1992 (12) TMI 67 - AT - Income Tax

Additional Grounds Assessing Officer Assessment Order Financial Year Orders Passed Orders Prejudicial To Interests Original Assessment Set Off

Summary

Issues:
1. Dispute over the order of the Commissioner of Income-tax under section 263 of the Income-tax Act.
2. Assessment order modification under section 154 regarding deductions under sections 80M and 80K.
3. Set off of carried forward business loss against current year's income.
4. Validity of the order under section 263 and the time limit for passing such order.

Analysis:

Issue 1:
The appeal concerns the disagreement with the Commissioner's order under section 263 of the Income-tax Act, challenging the assessment order passed by the Income-tax Officer.

Issue 2:
The assessment order was modified under section 154 to rectify deductions under sections 80M and 80K, leading to a dispute over the correct computation of taxable income.

Issue 3:
The crux of the matter involves the set off of carried forward business loss against the current year's income, specifically regarding the violation of section 72(1) of the Income-tax Act.

Issue 4:
Regarding the validity of the order under section 263, the time limit for passing such an order is debated. The calculation of the time limit is determined by the final order effecting the assessment, as established by legal precedents such as Kishanlal Haricharan v. ITO and other relevant cases.

The Appellate Tribunal allowed the additional ground raised by the assessee, citing broad powers granted to the Tribunal under section 254 to consider points of law beyond those initially raised. The Tribunal's jurisdiction extends to permitting additional grounds related to the subject matter of the proceedings.

In determining the time limit for passing an order under section 263, the Tribunal followed the principle that the final order effecting the assessment is crucial. Legal precedents emphasize that the assessment process continues until the final order is passed, including modifications under section 154, which dictate the starting point for calculating the period of limitation under section 263.

Regarding the main ground of appeal, the Tribunal found that the Commissioner's order under section 263 lacked clarity on how the assessment was prejudicial to the Revenue's interest. The Tribunal ruled in favor of the assessee, stating that the assessment order had rectified any mistakes and had conducted necessary enquiries, thereby invalidating the Commissioner's decision to set aside the assessment.

In conclusion, the Tribunal partially allowed the appeal, finding in favor of the assessee on the issue of setting aside the assessment order based on the set off of carried forward losses.