COMMISSIONER OF INCOME TAX vs L. H. SUGAR FACTORIES LTD.

The Tribunal referred the following question for the opinion of this Court under s. 256(1) of the IT Act, 1961 (briefly, the Act).

"Whether, on the facts and in the circumstances of the case, the Tribunal was legally correct in holding that the CIT had no jurisdiction under s. 263 of the IT Act, 1961 to revise the order of the ITO in this case ?"

The case relates to the asst. yrs. 1975-76 and 1976-77.

The Tribunal relying on an order passed by the Delhi Bench E Delhi in ITA No. 5059/Del/77-78 dt. 30th October, 1979 in the case of Dhampur Sugar Mills Ltd., held that the CIT had no jurisdiction to pass the impugned order under s. 263(1) of the Act.

Before us, the learned standing counsel adverting to cl. (c) of the Expln. to s. 263(1) of the Act submitted that the part of the assessment order which was not appealed against, could not have merged in the order of the appellate authority and, therefore, in view of cl. (c), the CIT would have jurisdiction to pass the impugned order under s. 263(1) of the Act. Admittedly, the appeal was filed only against part of the assessment order and, therefore, the question is whether the part of the order which was not appealed against, would stand merged in the order of the appellate authority. The contention of the standing counsel is that part of the order which was not appealed against, would not merge in the appeal order in view of cl. (c) of the Expln. to s. 263(1), which is retrospective in nature.

On the other hand, the submission of learned counsel for the assessee is that appeal for the years in question had been decided by the appellate authority much before the Explanation was inserted in s. 263(1) of the Act, and, therefore, the Expln. to s. 263(1) would have no application to the case at hand.

Since the contention of the standing counsel is that cl. (c) of the Expln. to s. 263(1) is retrospective in nature and, hence is applicable to the case at hand, it is nothing but necessary to consider this contention. It is important to note that a division Bench of this Court remitted the case of Dhampur Sugar Mills Ltd. to the Tribunal which decision is the sole basis of the order of the Tribunal [see Commissioner of Income Tax Vs. Dhampur Sugar Mills Ltd., and, therefore, it is nothing but appropriate to direct the Tribunal in this case also to consider the question whether on the facts and in the circumstances of this case, cl. (c) of the Expln. to s. 263(1) is applicable, and if so what is the effect of the newly inserted cl. (c) of the Expln. to s. 263(1) of the Act.

We accordingly, direct the Tribunal to decide the aforementioned question afresh giving opportunity of being heard to the parties after considering the rival submissions of the parties relating to cl. (c) of the Expln. to s. 263(1) of the Act.