Court invalidates Commissioner's tax notices for 1982-83 and 1983-84; lacks jurisdiction under retrospective law amendment.

The court ruled in favor of the petitioners, finding the notices issued by the Commissioner of Income-tax under section 263 for the assessment years 1982-83 and 1983-84 to be invalid due to the merger of assessment orders in appellate orders. The court held that the Commissioner lacked jurisdiction to proceed under section 263 based on the retrospective amendment of the law. The petitioners succeeded in their challenge, and the court made the rule absolute in their favor with no order as to costs.

---

---

Issues involved: Challenge to legality of notices u/s 263 of Income-tax Act for assessment years 1982-83 and 1983-84, jurisdiction of Commissioner to start proceedings u/s 263, interpretation of retrospective amendment of section 263.

Challenge to Legality of Notices u/s 263:
The petitioners challenged the legality of notices issued by the Commissioner of Income-tax u/s 263 for the assessment years 1982-83 and 1983-84. The notices were issued based on the petitioners collecting amounts for "Hotel receipts tax" which were not treated as trading receipts by the Income-tax Officer. The petitioners contended that the orders of assessment had merged in those of the Commissioner of Income-tax (Appeals) as per previous court decisions.

Jurisdiction of Commissioner to Start Proceedings u/s 263:
The jurisdiction of the Commissioner to start proceedings u/s 263 was challenged by the petitioners based on the merger of assessment orders in appellate orders as per court decisions. The Department argued that the retrospective amendment of section 263, specifically Explanation (c), allowed for revision of assessment orders based on matters not considered and decided in appeal.

Interpretation of Retrospective Amendment of Section 263:
The court examined the retrospective amendment of section 263, particularly Explanation (c), which was inserted with effect from June 1, 1988. The court analyzed the wording of the Explanation and concluded that it should be construed harmoniously. The court held that the impugned notices issued by the Commissioner were invalid as he had no jurisdiction to take up proceedings u/s 263 after the merger of assessment orders in appellate orders.

In conclusion, the court found in favor of the petitioners, ruling the impugned notices invalid due to the merger of assessment orders in appellate orders. The court held that the Commissioner lacked jurisdiction to proceed u/s 263 based on the retrospective amendment of section 263. The petition succeeded, and the rule was made absolute in terms of prayer(a) with no order as to costs.

---