ABDUL HADI, J. - (1.) IN this tax case reference under section 256(1) of the INcome-tax Act, 1961 (hereinafter referred to as "the Act"), at tile instance of the Revenue, the questions of law arising out of the Tribunal's order dated March 2, 1979, in ITA. No. 221/Mds/1978-79 with reference to the assessment year 1974-75, are as follows "1. Whether, on the facts and in circumstances of the case, the Appellate Tribunal was right in law in cancelling the order of tile Commissioner of INcome-tax passed under section 263 for the assessment year 1974-75 in the assessee's case ?.2. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal's finding that the order of the INcome-tax Officer dated March 11, 1976, should be treated as non est is sustainable in law ?"
(2.) THE facts of the case are as followsTHE assessee filed a return on November 6, 1974, showing an income of Rs. 6, 860. An assessment was made on him on December 23, 1975. On December 31, 1975, the assessee filed a revised return showing an enhanced income. No notice under section 148 of the Act was issued by the Income-tax Officer. On March 11, 1976, however, another assessment order, on an income of Rs. 17, 097, was made on the assesseeSubsequently, the Commissioner of Income-tax, looking into the file of the assessee, held in his order dated February 7, 1978, under section 263 of the Act, that the above said second assessment order of the Incometax Officer dated March 11, 1976, was erroneous, in so far as it was prejudicial to the interests of the Revenue. For coming to this conclusion, apart from stating that only one assessment could be made for a year, lie made the following observations"In the original return, the assessee has admitted net agricultural income of Rs. 2, 500 while in the revised return, net agricultural income admitted is Rs. 5, 000. In the original return, the assessee has not admitted any income from property. Only in the return filed on January 5, 1976, (this must be the revised return filed on December 31, 1975), the assessee has admitted property income of Rs. 1, 816 for the first time. In addition, to this, the assessee has admitted purchase of 2 acres and 47 cents of wet lands at Kaveripettai on February 20, 1974, for a sum of Rs. 13, 710. After deducting savings from agricultural income of Rs. 5, 000 lie has admitted an income of Rs. 8, 710 under the head "Business" in addition to the income originally returned. The Income-tax Officer has not examined as to how the assessee has claimed savings of Rs. 5, 000 in the second return while he has actually admitted Rs. 2, 500 in the original return. Further, he has not also examined the source for the purchase of property in respect of which he has admitted an income of Rs. 1, 816 for the first time in the return filed on January 5, 1976. Therefore, I consider that these aspects are prejudicial to the interests of the Revenue as it is likely that the income to be assessed should be more than what has been actually returned by the assessee in the second return." * The assessee then appealed against the said order to the Tribunal. Before the Tribunal, it was submitted on behalf of the assessee that by his order dated March 11, 1976, the Income-tax Officer had made an assessment on a higher figure of income than earlier and hence such order could not be regarded as prejudicial to the interests of the Revenue and that there was no error in the order. It was also submitted that the assessment order dated March 11, 1976, could be treated as a valid order, the assessee having waived the issue of notice under section 148 of the ActThe Tribunal observed that a notice under section 148 of the Act was mandatory to give jurisdiction to the Income-tax Officer to make reassessment, where the original assessment had already been made and that there was no evidence to indicate that the assessee had waived notice under section 148 of the Act. The Tribunal, therefore, held that tile alleged assessment order dated March 11, 1976, was non est and that the Commissioner could not treat a non est order as prejudicial to tile Revenue and pass an order tinder section 263 of the Act. For the said reason alone, the Tribunal held that the Commissioner's order had to be set aside. But the Tribunal did not go into the merits of the case as to whether there was actually any prejudice done to the RevenueBefore us, learned counsel for the Revenue submitted that the Tribunal was wrong in cancelling the order of the Commissioner of Income-tax passed under section 263 of the Act, without even going into the merits of the case as to whether there was prejudice done to the Revenue. Learned counsel contended that the Tribunal had also failed to appreciate the true scope of the expression "prejudicial to the interests of the Revenue". In that context he brought to our notice Smt. Devi Aggarwal v. CIT 1973 AIR(SC) 254, 1973 (88) ITR 323, 1973 (3) SCC 482, 1973 (2) SCR 1035, 1973 