9911796707
TMI Blog1993 (12) TMI 89X X X X Extracts X X X X X X X X Extracts X X X X ..... ground was that the sales tax realised from customers was not shown as the assessee's income in accordance with the judgment of the Supreme Court in Chowringhee Sales Bureau P. Ltd. v. CIT [1973] 87 ITR 542. The assessee filed its objections. After taking into account the objections the CIT passed the order under section 263 on 26-2-1987. The relevant portion of the order is as under: "The basic facts of this year are at par with the facts of the very case for assessment years 1982-83 and 1983-84. The assessed income of the assessee before deduction under section 80MM is Rs. 1,75,822 including back interest of Rs. 3,35,275. The ITO as in earlier years, has allowed the assessee deduction on the gross total income while the assessee has no income from industrial undertaking the profits of which were entitled for deduction under section 80MM. Thus, on the basis of the facts of the case after giving the assessee an opportunity of being heard on 24-2-1987, I hold that the order of the ITO is prejudicial to the interests of revenue. I am, therefore, cancelling the same and directing the ITO to pass a fresh assessment order after taking into consideration all the revenue yielding aspect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ope of the order under section 263 was limited only to the relief under section 80HH and the ITO could not travel beyond the scope of the order while giving effect to the same. 7. The contention has to be accepted. Under section 263 of the Act, it is open to the CIT to assume jurisdiction under that section subject to certain conditions being fulfilled. If such conditions are fulfilled, the CIT is empowered to pass such order against the order sought to be revised "as the circumstances of the case justify". It has been expressly stated in the section that an order enhancing or modifying the assessment or cancelling the assessment and directing a fresh assessment would also fall within the expression "such order thereon as the circumstances of the case justify". The question would be whether the CIT can set aside the entire assessment when he has found that only the relief granted under section 80HH has been wrongly computed. An assessment consists of various aspects. The process of assessment includes not only the taxing of an income but also includes the decision that a particular income is not taxable. The assessment order consists of various decisions taken by the ITO on the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 263. While answering the question in the affirmative, His Lordship Justice S. Ranganathan (as His Lordship then was) held at page 12 as under: "The second question, in our opinion, is also capable of the same simple answer. Though the language of section 263 is quite wide, it only empowers the Commissioner to pass an order which the circumstances of the case will justify. As the Tribunal has rightly pointed out, the mere fact that there is some minor omission or mistake in the assessment order cannot justify the action of the Commissioner in setting aside the whole of the assessment order. Such a wholesale cancellation of the assessment with a direction to make a fresh assessment is called for only in cases where there is something totally or basically wrong with the assessment which is not capable of being remedied by amendments to the assessment order itself. In the present case, having come to the conclusion that there was a defect in the assessment order insofar as the question of levy of interest was not considered by the ITO, all that the Commissioner had to do was to direct the ITO to consider the question on merits and in accordance with law after giving the assessee an op ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the entire assessment in such a case - that is, in a case where there is a particular error which results in prejudice to the revenue-is only a means or method to legally empower the ITO, not to tamper with the other aspects of the assessment, but only to examine the particular matter which has been noticed by the CIT to be erroneous and prejudicial to the interests of revenue. The setting aside itself is not the end, but it is only a means to achieve the end. Therefore, even though the entire assessment is set aside it would not be open to the ITO to enter into those aspects which have not been the subject-matter of the application of mind by CIT. If on the other hand, the CIT himself comes to the conclusion that there is no need for any enquiry by the ITO on a particular matter which he considers erroneous and to cause prejudice to the interests of revenue, the section in terms authorises him to enhance the assessment. The power therefore to set aside the assessment and direct a fresh assessment, appears to have been conferred upon the CIT only for the purpose of enabling the ITO to make an enquiry into those aspects of the assessment which, in the view of the CIT, are errone ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee had not questioned the finding of the ITO regarding the taxability of the amount received for the sale of loom hours but had questioned only the treatment of certain loss in speculative transactions. Before the AAC, certain evidence was led in respect of the loss. The AAC set aside the assessment with a direction to the ITO to examine the evidence and reframe the assessment. While the assessment was being re-framed by the ITO pursuant to the AAC's order, the Supreme Court held in another case that the sale proceeds of loom hours were not taxable. The assessee therefore contended before the ITO that the sale proceeds of loom hours received by it should not be taxed. The ITO did not accede to the assessee's request on the ground that the AAC had set aside the assessment for a limited purpose and the question of taxing the sale proceeds of loom hours had been concluded earlier. The AAC on appeal deleted the income. The Tribunal set aside the AAC's order holding that it was not open to the assessee to take advantage of the fact that the assessment has been set aside and to claim relief which was nowhere in the picture earlier. The High Court upheld the order of the Tribunal. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ITO will have to understand the same as limited only to the question of section 80HH. Inasmuch as he sought to invoke the provisions of section 43B and include the sum of Rs. 32,40,408 in the assessment made pursuant to the order of the CIT, he exceeded his powers and the scope of the order of the CIT. 15. It was argued on behalf of the department that it would not be open to the assessee to take up the plea that the order of the CIT is limited only to the computation of section 80HH relief in view of the order of the CIT(A) dismissing the assessee's appeal against the order passed under section 154. It is contended that the basis of the order of the CIT(A) was that the order under section 154 could not survive since the entire assessment had been set aside by the CIT. The non-filing of any appeal against the order of the CIT(A), it is contended, amounts to acceptance, on the part of the assessee, of the fact that the entire assessment has been set aside and consequently the position that it would be open to the ITO to include the sales tax receipts as income. We cannot take such a view merely because the assessee did not file any appeal against the order of the CIT(A) dismiss ..... X X X X Extracts X X X X X X X X Extracts X X X X
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