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TMI Blog1990 (10) TMI 139X X X X Extracts X X X X X X X X Extracts X X X X ..... framed earlier were set aside and IAC was directed to frame assessments afresh in accordance with law and in the light of the observations made by CIT (Administration) and to assess the income from flats as income from other sources. 2. While framing fresh assessments assessing officer noticed that assessee had given the flat on rent w.e.f.15th February, 1979and accordingly for assessment year 1980-81, the income from flats ought to have been disclosed for 12 months from1-4-1979to31-3-1980, In the original assessment assessee disclosed the income from flats from15th February, 1979to30th April, 1979. The assessing officer had assessed the income as disclosed. For assessment years 1981-82 assessee had disclosed the income from1-5-1979to30-4-1980i.e. for 12 months. Similarly for assessment year 1982-83 assessee had disclosed the income from1-5-1980to30-4-1981and assessed as such. Considering the relevant provisions of law the Assessing Officer assessed the income from flats by adopting the financial year as previous year for all the three years. The income was assessed as income from other sources as directed by CIT. By this process the income from15-2-1979to31-3-1979got excluded fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT v. K. Ramachandra Rao [1981] 127 ITR 414 in support of his contention that it was open to the assessee to adopt any previous year in respect of any source of income. Learned counsel accordingly urged that the action of the revenue in adopting a different previous year of the assessee may be cancelled. 5. The learned D.R. Shri Subash Kumar contended that the orders passed by the assessing officer have been set aside by CIT under section 263. Even for the first assessment year i.e. 1980-81 the order stands cancelled and is substituted by a fresh order. In these circumstances, according to the learned D.R., it was not open to the learned counsel for the assessee to argue that the previous year in respect of the income from flats had earlier been adopted and accepted by the assessing officer. The assessee has not appealed against the order of Commissioner under section 263. As such cancellation of assessment and the direction for framing fresh assessment in accordance with law cannot be questioned by the assessee in these proceedings. According to the learned D.R. once an assessment is set aside for making it fresh, assessing officer is entitled to do what he could do while frami ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, if the accounts of the assessee are made up to a date within the said financial year then at the option of the assessee the 12 months ending on such date would be the previous year of the assessee. In the case of newly set up business or profession assessee is given an option to make up the accounts up to a date in respect of a period not exceeding 12 months from the date of such setting up and then for the year for the subsequent assessment years the previous year of the assessee would be the year ending such date. Sub-section (3) of section 3 provides that the assessee may have different previous year in respect of separate sources of income. Sub-section (4) which has been heavily relied upon by the learned counsel for the assessee is reproduced hereunder for ready reference : "Where in respect of a particular source of income or in respect of a business or profession newly set up, an assessee has once exercised the option under clause (b) or sub-clause (ii) of clause (d) or sub-clause (i) of clause (e) of sub-section (1) or has once been assessed, then, he shall not, in respect of that source, or, as the case may be, business or profession be entitled to vary the meaning of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essing officer has the power to change the previous year of the assessee or not, is not very relevant in this case. Assessee not having maintained any books of account was not entitled to exercise the option in adopting a different previous year than the financial year, which is available to those who maintain books of account. Assessing officer had wrongly accepted the previous year of the assessee while framing the original assessment as the year ending on 30th April. This was clearly against the provision of section 3 of Income-tax Act, 1961. 9. The next issue for our consideration is as to whether in a case where CIT has cancelled the assessment for making it fresh in accordance with law it was permissible to the assessing officer to re-consider the issue in respect of which no direction had been issued by the Commissioner of Income-tax under section 263. It is nobody's case that the assessing officer has acted against the direction of Commissioner of Income-tax under section 263. The directions of the Commissioner of Income-tax which undoubtedly are binding on the assessing officer have not been violated. In fact the Assessing Officer has faithfully carried out the direction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the entire income that has escaped assessment during that year. Reference may be made to the Hon'ble Supreme Court's decision in the case of V. Jaganmhan Rao v. CIT [1970] 75 ITR 373. Similarly once assessment is found to be erroneous on any ground by the CIT he has the power either to modify the assessment and remove the infinity in any order. Another option open to the CIT under section 263 is to cancel the assessment and direct a fresh assessment. Once the CIT has exercised the option of cancelling the assessment and has a fresh assessment, in our view, it is the duty of the assessing officer while framing the fresh assessment to make the assessment in according with law, subject to only one rider that the direction of the CIT are notover looked or ignored. The assessing authority has no power to review the orders of his superior authorities nor has he the power to ignore or by-pass the directions of the said authorities. But that is not to say that when the order of assessment has been set aside he cannot correct the errors of law made at the time of making the original assement which have not been considered or adjudicated upon by the superior authorities. Thus we are of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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