2007 (9) TMI 429 - HC - Income Tax

Revision order - Whether the Income-tax Appellate Tribunal erred in holding that the Commissioner had no jurisdiction u/s 263 to revise the order made by the IAC (Asstt.) taking into consideration that both the orders that is of the IAC and of the Commissioner u/s 263 were made before the insertion of the Explanation to section 263(1) by the Taxation Laws (Amendment) Act, 1984 with effect from October 1, 1984 - Held that the differences in the language used in the 1984 Amendment Act as well as in the Finance Act, 1989, there can be no doubt that the amendment to section 263 of the Act, was with effect from 1st October, 1984 - Thus, decided in favour of the assessee and against the Revenue.

Summary

Issues:
Jurisdiction of the Commissioner under section 263 of the Income-tax Act, 1961 before and after the insertion of the Explanation by the Taxation Laws (Amendment) Act, 1984.

Analysis:

1. The main issue in this case pertains to the jurisdiction of the Commissioner under section 263 of the Income-tax Act, 1961, specifically in relation to the assessment year 1979-80. The question raised was whether the Income-tax Appellate Tribunal erred in holding that the Commissioner had no jurisdiction to revise the order made by the IAC (Asstt.) considering that both orders were issued before the insertion of the Explanation to section 263(1) by the Taxation Laws (Amendment) Act, 1984.

2. The amendment to section 263(1) of the Income-tax Act was introduced by the Taxation Laws (Amendment) Act, 1984, with effect from October 1, 1984. The court examined the statute printed in [1984] 149 ITR (St.) 97 to understand the legislative intent behind the amendment.

3. Section 47 of the 1984 Amendment Act specifically addressed the amendment of section 263. It included an Explanation clarifying the scope of an order passed by the Income-tax Officer, encompassing orders made on the basis of directions issued by the Inspecting Assistant Commissioner under specific sections.

4. The court emphasized that the plain reading of the provision indicated Parliament's intention to insert the Explanation with effect from October 1, 1984, as explicitly stated in the section itself.

5. Referring to a decision by the Supreme Court in CIT v. Shri Arbuda Mills Ltd., the court highlighted a subsequent amendment to section 263 by the Finance Act, 1989, which clarified the extension of the Commissioner's powers in certain scenarios. By comparing the language used in the 1984 Amendment Act and the Finance Act, 1989, the court reaffirmed that the relevant amendment in this case was effective from October 1, 1984.

6. Based on the legislative intent and the comparison with subsequent amendments, the court concluded that the Commissioner did not have jurisdiction under section 263 to revise the order made by the IAC before the insertion of the Explanation in 1984. Consequently, the court ruled in favor of the assessee and against the Revenue, disposing of the reference accordingly.