TaxTMI 
TaxTMI 
2010 (9) TMI 355
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.... year 1979-80. The assessment was completed under Section 143(3) of the Income-tax Act, 1961 by the Inspection Assistant Commissioner of Income-tax (Asstt.), Range-III ["the IAC(A)"] on 27th February, 1982. The income of the assessee-company was determined by the IAC(A) at Rs. 45,23,972/- against the declared income of Rs. 35,46,190/-. Interest under Section 216 was not charged while making the assessment. Aggrieved by the aforesaid order, the assessee-company filed an appeal before the Commissioner of Income-tax (A) which was disposed of by order dated 14th September, 1983. The assessee-company filed a second appeal before the Tribunal. While the said appeal was pending before the Tribunal, the Commissioner (Appeals) assumed jurisdiction under Section 263 of the Act and by order dated 25th February, 1984, set aside the assessment order passed by the IAC(A), holding it to be erroneous and pre-judicial to the interest of the Revenue, on the ground that the IAC (A) had failed to charge interest under Sections 215, 216 and 139(8) and had also failed to initiate penalty proceedings under Section 271(1)(a) and Section 273 of the Act. 3. The assessee appealed to the Tribunal, inter alia....
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....by declared that, for the purposes of this sub-section, an order passed by the Income-tax Officer shall include- (a) an order of assessment made on the basis of directions issued by the Inspecting Assistant Commissioner under section 144A or section144B; and (b) 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." 8. By the Circular No. 394 of 1984 dated 14th September, 1984, reported in 150 ITR (St.) 3, purpose for amending the provision with the insertion of the Explanation was sought to be clarified by Explanatory Notes on the provisions thereof, the relevant portion whereof reads as follows: - "AMENTDMENT OF SECTION 263 OF THE INCOME-TAX ACT RELATING TO REVISION OF ORDERS PREJUDICIAL TO REVENUE 35.1 The Amending Act has modified the provisions of section 263 of the Income-tax Act in certain respects. 35.2 Under one of the amendments, a new Explanation has been inserted at the end of sub-section (1) of section 263. The new Explanation declares, for the removal ....
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....ation Laws Amendment Act, 1984, by insertion of Clause (b) of Explanation with effect from 1st October, 1984 could not validate jurisdiction assumed by the Commissioner (Appeals), which was lacking at the time when action was taken under the said Section. He contended that the issue whether an order passed by the IAC(A) could be rectified under Section 263 was clearly debatable and it is settled law that action under Section 263 of the Act cannot be taken in respect of a debatable issue. Reliance was placed by him in this context on the decisions of the Supreme Court in Malabar Industrial Co. Ltd. vs. CIT : 243 ITR 83 (SC) and CIT vs. Max India Ltd. : 295 ITR 282. 11. We may note at this juncture that the precise question as to whether prior to 1st October, 1984, the Commissioner could revise an assessment order passed by the IAC(A) had arisen before the ITAT, Delhi Bench "E" in the case of Ms. Asha M. Primlani vs. Inspecting Assistant Commissioner in Income Tax Appeal No. 2624 of 1984. The Tribunal opined that the legislature in its legislative wisdom having made the Explanation to Section 263 effective from 1st October, 1984, and there being no indication in the Explanation itse....
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....r assigned to, him under clause (a) of sub-section (1) of section 125 or under sub-section (1) of section 125A."; XXXX XXXX XXXX XXXX XXXX The Explanation as inserted by the Finance Act, 1989 which made the amendment operative from 1st June, 1988 (b) for sub-section (2), the following sub-section shall be substituted, namely: - "(2) No order shall be made under sub-section (1) after the expiry of two years from the end of the financial year in which the order sought to be revised was passed." [Explanation : For the removal of doubts, it is hereby declared that, for the purposes of this sub-section, - (a) An order passed [on or before or after the 1st day of June, 1988] by the Assessing Officer shall include - (i) An order of assessment made by the Assistant Commissioner or the Income-tax Officer on the basis of the directions issued by the Deputy Commissioner under section 144A; (ii) An order made by the Deputy Commissioner in exercise of the powers or in the performance of the functions of an Assessing Officer conferred on, or assigned to, him under the orders or directions issued by the Board or by the Chief Commissioner or Director General or Commissioner authorized by t....