Commissioner of Income Tax vs Andhra Civil Construction Ltd.

R. Jayasimha Babu, J.—The question referred at the instance of the Revenue is,

Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the Commissioner of Income Tax was

not correct in invoking the provisions of Section 263 of the Income Tax Act, 1961 ?

The assessee had filed a return for the assessment year 1982-83 showing a loss of Rs. 3,13,970. The Assessing Officer merely endorsed ""not

assessable"" on that return. That order was thereafter suo motu revised by the Commissioner u/s 263 of the Income Tax Act, 1961, on the ground

that unabsorbed investment allowance, unabsorbed depreciation as also unabsorbed development rebate ought to have been scrutinised by the

Assessing Officer before accepting that return. That failure to carry out such scrutiny had not only rendered the assessment erroneous but also

caused prejudice to the Revenue. The assessee appealed to the Tribunal against that order of the Commissioner. The Commissioner took the view

that when the Assessing Officer ordered ""not assessable"" it would amount to acceptance of the claims made by the assessee with regard to the

losses and not its rejection and therefore, prejudice had been caused to the Revenue by reason of the order of the Income Tax Officer. The

Tribunal held that the pre-conditions for invoking the jurisdiction u/s 263 of the Act were not available to the Commissioner as the order had not

resulted in any prejudice to the Revenue.

Learned counsel for the Revenue invited our attention to the case of Esthuri Aswathiah Vs. The Income Tax Officer, Mysore State, in which a

three-judge Bench of the apex court held that an order stating ""no proceeding"" by the Income Tax Officer, in the circumstances of that case, meant

acceptance of the return and the assessment of the income as ""nil"". This court also has held to the same effect in the case of V.S. Sivalingam

Chettiar Vs. Commissioner of Income Tax, Madrasras, . The Karnataka High Court has similarly held in the case of Commissioner of Income Tax,

Karnataka-I, Bangalore Vs. M.P. Davis, .

The view of the Tribunal that claims made by the assessee was rejected by reason of the order of ""no assessment"" is, therefore, not correct. The

further inference drawn by it that there was no prejudice caused to the Revenue as there was no acceptance of the claim which showed a

substantial amount of a carried forward loss on unabsorbed investment allowance, unabsorbed depreciation and unabsorbed development rebate

is also not correct.

The Commissioner was justified in invoking his power u/s 263 of the Income Tax Act. The question referred is answered in favour of the

Revenue and against the assessee.