1992 (6) TMI 29 - HC - Income Tax

Summary

Issues:
1. Jurisdiction of Commissioner of Income-tax under section 263 of the Income-tax Act.
2. Interpretation of the Explanation to section 263(1) of the Income-tax Act.
3. Applicability of the decision in the case of CIT v. P. Muncherji and Co. [1987] 167 ITR 671.
4. Effect of pending special leave petition from a High Court judgment on subsequent applications under section 256(2) of the Income-tax Act.

Detailed Analysis:
1. The judgment addressed an application under section 256(2) of the Income-tax Act, 1961, where the Revenue sought direction to the Tribunal regarding the jurisdiction of the Commissioner of Income-tax under section 263. The issue arose from a case where the Tribunal held that once an assessment order is confirmed by the Appellate Assistant Commissioner, the Commissioner of Income-tax cannot exercise powers under section 263 as the orders have merged. The Tribunal relied on the decision in CIT v. P. Muncherji and Co. [1987] 167 ITR 671, stating that the assessment order merges with the appellate order, limiting the Commissioner's jurisdiction.

2. The judgment delved into the interpretation of the Explanation to section 263(1) of the Income-tax Act, highlighting the amendment introduced in June 1988. The amended clause (c) extended the Commissioner's powers to matters not considered in an appeal. However, the court clarified that this amendment could not be applied retrospectively to orders passed before June 1988. The court cited the case of Ritz Ltd. v. Union of India [1990] 184 ITR 599, which affirmed that the amended clause did not cover orders passed prior to June 1988, as it only came into effect from that date.

3. The judgment emphasized the relevance of the decision in CIT v. P. Muncherji and Co. [1987] 167 ITR 671, where the Division Bench concluded that once an assessment order is confirmed by the Appellate Assistant Commissioner, the Commissioner of Income-tax loses jurisdiction to revise the order under section 263. The court reiterated that this decision was binding until any contrary ruling by a higher court.

4. Regarding the effect of a pending special leave petition on subsequent applications under section 256(2) of the Income-tax Act, the judgment referred to CIT v. Desai Brothers Ltd. [1991] 189 ITR 88. It stated that until the Supreme Court decides on a question, the High Court is bound by its own earlier decisions. The judgment highlighted that pending special leave petitions do not automatically impact the applicability of existing judgments in the High Court.

In conclusion, the court dismissed the application under section 256(2) of the Income-tax Act, emphasizing adherence to established legal principles and precedents in determining the jurisdiction of the Commissioner of Income-tax under section 263.