Commissioner of Income Tax vs Smt. Asha M. Primlani

Relevant to the assessment year 1979-80, the following question has been referred for our opinion:

Whether, on the facts and in the circumstances of the case, the Tribunal erred in holding that the CIT had no jurisdiction u/s 263 to revise the order made by the TAG (Asst.) taking into consideration that both the orders that is of the Inspecting Assistant Commissioner and of the Commissioner u/s 263 were made before the insertion of the Explanation to Section 263(1) by the Taxation Laws (Amendment) Act, 1984 with effect from 1-10-1984?

As the question itself suggests that the amendment to Section 263(1) of the Income Tax Act, 1961 (hereinafter referred to a ''Act'') was brought with effect from 1-10-1984 by the Taxation Laws (Amendment) Act, 1984 (''1984 Amendment Act''),

We have seen the statute which is printed in (1984) 149 ITR (St) 97. Section 47 of the 1984 Amendment Act reads as under:

Amendment of Section 263 ''In Section 263 of the Income Tax Act, with effect from the 1-10-1984,''-

(a) In Sub-section (1), the following explanation shall be inserted at the end, namely:

Explanation. ''For the removal of doubts, it is hereby declared that, for the purposes of this Sub-section, an order passed by the Income Tax Officer shall include''

an order of assessment made on the basis of directions issued by the Inspecting Assistant Commissioner u/s 144A or Section 144B; and

an order made by the Inspecting Assistant Commissioner in exercise of the powers or in performance of the functions of an Income Tax Officer conferred on, or assigned to, him under clause (a) of Sub-section (1) of Section 125 or under sub section (1) of Section 125A;

(b) for Sub-section (2), the following Sub-section shall be substituted, namely : (2) No order shall be made under Sub-section (1) after expiry of two years from the end of the financial year in which the order sought to be revised was passed.

A plain reading of the above provision makes it quite clear that the Parliament intended the Explanation to be inserted with effect from 1st Oct., 1984 as mentioned in the section itself.

We may also refer to the decision of the Supreme Court in COMMISSIONER OF Income Tax Vs. SHRI ARBUDA MILLS LTD., . In that case the court was dealing with a subsequent amendment to Section 263 of the Act by the Finance Act, 1989 which made the amendment operative from 1-6-1988. The Explanation inserted by the Finance Act, 1989 reads as under:

Explanation : For the removal of doubts, it is hereby declared that, for the purposes of this Sub-section,''

(c) where any order referred to in this Sub-section and passed by the assessing officer had been the subject-matter of any appeal filed on or before or after 1st June, 1988, the powers of the Commissioner under this Sub-section shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in such appeal.

Reading the differences in the language used in the 1984 Amendment Act as well as in the Finance Act, 1989, there can be no doubt that the amendment to Section 263 of the Act, which is the subject-matter of the present reference, was with effect from 1-10-1984.

Under the circumstances, we answer the question of law in the negative that is in favour of the assessee and against the revenue.

The reference is disposed of accordingly.