1993 (11) TMI 242 - HC - Income Tax

Summary

Issues:
1. Jurisdiction of CIT under s. 263 when CIT(A) already passed order in the same assessment.
2. Justification of Tribunal's decision regarding the effective date of a notification for purchase tax liability.

Analysis:

Issue 1:
The case involved the jurisdiction of the Commissioner of Income Tax (CIT) under section 263 when the CIT(A) had already passed an order in the same assessment. The respondent, an assessee to income tax, had made a provision for purchase tax in the accounting period ending on 31st March 1979. The CIT, in suo motu revisional proceedings, held that the provision for purchase tax was an error and directed revision of the assessment order. The Tribunal later held that the CIT was not justified in directing the taxation solely based on the date of a notification. The High Court, after considering the arguments, held that the Tribunal was in error in invoking the theory of merger and that the CIT had jurisdiction under s. 263 since the point considered by the CIT was not part of the appeal before the first appellate authority. The Court answered this question in the affirmative, in favor of the Revenue and against the assessee.

Issue 2:
The second issue revolved around the legal effect of a notification dated 3rd April 1979 regarding the purchase tax liability. The High Court referred to a previous Bench decision where it was held that the notification published on 29th March 1979 was effective only from 3rd April 1979. Consequently, the liability towards the purchase tax did not fall within the accounting period ending on 31st March 1979. The Court upheld this interpretation, answering question No. 2 in the affirmative, against the Revenue and in favor of the assessee. Therefore, the notification's effective date played a crucial role in determining the purchase tax liability for the relevant assessment year.

In conclusion, the High Court clarified the issues regarding the jurisdiction of the CIT under s. 263 and the effective date of the notification for purchase tax liability, providing a detailed analysis and ultimately disposing of the reference accordingly.