C.S.P. Singh, J. - (1.) THE Income-tax Appellate Tribunal, Allahabad Bench, has referred the following questions : " 1. Whether, on the facts and in the circumstances of the case, the Commissioner having authorised an appeal against the order of the Appellate Assistant Commissioner for the assessment year 1960-61 was justified in passing an order under Section 33B relying solely on the very order of the Appellate Assistant Commissioner for the purposes of holding that the order of the Income-tax Officer was erroneous in so far as it was prejudicial to the interest of revenue ? 2. Whether Section 33B proceedings can be taken against the legal heirs of a deceased assessee, and if so, whether the proceedings taken in this case by issue of a notice on an heir who was the karta of the Hindu undivided family are valid ? 3. Whether the legality of an assessment which had become final could be challenged in the proceedings taken by the Commissioner of Income-tax under Section 33B of the Indian Income-tax Act, 1922 ?"
(2.) THE assessee, Sunderlal, had filed a return for the assessment year 1959-60 on September 5, 1959, in response to a notice under Section 22(2) dated May 2, 1959. In the return, he showed a net loss of Rs. 4,229. In Section D of the return, the assessee claimed that a sum of Rs. 1,02,500, received by him on retirement from the firm styled Messrs. Ram Kishore Sunder Lal and Co. (sic) and was, therefore, not includible in his income. THE assessee died on February 11, 1961, but the Income-tax Officer completed the assessment on February 6, 1964. THE Income-tax Officer did not include the amount of Rs. 1,02,500 in the income of that year on the ground that it was received in April, 1959, and as such was to be considered in the assessment year 1960-61 only. THE Income-tax Officer thereafter, assessed this amount as capital gain in the assessment year 1960-61. An appeal was filed by the assessee against the aforesaid inclusion and the Appellate Assistant Commissioner deleted the addition on the ground that the amount was assessable as capital gain in the assessment year 1959-60 and not in the assessment year 1960-61. THE Commissioner of Income-tax being of the view that the order of the Income-tax Officer for the year 1959-60 was prejudicial to the interest of the revenue, issued a notice under Section 33B of the Act to Bankey Behari Lal, the legal heir of the deceased assessee, to show cause why action under Section 33B of the Act should not be taken. In the meantime, it appears that the department had filed an appeal before the Tribunal for the assessment year 1960-61. THE Commissioner, however, passed the following order: " THE counsel only wanted that action under Section 33B be deferred till the disposal of the appeal for the assessment year 1960-61 by the Tribunal. I do not find any force in this argument and his request cannot, therefore, be adhered to. For the reasons in para. 2 above (wherein the order of the Appellate Assistant Commissioner for the assessment year 1960-61 has been discussed), the Income-tax Officer's order under Section 23(3) of the Indian Income-tax Act, 1922, dated February 6, 1964, is erroneous; the assessment is, therefore, set aside and the Income-tax Officer is directed to make a fresh assessment in accordance with law." The order of the Commissioner was thereafter challenged by the assessee before the Tribunal. The Tribunal repelled the contention that the order of assessment was a nullity as it was passed against a dead person on the basis of a decision of the Supreme Court in the case of Income-tax Officer v. S. K. Habibullah, [1962] 44 I.T.R. 809 (S.C.) and held that the assessment order had to be taken as a valid order till such time that it was not set aside and this being so, this question could not be agitated in the appeal against the Section 33B order. It also negatived the contention that the order under Section 33B was invalid as it was passed against a dead person on the ground that the order having been served on Bankey Behari Lal, the karta and heir of the deceased, the order in question had to be treated as one passed against him and not against a deceased person. It, however, held that inasmuch as the Commissioner had authorised the filing of an appeal against the order of the Appellate Assistant Commissioner for the assessment year 1960-61, the Commissioner did not exercise his powers under Section 33B in accordance with the law, and further that the Commissioner had not applied his mind to the matters in dispute, inasmuch as he had relied solely on the order of the Appellate Assistant Commissioner for passing the order. It also took the view that the proceedings under Section 33B could not be taken against the heirs of a deceased assessee. We now propose to deal with the questions referred to in seriatim. Coming to the first question, Section 33B runs as follows : " 33B. Power of Commissioner to revise Income-lax Officer's orders.--(1) The Commissioner may call for and examine the record of any proceeding under this Act and if he considers that any order passed therein by the Income-tax Officer is erroneous in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such enquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment. (2) No order shall be made under Sub-section (1)-- (a) to revise an order of reassessment made under the provisions of Section 34 ; or (b) after the expiry of two years from the date of the order sought to be revised. (3) Any assessee objecting to an order passed by the Commissioner under Sub-section (1) may appeal to the Appellate Tribunal within 60 days of the date on which the order is communicated to him. (4) An appeal to the Appellate Tribunal under Sub-section (3) shall be in the prescribed form and shall be verified in the prescribed manner and shall be accompanied by a treasury receipt in support of having paid the fee of Rs. 100, and such appeal shall be dealt within the same manner as if it were an appeal under Sub-section (1) of Section 33."
(3.) THIS section empowers the Commissioner to call for and examine record of any proceedings and to pass any order which he thinks fit, in case he is satisfied that the Income-tax Officer has passed an order which is prejudicial to the interest of the revenue. It will be seen that the Commissioner can exercise his power under this section only in case he considers the order passed by the Income-tax Officer to be "prejudicial to the interest of the revenue ". The revisional power conferred on the Commissioner is undoubtedly a quasi-judicial power (See Dwarka Nath v. Income-tax Officer, 1965 57 ITR 349. Although the case deals with the nature of the powers conferred on the Commissioner under Section 33A(2) of the Act, we see no difference in that power and the one exercised under Section 33B of the Act. THIS being so, he must give his own reasons for being satisfied that the order passed by the Income-tax Officer is prejudicial to the interest of the revenue. THIS conclusion is further strengthened by the use of the words " if he considers " used in the sub-section which postulates a scrutiny by the Commissioner of all the relevant facts for holding that the order is prejudicial to the interest of the revenue. A perusal of the order of the Commissioner of Income-tax shows that after referring to the fact that the Appellate Assistant Commissioner had held that the amount in question was taxable in the assessment year 1959-60 and not in the assessment year 1960-61, and stating the reasons which led the Appellate Assistant Commissioner to come to this conclusion, the Commissioner of Income-tax held as under : " The Income-tax Officer had failed to assess the said capital gains in his order for the assessment year 1959-60. The Income-tax Officer's order under Section 23(3) of the Indian Income-tax Act, 1922, dated February 6, 1964, was, therefore, erroneous in so far as it is prejudicial to the interest of the revenue......" It will be seen that no reasons at all have been given by the Commissioner of Income-tax for coming to the conclusion that the order in question was prejudicial to the interest of the revenue. It is also not possible to accept the argument on behalf of the revenue that the Commissioner must be deemed to have adopted the reasoning of the Appellate Assistant Commissioner, inasmuch as he had authorised the Income-tax Officer to file an appeal to the Tribunal against the order of the Appellate Assistant Commissioner. It is settled law that an order passed by a quasi-judicial authority without giving any reasons for its conclusion is vitiated in law (See Bhagat Raja v. Union of India, AIR 1967 SC 1606). The order passed by the Commissioner clearly suffers from this infirmity.;