TaxLR 150, 1975 (1) ITJ 67, 1973 (2) CTR 107, 1973 (2) CTR(SC) 107, 1973 (2) CTR 107 (SC), where it was held that (at page 328)Even where an income has not been earned and is not assessable, merely because the assessee wants it to be assessed in his or her hands in order to assist someone else who would have been assessed to a larger amount, an assessment so made can certainly be erroneous and prejudicial to the interests of the Revenue. "(underlining is ours)Then, he referred to Venkatakrishna Rice Co. v. CIT 1987 (163) ITR 129, 1987 (62) CTR 152, 1987 (30) TAXMAN 528, 1987 (62) CTR(Mad) 152 (Mad), where after reiterating that for invoking section 263, the order of the Income-tax Officer must not only be erroneous, but also the error must be of such a kind that it can be said of it that it is prejudicial to the interests of the Revenue, this court observed as follows (at page 137)" * In our judgment, the expression 'prejudicial to the interests of the Revenue' is not to be construed in a petty-fogging manner, but must be given a dignified construction . . . The interests of the Revenue are not to be equated to rupees and paise, merely . . . the interests of the Revenue are not tied up merely with realising as much revenue as possible, willy nilly, merely looking to the productivity aspect of taxation. The jurisdiction of the Commissioner under section 263 is undoubtedly supervisory jurisdiction . . . In this context, therefore, the expression prejudicial to the interests of the Revenue must be regarded as involving a conception of acts or orders which are subversive of the administration of revenue. There must be some grievous error in the order passed by the Income-tax Officer, which might set a bad trend or pattern for similar assessments, which on a broad reckoning, the Commissioner might think to be prejudicial to the interests of the Revenue Administration. There might be cases where the Commissioner might wish to interfere with an order of the Income-tax Officer in order to safeguard the fair name and reputation of the Income-tax Department without any thought of going into the particular aspects of the assessment. Assessments which are mala fide, politically and communally motivated may be, however, set aside as being prejudicial to the interests of the Revenue. It is unnecessary for us to illustrate the point any further. All that we wish to observe is that the scope of the interference under this section is not to set aside merely unfavourable orders and bring to tax some more money to the treasury. Nor is the section meant to get at sheer escapement of revenue which, as is well known, is taken care of by provisions elsewhere in the Act such, for instance, as section 147 of the Act. The prejudice must be prejudice to the revenue administration. (underlining is ours)Learned counsel for the Revenue also brought to our notice Balchand v. ITO 1969 AIR(SC) 496, 1969 (72) ITR 197, 1969 (1) SCR 704 (SC), where it has been held that the assessee cannot file a second return after the assessment order was passed. In the present case, it has already been pointed out that the second return was filed on December 31, 1975, after the original assessment order was made on December 23, 1975.
(3.) TO the same effect is Kerala Kaumudi (P) Ltd. v. CIT 1990 (181) ITR 30, 1989 (48) TAXMAN 76 (Ker)Learned, counsel pointed out that even though the above said second assessment order by the Income-tax Officer was a void order, yet it has to be set aside and it cannot be ignored and the Tribunal erred in holding that since the said second order of the Income-tax Officer was non est, the subsequent order of the Commissioner under section 263 was not justified. Learned counsel for the Revenue also cited V. Raju v. CIT 1984 (147) ITR 212, 1983 (36) CTR 17, 1984 (16) TAXMAN 249, 1984 (2) TLR 1241 (Mad), where it was held that any order passed by an authority without following the principles of natural justice was null and void even though it had been passed well within its jurisdiction. However, it was observed in the said decision as follows (at page 217)"So long as the order is passed under a statutory provision, it continues to be enforceable, unless it is set aside by the appropriate forum constituted under the same Act. Therefore, the assessee will be acting at his risk and peril if he ignores the order as being null and void." * Learned counsel for the Revenue also cited the following passage from Anisminic Ltd. v. Foreign Compensation Commission 1967 (2) AllER 986, 1967 (3) WLR 382, 1969 (2) AC 147 (HL) at page 169"If it is a nullity, that could only be established by raising some kind of proceedings in Court." * He also cited a passage quoted from Naresh Shridhar Mirajkar v. State of Maharashtra, 1967 AIR(SC) 1, 1966 (3) SCR 744, 28, in paragraph 53 in A R. Antulay v. R. S. Nayak 1988 AIR(SC) 1531, 1988 (2) CRIMES 753, 1988 (94) CRLJ 1661, 1988 CrLR(SC) 366, 1988 (2) JT 325, 