1985 (9) TMI 124 - AT - Income Tax

Summary

Issues:
Jurisdiction of Commissioner to revise assessment order passed by IAC under section 263 prior to 1-10-1984.

Analysis:
The appeal was filed against the order of the Commissioner under section 263 of the Income-tax Act, 1961, for the assessment year 1978-79, where the Commissioner set aside the assessment and directed a fresh assessment by the assessing officer. The main contention was whether the Commissioner had jurisdiction to revise an assessment order passed by the Inspecting Assistant Commissioner of Income-tax (IAC) before 1-10-1984. The representative for the assessee argued that the Commissioner's jurisdiction was limited to orders passed by the Income-tax Officer (ITO) only, not the IAC. He relied on the Explanation to section 263(1) introduced in 1984, stating it was not applicable to the Commissioner's order in 1981. The department's representative contended that the Explanation clarified existing law and enabled the Commissioner to revise orders by the IAC. The circular by the Board supported this interpretation.

The Tribunal analyzed the legislative intent behind the Explanation to section 263(1) and compared it to similar provisions in other sections. It noted that the Explanation, like others, aimed to remove doubts existing prior to the amendment. The Tribunal emphasized that the Explanation was prospective from 1-10-1984, indicating a specific effective date. It distinguished this from a retrospective amendment where the intention was to apply from the beginning. The Tribunal also highlighted that the legislative language did not suggest retrospective application. It concluded that the Explanation did not have effect before 1-10-1984, and the Commissioner lacked jurisdiction to revise the assessment order passed by the IAC.

The Tribunal further discussed the role of section 125A(4), which deems references to ITO as references to IAC when the latter performs ITO functions. However, the Tribunal found that this provision did not confer jurisdiction on the Commissioner for section 263 purposes. It emphasized the need for clear and unambiguous provisions for conferring jurisdiction. The Tribunal held that the doubt regarding jurisdiction, as acknowledged by the Legislature, should be resolved in favor of the assessee, following the principle established in previous case law. Consequently, the Tribunal concluded that the Commissioner's assumption of jurisdiction under section 263 against the IAC's assessment order was legally flawed and canceled the order.

The Tribunal's decision rendered the discussion of remaining grounds in the appeal unnecessary, and the appeal was allowed in favor of the assessee.