S. 263 Revision – Revisional jurisdiction cannot be exercised on the ground that AO should have gone deeper

CIT Vs. Jawahar Bhattacharjee (Gauhati High Court Full Bench)

S. 263 Revision – Full Bench of HC Resolves Conflict In Law- S. 263 Jurisdiction can be exercised whenever it is found that the order of assessment was erroneous and prejudicial to the interest of the Revenue

We have already referred to judgments of this Court in Rajendra Singh and two Single Bench judgments following the said judgment in Bongaigaon Refinery and Petrochemicals Ltd. and Shyam Sundar Agarwal as also the second Division Bench judgment in Daga Entrade P. Ltd. No doubt, in Rajendra Singh, an observation was made that erroneous assessment referred to the defect which is jurisdictional in nature, as against substitution of one view for the other, merely on the ground that a different view was possible. If read as a whole, the judgment does not exclude error in assessment order, by ignoring relevant material. Not holding such inquiry as is normal and not applying mind to relevant material would certainly be ‘erroneous’ assessment warranting exercise of revisiona l jurisdiction. Judgment has to be read as a whole and an observation during the course of reasoning in the judgment should not be divorced from the context in which it was used. The judgment is neither to be interpreted as an Act of Parliament nor as a holy book. If this principle is kept in mind, we do not find any conflict in the view taken in Rajendra Singh and Daga Entrade P. Ltd. Disagreement in Daga Entrade P. Ltd. is only to the interpretation which limits the ratio of the judgment by relying only one sentence in isolation divorced from the entire judgment. An incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being ‘erroneous’ non‑application of mind and omission to follow natural justice is in same category.

Accordingly, we hold that Daga Entrade P. Ltd. lays down correct law and the same is not in conflict with the earlier order of this Court in Rajendra Singh. Jurisdiction under Section 263 can be exercised whenever it is found that the order of assessment was erroneous and prejudicial to the interest of the Revenue. Cases of assessment order passed on wrong assumption of facts, on incorrect application of law, without due application of mind or without following principles of natural justice are not beyond the scope of Section 263 of the Act.

FULL TEXT OF THE ABOVE JUDGMENT IS AS FOLLOWS:-

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