1981 (1) TMI 126 - AT - Income Tax

Summary

Issues: Jurisdiction of CIT to revise assessment order under section 263 of the Income Tax Act

Analysis:
The case involves the jurisdiction of the Commissioner of Income Tax (CIT) to revise an assessment order under section 263 of the Income Tax Act. The CIT issued a show cause notice to the assessee, questioning the assessment order made by the Income Tax Officer (ITO) for allowing excessive depreciation and not properly calculating the income from the house property. The CIT held that the ITO's order was erroneous and prejudicial to the interest of the Revenue. The assessee contended that the assessment order had merged with the order of the Appellate Authority Commissioner (AAC) and, therefore, the CIT lacked jurisdiction to revise the assessment. The CIT, however, maintained that he had the authority to revise the assessment order. The CIT set aside the ITO's order and directed a re-assessment.

In the appeal before the Tribunal, the representative for the assessee relied on various decisions to argue that the CIT did not have the jurisdiction to pass the order under section 263 as the assessment had been subjected to an appeal before the AAC, and the entire assessment order made by the ITO had merged in the appellate order. The Departmental Representative countered the arguments, asserting that there was no merger of the assessment order and supported the CIT's approach. The Tribunal considered the arguments and referred to a case where the CIT sought to revise an order, but the High Court held that the CIT lost jurisdiction to revise the order of the ITO as the assessment order had merged into the appellate order of the AAC. The Tribunal, following the High Court's decision, upheld the preliminary objection raised by the representative for the assessee and concluded that the CIT had no jurisdiction to revise the assessment order under section 263.

The Tribunal, having decided on the jurisdictional issue, did not delve into the merits of the case. Consequently, the Tribunal allowed the appeal by the assessee based on the lack of jurisdiction of the CIT to revise the assessment order.