1993 (10) TMI 68 - HC - Income Tax

Summary

Issues:
1. Jurisdiction of the Commissioner of Income-tax to revise original assessment.
2. Validity of cancelling the order of the Commissioner of Income-tax under section 16 of the Companies (Profits) Surtax Act, 1964.

Jurisdiction of the Commissioner of Income-tax to revise original assessment:
The case involved questions of law arising from an order dated May 21, 1981, under section 256(1) of the Income-tax Act, 1961, for the assessment year 1976-77. The Commissioner of Income-tax contended that the original assessment order made by the Income-tax Officer was erroneous and directed a recomputation of surtax payable by the assessee. The assessee argued that the assessment order had merged with the appellate order of the Commissioner of Income-tax (Appeals), thus limiting the Commissioner's jurisdiction under section 16 of the Companies (Profits) Surtax Act, 1964. The Appellate Tribunal analyzed the withdrawal of a ground of appeal by the assessee and concluded that the Commissioner had the jurisdiction to revise the original assessment, rejecting the contention that the entire surtax assessment had merged in the appellate order.

Validity of cancelling the order of the Commissioner of Income-tax under section 16:
The Appellate Tribunal referred to the decision of the Allahabad High Court in J. K. Synthetics Ltd. v. Addl. CIT [1976] 105 ITR 344 and canceled the order of the Commissioner of Income-tax under section 16 of the Companies (Profits) Surtax Act, 1964. The Tribunal held that the withdrawal of a ground of appeal amounted to rejection of the ground, and therefore, the subject matter had been considered by the Commissioner of Income-tax (Appeals). The Tribunal's decision was based on the principle that if an appellant has not pressed a ground of appeal and has withdrawn it, there is no effective order of the appellate authority on that point. Consequently, the Commissioner retained the jurisdiction to revise the original assessment under section 16.

In conclusion, the High Court held that the Tribunal was not justified in ruling that the entire surtax assessment had merged in the appellate order, thereby affirming the Commissioner's jurisdiction to revise the original assessment. The cancellation of the Commissioner's order under section 16 was also deemed invalid. The Court referenced decisions from Ganga Devi v. CWT [1987] 166 ITR 325 and CWT v. Sheo Kumar Dalmia [1986] 159 ITR 845 to support its findings. The reference was answered in favor of the Revenue, and costs were not awarded.