TaxTMI 
TaxTMI 
2013 (3) TMI 123
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.... iv) The CIT erred in usurping his jurisdiction u/s 263 by revising order dt 30.11.2006 when he knew that the time limit to revise the order u/s 143(1) made on 8.9.2000 was already over. vi) the CIT erred in revising the order passed u/s 147 r.w.s 143(3) dt 30.11.2006 even though the conditions precedent for validity excising his jurisdiction u/s 263 were not satisfied." 3. The only issue raised in this appeal by the assessee is whether the revision order passed u/s 263 dt 5.3.1999 is time barred. 4. The relevant brief facts leading to the controversy are as under: The assessee filed its return of income for the assessment year on 27.12.1999 declaring the total income of Rs.17.28 crores and book profit u/s 115JA at Rs.73.42 crores. The return of income was processed u/s 143(1) on 8.9.2000. Subsequently, the proceedings u/s 147 were initiated and the assessment was completed u/s 147 r.w.s 143(3) of the I T Act on 30.11.2006. Thereafter, the CIT, after going through the case records noticed that while completing the assessment u/s 147 r.w.s 143(3), the Assessing Officer has not made necessary and adequate enquires on various issues. Accordingly, the CIT prop....
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....ceedings, the doctrine of merger will have no application. Therefore, the original assessment u/s 143(1) could not be said to have merged in the reassessment and limitation of two years under sub-section (2) of 263 of the Act shall be reckoned from the date of original assessment. Since the original assessment in this case was made on 25.9.2000, any notice u/s 263 after March, 2003 is barred by limitation. Accordingly, it was pleaded that the proceedings u/s 263 should be dropped. 5. The CIT did not agree with the contention of the assessee on the point of limitation and passed the impugned order whereby he has held that limitation for passing order u/s 263 run from the date of the assessment u/s 143(3)/ 147 and set aside the assessment framed u/s 147/143(3). Accordingly, the CIT directed the Assessing Officer to re-frame the assessment to consider various issues as raised in the show cause notice by making necessary and adequate enquiries. 6. Before us, the ld AR of the assessee has submitted that the jurisdiction u/s 263 cannot be invoked on the issues which were not subject matter of the reassessment after expiry of two years from the end of the financial year in which....
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....Delhi High Court in the case of Jay Bharat Maruti Ltd. v. Commissioner of Income-tax reported in 324 ITR 289 and submitted that if the return of income processed u/s 143(1), the Assessing Officer has no power to enquire into other unrelated issues at the time of reassessment. Therefore, in this case, when the Assessing Officer has passed the reassessment order on the issue, which was the reason for reopening, then the reassessment order on the other issue cannot be treated as erroneous, if the Assessing Officer has taken one of the possible views as far as the other issues are concerned when nothing came to the knowledge of the Assessing Officer to believe that the other incomes chargeable to tax has escaped assessment, then non adjudication of the other issues in the reassessment proceedings cannot be treated as erroneous or prejudicial to the interest of revenue. The ld AR also relied upon the decision of the Hon'ble Jurisdictional High Court in the case of CITv. Alagendran Finance Ltd. Reported in 293 ITR 1 (Mum) and the decision of the Hon'ble Kerala High Court in the case of Travancore Cement Ltd vs ACIT reported in 219 CTR 359 6.1 On the other hand, the ld DR has submitted t....
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....43(3) in this case. 6.1 The ld DR has submitted that In the case of Shri Arbuda Mills reported in 231 ITR 50(SC), it was held that for the purposes of sec. 263, the order of the Assessing Officer merges only to that extent on the items decided by CIT(A) and hence 263 is applicable in items not considered by CIT(A). On same logic when an item not considered or which could not have been considered by AO u/s 143(1), would stand merged with order of AO u/s 147 and hence it is the order u/s 147 which survives so far as non consideration of those items is concerned. 6.2 Accordingly, the ld DR has submitted that after the reassessment order, initial order u/s 143(1) ceases to operate. It is no more in existence and is substituted by the fresh assessment order passed. Thus, it can categorically be held that the expression "any order" u/s 263 would mean even the reassessment order. Therefore for all intent and purposes of the Act the order ' surviving after reassessment proceedings is only the one passed u/s 147 which only can be rectified u/s 263 provided other conditions are satisfied. 6.3 The ld DR has submitted the order passed u/s 147 is erroneous and prejudicial as the order of the....
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.... where only intimation and acknowledgement are sent to the assessee after filing of the return. 6.6 He has also relied upon the decision of the Hon'ble Karnataka High Court in the case of CITG vs Mysore Iron & Steel Ltd reported in 157 ITR 531(Kar) as well as the order of the Ahmedabad A Bench of the Tribunal in the case of Vijay Kumar Gupta vs CIT reported in 132 ITD 276. He has also relied upon the decision of Full Bench of the Hon'ble Kerala High Court in the case of CIT vs Best Wood Industries & Saw Mills reported in 331 ITR 63(Kel) 6.7 In rebuttal, the ld AR of the assessee has submitted that when no income has come to the notice of the Assessing Officer at the time of reassessment, then the Assessing Officer cannot be launch an enquiry into unrelated issues while passing the reassessment order; accordingly, the reassessment cannot be said to be erroneous. Therefore, invoking the provisions of sec. 263 on the issues which are not subject matter of sec. 147, the limitation would reckoned from the date of original assessment i.e processing the return of income u/s 143(1). The assessment u/s 147 is a regular assessment only for the purpose of sec. 234B for completing the....
