1991 (10) TMI 36 - HC - Income Tax

Summary

Issues Involved:
The issue involves the jurisdiction of the Commissioner of Income-tax to revise an assessment order passed by the Income-tax Officer in conformity with the directions given by the Inspecting Assistant Commissioner under section 263 of the Income-tax Act, 1961.

Summary:
The case involved the assessment of the assessee for the year 1973-74, where the Commissioner of Income-tax initiated proceedings under section 263 of the Income-tax Act, 1961, deeming the assessment order prejudicial to the Revenue's interests. The Commissioner set aside the assessment order passed by the Income-tax Officer and directed a reassessment. The Tribunal held that the Commissioner lacked jurisdiction to revise the order as it was passed after approval by the Inspecting Assistant Commissioner. The main contention was whether the order was that of the Income-tax Officer or the Inspecting Assistant Commissioner.

The Revenue argued that the order revised by the Commissioner was that of the Income-tax Officer, even though approved by the Inspecting Assistant Commissioner, and thus, the Commissioner had the authority to set it aside under section 263. On the other hand, the assessee contended that the order was essentially passed by the Inspecting Assistant Commissioner, depriving the Commissioner of jurisdiction.

Section 263(1) empowered the Commissioner to examine and pass orders on proceedings under the Act if deemed prejudicial to Revenue's interests. The Explanation to section 263(1) clarified that an order made on the basis of directions by the Inspecting Assistant Commissioner was subject to revision. The Tribunal's conclusion that the Commissioner lacked jurisdiction was deemed incorrect as the order remained that of the Income-tax Officer, even with the Inspecting Assistant Commissioner's approval.

The Explanation to section 263(1) was added to remove doubts and did not create new jurisdiction. It was clarificatory in nature and did not alter substantive law. The Tribunal's decision was overturned as the order, despite approval by the Inspecting Assistant Commissioner, remained under the Income-tax Officer's jurisdiction, allowing the Commissioner to revise it under section 263.

The judgment favored the Revenue, holding that the Commissioner had the jurisdiction to revise the assessment order passed by the Income-tax Officer, even with approval from the Inspecting Assistant Commissioner. The reference was answered in favor of the Revenue, with no costs incurred.

Separate Judgment by S. K. MOHANTY:
S. K. MOHANTY agreed with the judgment delivered by ARIJIT PASAYAT, supporting the decision in favor of the Revenue.