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2009 (10) TMI 327 - HC - Income TaxRevision- Limitation- The appellant-assessee was engaged in arrack business during the previous year relevant for the assessment year 1992-93. Even though profit and loss account filed along with the income-tax returns showed net income of Rs. 10,53,607 the assessee returned income from arrack business only at Rs. 5,25,645, which was income assessable under section 44AC of the Income-tax Act, 1961. The assessment was completed ignoring the higher income shown in the profit and loss account as income from arrack business, but by accepting the income under section 44AC of the Act. The original assessment was completed on February 7, 1995. The assessee filed appeal against the assessment before the Commissioner of Income-tax (Appeals) set aside the assessment and remanded the case back to the assessing officer for the purpose of reconsidering the certain addition contested by the assessee in the appeal.. Held that- dismissing the appeal. The order of the Commissioner under section 263 issued on March 30, 2000 was within two years from the end of the financial year in which the revised assessment was issued that was on March 6, 1998. Therefore, the order of revision was within time.
Issues:
1. Jurisdiction of the Commissioner under section 263 of the Income-tax Act. 2. Time limitation for revision under section 263. 3. Merits of the impugned order regarding the revised assessment. Jurisdiction of the Commissioner under section 263 of the Income-tax Act: The appellant challenged the Commissioner's order under section 263, arguing that it was time-barred as the issue regarding the computation of business income from arrack under section 44AC was not part of the original appeal against the assessment completed in 1995. The appellant contended that the Commissioner should have revised the assessment within two years from the original order, which was not done. However, the respondent argued that the revision power should be considered concerning the revised order issued based on the appeal decisions. The Court held that the Commissioner could revise an assessment found prejudicial to the Revenue within two years of the end of the financial year in which the revised order was passed. The Court noted that the Commissioner (Appeals) had the authority to enhance assessments, similar to the power of the regular Commissioner under section 263, to correct orders prejudicial to the Revenue. Time limitation for revision under section 263: The Court rejected the appellant's argument that the revision under section 263 was time-barred, emphasizing that the revised assessment was a new proceeding after the original assessment was set aside in appeal. The Court clarified that if the original assessment was not set aside in appeal, the limitation for revision under section 263 would be calculated from the date of the original assessment. In this case, the Commissioner's order under section 263 was held to be within the time limit as it was issued within two years from the end of the financial year in which the revised assessment was passed. Merits of the impugned order regarding the revised assessment: The Court found that the Assessing Officer had passed the revised assessment after the Supreme Court's decision in A. Sanyasi Rao's case but had ignored it, resulting in a substantial escapement of assessment. The Court noted that if the Assessing Officer had considered the Supreme Court's decision, the omission in the original assessment could have been corrected during the revision based on the appeal decisions. Therefore, the challenge against the merit of the impugned order was dismissed. In conclusion, the Court dismissed the writ appeal, upholding the Commissioner's jurisdiction under section 263, the time limitation for revision, and the merits of the impugned order regarding the revised assessment.
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