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TMI Blog2012 (2) TMI 308X X X X Extracts X X X X X X X X Extracts X X X X ..... ment u/s 143(3) and which does not form the subject matter of the reassessment, as in the present case, limitation must necessarily begin to run from the order u/s 143(3). See Ashoka Buildcon Ltd. Vs. ACIT (2010 - TMI - 76630 - Bombay High Court). Therefore invocation of the jurisdiction u/s 263 held to be barred by limitation by Tribunal u/s 263(2) is upheld. See CIT vs Alagendran Finance Ltd (2007 - TMI - 40388 - Supreme Court) – Decided against the Revenue. - INCOME TAX APPEAL NO.6375 OF 2010 - - - Dated:- 8-2-2012 - DR.D.Y.CHANDRACHUD M.S. SANKLECHA, JJ. Mr.Vimal Gupta for appellant. Ms.Aarti Vissanji with Mr.S.J.Mehta for respondent. ORAL JUDGMENT (PER DR.D.Y.CHANDRACHUD, J.) : This appeal arises out of an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssioner (Appeals) on 28 March 2001. Thereafter a second notice was issued under Section 148 on 28 March 2001. Following that on 26 March 2002 a second order of reassessment was passed for reworking of the deduction under Section 36(1)(viii). This order was set aside by the Tribunal on 27 August 2010 and an Appeal (IT Appeal No.1237 of 2011) is pending. On 28 March 2003 an order was passed by the Commissioner under Section 263 for disallowance under Section 36(1)(vii), (viia) and in respect of foreign exchange rate difference. The narration of facts would indicate the following admitted position: (i) In the order of assessment under Section 143(3) dated 10 March 1999 the deductions which were claimed under Clauses (vii) and (viia) of Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent and passed his order dated 26 March 2002 the explanation to Clause (vii) of Section 36(1) had been introduced on the statute book. The Assessing Officer, it is urged, was duty bound to apply the law as amended, which he failed to do. Moreover, it has been urged that Explanation 3 to Section 147 of the Act provides that for the purpose of assessment or reassessment under the Section, the Assessing Officer may assess or reassess the income in respect of any issue, which has escaped assessment, and such issue comes to his notice subsequently in the course of the proceedings under the section, notwithstanding that the reasons for such issue have not been included in the reasons recorded under subsection (2) of section 148. 5. The issue as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entire proceeding of assessment would be deemed to have been reopened. Since the Commissioner in exercise of his revisional jurisdiction reopened the order of assessment in relation to the lease equalisation fund which was not the subject matter of the reassessment proceedings, the period of limitation provided under subsection (2) of Section 263 would, it was held, begin to run from the date of the order of assessment and not from the order of reassessment. 6. But the submission which has been urged by the counsel for the revenue is that the decision of the Supreme Court in Alagendran Finance was rendered on 27 July 2007 which was prior to the amendment of Section 147 by the insertion of Explanation 3. The counsel submits that as a result ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he submission of the revenue is that by not passing an order of reassessment in respect of other independent issues, the order of the Assessing 2 [2010] 325 ITR 574 (Bombay) Officer can be construed to be erroneous and to be prejudicial to the interests of the Revenue within the meaning of Section 263. The submission cannot be accepted in the facts of the present case. The substantive part of Section 147 as well as Explanation 3 enables the Assessing Officer to assess or reassess income chargeable to tax which he has reason to believe had escaped assessment and other income which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under the section. There is nothing on the record of the present ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The order of assessment under Section 143(3) in the present case allowed the deduction which was claimed under Section 36(1)(vii), Section 36(1)(viia) and in respect of foreign exchange rate difference. Neither in the first order of reassessment dated 22 February 2000 nor in the second order of reassessment dated 26 March 2002 were these aspects determined. In other words on the aforesaid three issues, the original order of assessment dated 10 March 1999 passed under Section 143(3) continued to hold the field. Once that is the position, then clearly the doctrine of merger would not apply. The order under Section 143(3) passed on 10 March 1999 cannot stand merged with the orders of reassessment in respect of those issues which did not form ..... X X X X Extracts X X X X X X X X Extracts X X X X
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