1983 (9) TMI 142 - AT - Income Tax

Summary

Issues:
Jurisdiction of Commissioner under section 263 regarding assessment made in pursuance of order under section 144B.
Validity of Commissioner's order setting aside assessment based on status of the assessee.
Jurisdiction of first appellate authority to entertain appeal on issues not covered by Commissioner's order under section 263.

Analysis:
The judgment involves two appeals filed by a company manufacturing automobile leaf springs, relating to the assessment year 1977-78. The Commissioner set aside the assessment, directing to treat the company as not substantially interested to the public, leading to an appeal by the assessee against this order.

The Special Bench decision in Fast Coast Marine Products (P.) Ltd. v. ITO was cited, emphasizing that the Commissioner's jurisdiction under section 263 is limited to issues not covered by the order under section 144B. The Tribunal found that the Commissioner cannot disturb findings of the IAC and observed that in cases under section 144B, the order is a combined effort of the IAC and ITO, not solely the ITO's.

The judgment clarified that the Commissioner's jurisdiction under section 263 does not extend to matters already resolved under section 144B, as evidenced by the Special Bench case. The ITO's order, in this case, was not subject to instructions under section 144B regarding the status of the assessee, making the Commissioner's notice under section 263 valid within jurisdiction.

Regarding the first appellate authority's decision not to entertain the appeal on other points due to the Commissioner's order, the judgment highlighted that the issues before the authority were independent of the status issue raised by the Commissioner. The authority's jurisdiction was upheld, and the appeal was directed to be restored for reconsideration on its merits.

In conclusion, the appeal in IT Appeal No. 352 (Hyd.) of 1981 was partly allowed for statistical purposes, while the appeal in IT Appeal No. 353 (Hyd.) of 1981 was allowed, emphasizing the need for a fresh consideration of the appeal by the first appellate authority.