1988 (S) Scale 52, 1988 (2) SCC 602, 1988 SCC(Cr) 372, 1988 (S1) SCR 1, 1988 CRLR 366, 1988 AIR(SC) 1531, 1988 (2) CRIMES 753, 1988 (94) CRLJ 1661, 1988 CrLR(SC) 366, 1988 (2) JT 325, 1988 (S) Scale 52, 1988 (2) SCC 602, 1988 SCC(Cr) 372, 1988 (S1) SCR 1, 1988 CRLR 366. That passage was made in the context of the rule which required furnishing of security in a petition under article 32 of the Constitution of India and which was struck down in Prem Chand Garg v. Excise Commissioner, 1963 AIR(SC) 996, 1963 (S1) SCR 885 as offending fundamental rights and hence void. Hence, the earlier order of the court to furnish such security based on that rule was set aside. In that context the Supreme Court, in Naresh Shridhar Mirajkar v. State of Maharashtra, 1967 AIR(SC) 1, 1966 (3) SCR 744, 28, referred to the above-referred passage which is as follows "But a judicial decision based on such a rule is not any better and offends the fundamental rights just the same and not less so because it happens to be a judicial order. If there be no appropriate remedy to get such an order removed because the court has no superior, it does not mean that the order is made good. When judged under the Constitution it is still a void order although it may bind the parties unless set aside." * This passage was quoted with approval in A. R. Antulay v. R. S. Nayak 1988 AIR(SC) 1531, 1988 (2) CRIMES 753, 1988 (94) CRLJ 1661, 1988 CrLR(SC) 366, 1988 (2) JT 325, 1988 (S) Scale 52, 1988 (2) SCC 602, 1988 SCC(Cr) 372, 1988 (S1) SCR 1, 1988 CRLR 366, 658 1988 AIR(SC) 1531, 1988 (2) CRIMES 753, 1988 (94) CRLJ 1661, 1988 CrLR(SC) 366, 1988 (2) JT 325, 1988 (S) Scale 52, 1988 (2) SCC 602, 1988 SCC(Cr) 372, 1988 (S1) SCR 1, 1988 CRLR 366. In A. R. Antulay v. R. S. Nayak 1988 AIR(SC) 1531, 1988 (2) CRIMES 753, 1988 (94) CRLJ 1661, 1988 CrLR(SC) 366, 1988 (2) JT 325, 1988 (S) Scale 52, 1988 (2) SCC 602, 1988 SCC(Cr) 372, 1988 (S1) SCR 1, 1988 CRLR 366, the question was whether the direction given by the Supreme Court on February 16, 1984, in R. S. Nayak v. A. R. Antulay 1984 AIR(SC) 684, 1984 (3) Crimes 568, 1984 CAR 141, 1984 CrLR(SC) 163, 1984 (1) SLJ 347, 1984 (1) SLR 619, 1984 (3) Scale 198, 1984 (2) SCC 183, 1984 SCC(Cr) 172, 1984 (2) SCR 495, 1984 (90) CRLJ 613, 1984 (86) BomLR 365, 245 1984 AIR(SC) 684, 1984 (3) Crimes 568, 1984 CAR 141, 1984 CrLR(SC) 163, 1984 (1) SLJ 347, 1984 (1) SLR 619, 1984 (3) Scale 198, 1984 (2) SCC 183, 1984 SCC(Cr) 172, 1984 (2) SCR 495, 1984 (90) CRLJ 613, 1984 (86) BomLR 365, withdrawing a criminal case pending in the court of the special judge and transferring the same to the High Court in breach of section 7(1) of the Criminal Law Amendment Act, 1952, which mandates that the offences in question shall be tried by a special judge only, thereby denying at least one right of appeal, was violative of articles 14 and 21 of the Constitution, was not valid. Tile Supreme Court in A. R. Antulay v. R. S. Nayak, (supra) referred to above, held that the said direction violated fundamental rights, recalled it and quashed all proceedings subsequent to the said direction and directed trial of the offences to be proceeded with under the said Act of 1952The Supreme Court in A. R. Antulay v. R. S. Nayak (supra), 1546, referred to above also referred to Kiran Singh v. Chaman Paswan, 1954 AIR(SC) 340, 1955 (1) SCR 117, 1954 (2) MLJ 60, 1954 ALJ 551, 1965 KerLT 1195, 1954 All(LJ) 546 and observed as follows"In Kiran Singh v. Chaman, Paswan, (supra), 121, Venkatarama Ayyar J., observed that the fundamental principle is well established that a decree passed by a court without jurisdiction is a nullity, and that its invalidity could be set up whenever and wherever it is sought to be enforced or relied upon-even at the stage of execution and even in collateral proceedings. A defect of jurisdiction, whether it is pecuniary or territorial, or whether it is in respect of the subject-matter of the action, strikes at the very authority of the court to pass any decree, and such a defect cannot be cured even by consent of parties." * After referring to Kiran Singh, v. Chaman Paswan, (supra), thus, the Supreme Court in A. R. Antulay v. R. S. Nayak (supra), 1546, also, observed as follows"This question has been well put, if we may say so, in the decision of this court in M. L. Sethi v. R. P. Kapur, 1972 AIR(SC) 2379, 1972 (2) SCC 427, 1973 (1) SCR 697 1972 AIR(SC) 2379, 1972 (2) SCC 427, 1973 (1) SCR 697 1972 AIR(SC) 2379, 1972 (2) SCC 427, 1973 (1) SCR 697, where Mathew J., observed that the jurisdiction was a verbal coat of many colours and referred to the decision in Anisminic Ltd. v. Foreign Compensation Commission 1967 (2) AllER 986, 1967 (3) WLR 382, 1969 (2) AC 147 (HL), where the majority of the House of Lords dealt with the assimilation of the concepts of 'lack' and 'excess' of jurisdiction or, in other words, the extent to which we have moved away from the traditional concept of jurisdiction. ;