1985 (3) TMI 90 - AT - Income Tax

Assessment Order, Original Assessment, Original Order, Prejudicial To The Interests Of Revenue, Weighted Deduction

Summary

Issues:
- Whether the Commissioner can revise an order of reassessment under section 263 of the Income-tax Act, 1961.
- Whether the original assessment merges with the reassessment order, thereby preventing the Commissioner from revising the assessment.

Analysis:
1. The appeal before the Appellate Tribunal ITAT Bangalore involved a dispute regarding the Commissioner's power to revise an order of reassessment under section 263 of the Income-tax Act, 1961. The case pertained to an appeal by the assessee against the Commissioner's order under section 263, challenging the grant of weighted deduction under section 35B of the Act on commission paid to a company. The Commissioner contended that the original assessment order was erroneous and prejudicial to revenue, thus issuing a show-cause notice to the assessee for revising the assessment.

2. The crux of the issue revolved around whether the original assessment merged with the reassessment order, thereby impacting the Commissioner's authority to revise the assessment. The Tribunal examined the provisions of section 263(2) of the Act, which prohibited the revision of a reassessment order under certain conditions. The Tribunal considered the legal principle of merger in the context of reassessment and original assessment. It referred to relevant case laws, including decisions by the High Court of Karnataka, to determine that the original assessment effectively merged with the reassessment, preventing the Commissioner from modifying the assessment under section 263.

3. The Tribunal, after thorough analysis and consideration of legal precedents, concluded that there was indeed a merger of the original assessment with the reassessment. Consequently, it held that the Commissioner did not have the authority to revise the assessment under section 263. As a result, the appeal filed by the assessee was allowed, setting aside the Commissioner's order and upholding the grant of weighted deduction under section 35B of the Income-tax Act for the relevant assessment year.

This detailed analysis of the judgment showcases the legal intricacies involved in determining the scope of the Commissioner's powers to revise assessments and the concept of merger between original and reassessment orders in the context of income tax proceedings.