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TMI Blog2015 (5) TMI 935X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT in exercise of his power under Section 263, the whole proceedings started afresh. Moreover, the assessment under Section 143 (1) of the Act was set aside by the Commissioner, the higher authority, in exercise of his powers under Section 263 of the Act, and therefore, it ceased to operate or in other words the Assessing Officer had to pass order under Section 143 (3) as if there was no assessment under Section 143 (1). In view thereof, it was open to the Assessing Officer to make assessment under sub-section (3) of Section 143 without seeking prior approval as contemplated by sub-section (2) thereof. In other words, this is not a case where the Assessing Officer chose to make reassessment under Section 143 (3) of the Act of his own. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red an expenditure of ₹ 3,380/- for selling the property and arrived at a net taxable capital gains of ₹ 26,620/-, after deducting ₹ 1,05,500/- as the value of the property on 01.01.1964 exercising his option under Section 49 (1) (i) read with Section 55 of the Act. The assessment was accordingly completed under Section 143(1) of the Act accepting the returned income. Subsequently, an order under Section 263 of the Act was passed by the Commissioner on 28.09.1987 having found the order of Assessing Officer prejudicial to the Revenue. The Commissioner accordingly set aside the order dated 22.07.1985 of assessment made under Section 143 (1) of the Act, and directed the Assessing Officer to conduct local enquiries into the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice, previous approval of the Inspecting Assistant Commissioner was not sought. Therefore, the question raised is, whether the assessment under Section 143 (3) of the Act, would vitiate for want of previous approval of the Inspecting Assistant Commissioner. We are concerned with the provisions of Section 143 of the Act, as it stood at the relevant time. Section 143, to the extent it is relevant for our purpose, reads thus: S. 143. Assessment. - (1)(a) Where a return has been made under section 139, the Assessing Officer may, without requiring the presence of the assessee or the production by him of any evidence in support of the return, make an assessment of the total income or loss of the assessee after making such adjustments to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re such notice is in pursuance of an application by the assessee under clause (a) shall not be issued by the Assessing Officer unless the previous approval of the Deputy Commissioner has been obtained to the issue of such notice: Provided further (3) On the day specified in the notice issued under sub-section (2), or as soon afterwards as may be, after hearing such evidence as the assessee may produce and such other evidence as the Assessing Officer may require on specified points, and after taking into account all relevant material which he has gathered. Sub-section (2) of Section 143 of the Act provides for issue of notice by the Assessing Officer, requiring the assessee, on the date to be therein specified, either to attend at the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y under Section 263 of the Act, whether the previous approval contemplated by sub-section (2) of Section 143 of the Act is necessary. In our opinion this question must be answered in the negative, since the original order under Section 143(1), having been quashed and set aside, it ceases to operate. At this stage, we would also like to have a glance at Section 263(1) of the Act. The relevant portion of Section 263(1) reads thus: The Commissioner may call for and examine the record of any proceedings under this Act, and if he considers that any order passed therein by the Assessing Officer is erroneous insofar as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order passed by CIT under Section 263 of the Act, the initial order of assessment ceases to be operative. The effect of re-opening of assessment is to vacate or set aside the initial order for assessment and to substitute in its place the order made of re-assessment. Thus, in the present case, in our opinion, after the previous assessment, which was set aside by the CIT in exercise of his power under Section 263 of the Act, the whole proceedings started afresh. Moreover, in the present case, the assessment under Section 143 (1) of the Act was set aside by the Commissioner, the higher authority, in exercise of his powers under Section 263 of the Act, and therefore, it ceased to operate or in other words the Assessing Officer had to pass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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