1984 (8) TMI 105 - AT - Income Tax

Summary

Issues:
- Jurisdiction of CIT under section 263 regarding assessment order
- Merger of assessment order in appellate authority's order

Analysis:

Issue 1: Jurisdiction of CIT under section 263 regarding assessment order
The appeal was filed by the assessee company against the order of the Commissioner of Income Tax (CIT) under section 263. The CIT contended that the assessment made by the Income Tax Officer (ITO) was erroneous and prejudicial to the interest of revenue as a deduction of Rs. 19,38,131 was allowed without proper scrutiny. The CIT set aside the assessment and directed the ITO to reassess after providing the assessee with an opportunity to present evidence. The assessee argued that the assessment order had merged with the order of the Income-tax Appellate Commissioner (IAC) under section 144B, and therefore, the CIT had no jurisdiction to revise the assessment under section 263. The assessee also cited relevant case laws to support this argument. On the other hand, the Departmental Representative justified the CIT's order under section 263 by referring to a Full Bench ruling of the High Court of Madhya Pradesh and a ruling of the High Court of Bombay. After considering the submissions, the Tribunal held that the CIT's order under section 263 was without jurisdiction. The Tribunal emphasized that the allowance of Rs. 19,38,131 was made by the IAC under section 144B and not by the ITO, thus concluding that the CIT had no jurisdiction to deem this allowance as erroneous and prejudicial to revenue.

Issue 2: Merger of assessment order in appellate authority's order
The Tribunal analyzed conflicting decisions of the High Court of Bombay and Full Bench decisions of the High Court of Madhya Pradesh regarding the merger of assessment orders in appellate authority's orders. The Tribunal preferred to follow the ruling of the High Court of Bombay, which stated that once an assessment order has been the subject of an appeal, the CIT has no jurisdiction to revise the assessment under section 263. The Tribunal concluded that after the CIT (A) decided the appeal against the assessment order, the CIT did not have jurisdiction to revise the assessment under section 263. The Tribunal highlighted that the allowance of Rs. 19,38,131 was a result of the IAC's order under section 144B, not the ITO's order, further supporting the decision that the CIT's order under section 263 was without jurisdiction. Consequently, the Tribunal canceled the CIT's order under section 263 and allowed the appeal filed by the assessee company.