1996 (2) TMI 63 - HC - Income Tax

Summary

Issues:
Jurisdiction of Commissioner under section 263 of the Income-tax Act, 1961 to revise assessment order under section 143(1)

Analysis:
The case involved a reference under section 256(1) of the Income-tax Act, 1961 regarding the jurisdiction of the Commissioner to revise an assessment order under section 143(1). The Tribunal referred the question of law to the High Court, questioning the justification of holding that the Commissioner had no jurisdiction to revise the assessment order. The assessment in question was for the year 1980-81, with the assessment order completed by the Income-tax Officer on March 31, 1983, and served to the assessee on February 10, 1984. The assessee objected to the assessment under section 143(2)(a) of the Act, leading to the Commissioner setting aside the order for de novo assessment under section 263 of the Act.

The High Court analyzed the provisions of section 143 of the Act, emphasizing that an assessment under section 143(1) becomes inchoate when objected to by the assessee within the prescribed period under section 143(2)(a). The Court highlighted that the assessment order loses finality in such cases, as per the provisions of section 143(3)(b) which require a fresh assessment if the initial assessment is objected to or deemed incorrect by the Assessing Officer. The Court noted that the Commissioner can only revise a final order, and since the assessment in question was inchoate due to the objection raised by the assessee, the Commissioner had no jurisdiction under section 263 to interfere with that order.

Furthermore, the Court clarified that the period of limitation of two years under section 153 for completing the assessment would not apply in this scenario, as the Assessing Officer was within the prescribed period when making the initial assessment. The Court concluded that the Tribunal's decision was justified, ruling in favor of the assessee and against the Revenue. The judgment highlighted the importance of finality in assessment orders for the Commissioner to exercise revisionary powers under the Act.