Commissioner of Income Tax vs Carborandum Universal Ltd. <BR>Carborandum Universal Ltd. Vs Commissioner of Income Tax

R. Jayasimha Babu, J.—Three questions have been referred to us, one at the instance of the Revenue and two at the instance of the

assessee. The assessment year in question is 1978-79. The question referred to us at the instance of the Revenue is as under :

Whether, on the facts and in the circumstances of the case the Appellate Tribunal is correct in law in holding that the original assessment order got

merged with the appellate order of the Commissioner of Income Tax (Appeals) and hence the Commissioner had no jurisdiction to interfere u/s

263 of the Income Tax Act ?

The questions referred to us at the instance of the assessee are as under :

Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that on the facts though the

assessment had been made in accordance with the directions of the Inspecting Assistant Commissioner u/s 144B of the Act, the jurisdiction to

revise the assessment by the Commissioner of Income Tax u/s 263 did not stand excluded ?

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

Tax had jurisdiction to act u/s 263 of the Income Tax Act on the ground that dropping of proceedings commenced u/s 147 was not synonymous in

the circumstances of the case with an order of reassessment made u/s 147 and, therefore, the bar prescribed by the provisions of Section 263(2)

(a) precluding the Commissioner of Income Tax from exercising his powers u/s 263 did not operate ?

The Supreme Court in the case of COMMISSIONER OF Income Tax Vs. SHRI ARBUDA MILLS LTD., , has held that it is open to the

Commissioner to exercise the powers of revision u/s 263(1) of the Act notwithstanding the fact that the original assessments had not been affected

from (sic) and that revisional jurisdiction is available for exercise in respect of matters which was not the subject-matter of the appeal. Here it is not

the case of the assessee that the matter sought to be revised was the subject-matter of the appeal. The first question therefore is answered in

favour of the Revenue and against the assessee.

The second question is also to be answered in favour of the Revenue and against the assessee in the light of the decision of the court in the case

of Commissioner of Income Tax Vs. V.V.A. Shanmugam, , wherein it has been held that notwithstanding the fact that the initial assessment has

been made in accordance with the direction given by the Inspecting Assistant Commissioner u/s 144B of the Act, the Commissioner had

jurisdiction to revise the order of the Income Tax Officer.

So far as the third question is concerned, the Tribunal, in our view, has rightly held that the order dropping the proceedings is not an order of

reassessment and, therefore, notwithstanding the fact of dropping of those proceeding''s, the Commissioner has jurisdiction to revise the original

assessment order made u/s 263(2)(a) of the Act. Our answer to this question is against the assessee and in favour of the Revenue. As the Tribunal

has not examined the merits of the case, we direct the Tribunal to do so now.