High Court clarifies order under sections 143(3) & 144B subject to revision under section 263

The High Court held that an order passed by the Income-tax Officer under section 143(3) with approval under section 144B is the Income-tax Officer's order subject to revision under section 263. The Court clarified that section 144B is akin to a proviso to section 143(3) and should be interpreted as such. The Tribunal's decision treating the order as that of the Inspecting Assistant Commissioner was deemed unsustainable. The outcome favored the Revenue over the assessee, with no costs awarded.

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Issues Involved:
The judgment involves the interpretation of whether an order passed by the Income-tax Officer after obtaining approval from the Inspecting Assistant Commissioner under section 144B becomes the order of the latter and is no longer reviewable by the Commissioner under section 263 of the Income-tax Act, 1961.

Summary:

The case involved an individual assessee for the assessment year 1973-74. The Income-tax Officer completed the assessment under section 143(3) with the approval of the Inspecting Assistant Commissioner under section 144B. The Commissioner of Income-tax later found an error in allowing a deduction of Rs. 65,000 and initiated proceedings under section 263 to rectify the assessment.

The assessee contended that the assessment order was actually that of the Inspecting Assistant Commissioner and not the Income-tax Officer, thus not subject to revision under section 263. The Tribunal agreed with this argument, stating that an order made under the directions of the Inspecting Assistant Commissioner under section 144B is considered the Commissioner's order and not the Income-tax Officer's.

The High Court analyzed the provisions of sections 143, 144B, and 263 of the Income-tax Act. It clarified that even if the Income-tax Officer follows the procedure under section 144B, the assessment order remains under section 143(3). The Court emphasized that section 144B is akin to a proviso to section 143(3) and should be read as such.

Ultimately, the High Court held that an order passed by the Income-tax Officer under section 143(3) read with section 144B is indeed the Income-tax Officer's order and falls within the revisional jurisdiction of the Commissioner under section 263. Therefore, the Tribunal's decision that the order should be treated as that of the Inspecting Assistant Commissioner was not sustainable.

Consequently, the question posed in the reference was answered in favor of the Revenue and against the assessee. No costs were awarded in this case.

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