2001 (7) TMI 96 - HC - Income Tax

Summary

Issues Involved:
1. Interpretation of Section 263 of the Income-tax Act, 1961 in relation to assessment proceedings.
2. Applicability of Section 263 during the pendency of proceedings under Section 132(5) of the Income-tax Act.

Analysis:

Issue 1: Interpretation of Section 263 of the Income-tax Act

The petitioner challenged a notice issued under Section 263 of the Income-tax Act, contending that Section 263 applies only to assessments made by the Income-tax Officer and not to orders by other authorities. The respondent argued that Section 263 empowers the Commissioner to revise any proceeding under the Act, including those conducted by officers empowered under Section 132(5) for assessing undisclosed income. The court held that the term "Income-tax Officer" in Section 263 includes any officer empowered to assess under the Act, as per the definition in Section 117. Therefore, Section 263 can apply to proceedings under Section 132(5) as they involve assessment of income and tax, meeting the criteria of "any proceeding" under the Act.

Issue 2: Applicability of Section 263 during the pendency of proceedings under Section 132(5)

The petitioner argued that Section 263 cannot be invoked during the pendency of proceedings under Section 132(5). However, the court noted that Section 132(5) empowers officers to estimate undisclosed income and assess tax, constituting an assessment proceeding under the Act. The court clarified that the pendency of proceedings under Section 132(5) does not bar the exercise of jurisdiction under Section 263. The court emphasized that the petitioner could raise objections during the Section 263 process, similar to those raised under Section 132(11). The court concluded that the petitioner's rights would not be prejudiced, and objections to assessments under Section 132(5) could be challenged in Section 263 proceedings, ultimately leading to a fresh assessment by the Assessing Officer.

In summary, the court dismissed the petition, stating that it was premature as it was filed when the notice was issued. The court highlighted that the petitioner could raise objections during the proceedings and would not suffer prejudice. The court emphasized that the Commissioner would refer the matter back to the Assessing Officer for a fresh assessment, whether under Section 132(11) or Section 263. Therefore, the court found no reason to interfere, dismissed the petition, and vacated all interim orders, with no costs awarded to either party.