court in Jain Studios Ltd., through its President Vs. Shin Satellite Public Co. Ltd., AIR 2006 SC 2686, held that the power of review cannot be confused with appellate power which enables a superior Court to correct all errors committed by a 15 subordinate Court. It is not rehearing of an original matter. A repetition of old and overruled argument is not enough to reopen concluded adjudications. The power of review can be exercised with extreme care, caution and circumspection and only in exceptional cases. Thus, it is the settled proposition of law that review lies when there is error apparent on the face of record and such an error crept in inadvertently or otherwise and it is in the interest of justice, such a mistake should be rectified. 22. The matter can be looked at from different angle. In the instant case the judgment passed in W.P.(c) No. 4554 of 2011 out of which the present review petition has been filed was argued by Mr. B.K. Mohanti, Senior Advocate extensively. But the present review petition is argued by Mr. N.L. Das, who is only rearguing the points already argued, which is not permissible under law. Such practice is deprecated by the Hon’ble Supreme Court in the cases of Tamilnadu Electricity Board –Vrs.- N.Raju Reddiar and others, AIR 1997 SC 1005 (also see Mohan Lal Bagla –Vrs.- Board of Revenue, U.P., Lucknow and others, AIR 2005 All. 308). 23. In any event, no case for review under Order XLVII, Rule 1, CPC is made out. The well-known parameters of review, as indicated above, having not been fulfilled, there is no scope for review. The review petition is accordingly dismissed. ……………………… B.N.Mahapatra,J. V.Gopala Gowda, C.J. I agree. ………………….. Chief Justice Orissa High Court, Cuttack. 16 The 17TH October, 2012/ssd. 17 "