Court rules against Commissioner's jurisdiction under section 263 of Income-tax Act

The High Court of Bombay ruled in favor of the assessee in a case questioning the Commissioner of Income-tax's jurisdiction under section 263 of the Income-tax Act. The Court held that once an original order is appealed and decided, it merges with the appellate order and cannot be revised. As the Income-tax Officer's assessment was based on the appellate order, the Commissioner's revisional jurisdiction was deemed unjustified. The Court affirmed that the original order ceased to exist post-appeal decision, thus preventing revision under the revisional jurisdiction. The decision favored the assessee with no costs awarded.

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Issues involved:
The issue involves the correctness of the order of the Commissioner of Income-tax u/s 263 of the Income-tax Act, 1961, and whether it was without jurisdiction and bad in law.

Summary:

The High Court of Bombay considered a case where the Commissioner of Income-tax, in a revisional jurisdiction u/s 263, set aside the Income-tax Officer's order allowing set-off of carried forward losses without redetermining the figures of losses. The Tribunal quashed the Commissioner's order, stating that the revisional jurisdiction was not justified as the Income-tax Officer had made the assessment based on the appellate order. The Tribunal referred to the decision of the Calcutta High Court and various precedents emphasizing that once an original order is appealed and decided, it merges in the appellate order and cannot be revised. The Court, in line with these precedents, held in favor of the assessee, affirming that the original order ceased to exist after the appeal decision, and therefore, could not be revised under the revisional jurisdiction.

In conclusion, the Court answered the raised question in the affirmative and in favor of the assessee, with no order as to costs.

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