1989 (3) TMI 56 - HC - Income Tax

Summary

Issues:
Jurisdiction of Commissioner under section 263 of the Income-tax Act to revise an order passed by the Income-tax Officer in accordance with the directions given by the Inspecting Assistant Commissioner under section 144B of the Act.

Analysis:
The judgment pertains to a reference made under section 256(1) of the Income-tax Act, 1961, regarding the jurisdiction of the Commissioner to revise an order passed by the Income-tax Officer in accordance with the directions of the Inspecting Assistant Commissioner under section 144B of the Act. The Commissioner set aside the Income-tax Officer's order for the assessment year 1978-79 and directed a fresh assessment. The Tribunal, however, allowed the appeal by the assessee, stating that the Commissioner had no jurisdiction to revise the order under section 263 of the Act in such circumstances. The Revenue sought reference, leading to the question of law being referred to the High Court.

The High Court referred to a previous Division Bench judgment in CIT v. Vithal Textiles [1989] 175 ITR 629, which held that the Commissioner does have the jurisdiction under section 263 to revise an order passed by the Income-tax Officer following the directions of the Inspecting Assistant Commissioner under section 144B. The High Court agreed with this view and held that the Tribunal was not justified in setting aside the Commissioner's order under section 263 on the grounds of lack of jurisdiction.

The High Court dismissed the contention that the question referred was purely academic, emphasizing that it arose from the Tribunal's order and was not merely hypothetical. The Court concluded that the Commissioner was within his rights to set aside the Income-tax Officer's order under section 263, and therefore, the answer to the question referred was against the assessee. The parties were directed to bear their own costs in the reference.

In summary, the High Court held that the Commissioner had the jurisdiction under section 263 of the Income-tax Act to revise an order passed by the Income-tax Officer even if it was in accordance with the directions of the Inspecting Assistant Commissioner under section 144B. The Tribunal's decision to set aside the Commissioner's order was deemed unjustified, and the question of law referred to the High Court was answered in the negative, against the assessee.