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.... notice issued under section 156, that did not per se preclude the right of the Assessing Officer to proceed under section 143(2). That right is preserved and is not taken away. Between the period from April 1, 1989, and March 31, 1998, the second proviso to section 143(1)(a), required that where adjustments were made under the first proviso to section 143(1)(a), an intimation had to be sent to the assessee notwithstanding that no tax or refund was due from him after making such adjustments. With effect from April 1, 1998, the second proviso to section 143(1)(a) was substituted by the Finance Act, 1997, which was operative till June 1, 1999. The requirement was that an intimation was to be sent to the assessee whether or not any adjustment had been made under the first proviso to section 143(1) and notwithstanding that no tax or interest was found due from the assessee concerned. Between April 1, 1998, and May 31, 1999, sending of an intimation under section 143(1)(a) was mandatory. Thus, the legislative intent is very clear from the use of the word "intimation" as substituted for "assessment" that two different concepts emerged. While making an assessment, the Assessing Officer is....
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....se of Kartar Singh & Co P Ltd (supra) after considering the decision of the Hon'ble jurisdictional High Court in the case of Anderson Marine &Sons P Ltd (supra) and by following the decision of the Hon'ble Supreme Court in the case of Rajesh Jhaveri Stock Brokers P. Ltd (supra) has held in para 7 as under: "We have thoughtfully considered the submissions made by learned counsel for the parties and are of the view that the question of law referred to for our opinion has to be answered in favour of the assessee and against the Revenue. We are of the considered view that the omission of the expression "intimation" from section 263 of the Act establishes the intention of Parliament to limit the power of revision of a Commissioner of Income-tax only to cases where an order has been passed. A plain reading of section 263 of the Act would alone be sufficient to reach the aforementioned conclusion. A perusal of section 263 of the Act brings out that the Legislature never intended to clothe the Commissioner with the powers of revision in summary cases where intimation and acknowledgment had been sent to the assessee after filing of the return. In that regard reliance may be placed o....
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....nnot revise the summary assessment under section 143(1) of the IT Act as per the decision of the Hon'ble Jurisdictional High Court in the case of Vikrant Crimpers (supra). Therefore, the contention of the learned Counsel for the assessee that limitation is to be counted from 2-5-2001 when the return was processed under section 143(1) of the IT Act has no force and is rejected." 8. In view of the decisions and as the issue understood by the Hon'ble Punjab & Haryna High Court after considering the decision of the Hon'ble jurisdictional High Court in the case of Anderson Marine &Sons P Ltd (supra) as well as the decision of the Hon'ble Supreme Court in the case of Rajesh Jhaveri Stock Brokers P. Ltd (supra), it is clear that the return processes u/s 143(1) is not subjected to revision. 9. Now, we turn to the question whether the order u/s 147 r.w.s 143(3) is erroneous and prejudicial to the interest of revenue as the Assessing Officer has not made any enquiry or examined and adjudicated the issues which are subject matter of impugned revision order and consequently, whether the impugned revision order is barred by limitation so far as on the issues which are not related to the groun....
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.... Officer that any other income also has escaped income, then the Assessing Officer should bring to tax such income also. The procedure for income escaping assessment under section 147 is contained in section 148 where under sub-section (2) makes it mandatory for the Assessing Officer to record reasons before proceeding to issue notice. However, once assessment is reopened after recording reasons, the Assessing Officer has to complete the income escaping assessment by following the provisions of the Act as if the return furnished against notice under section 148 as one filed under section 139 of the Act. This obviously means that so far as procedure to be followed is concerned, there is no difference between income escaping assessment and regular assessment because the provisions generally provide for issue of notice, hearing of the assessee and taking of evidence, etc., which are the same for regular assessment and income escaping assessment. Therefore in the course of income escaping, assessment, if it comes to the notice of the Assessing Officer that any other item or items of income other than the item of escaped income for the assessment of which, assessment originally complete....
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....be followed by the Assessing Officer. It is observed by the Full Bench of the Hon'ble High Court that taking all evidences etc., which are the same for the regular assessment and the income escaping assessment. The Hon'ble High Court has thus, overruled the decision in the case of Travancore Cements Ltd. (supra). 12. In the case in hand undisputedly the claim of the assessee are not allowable but the same were allowed by the Assessing Officer without addressing the same; therefore, non address of the issue resulting allowance of impossible claim establishes the non application of mind on the part of the Assessing Officer during the reassessment proceedings and consequently render the order passed u/s 147 r.w.s 143(3) as erroneous and prejudicial to the interest of revenue. 13. Now coming to the question of limitation as provided under sub.sec. (2) of sec. 263. 13.1 The assessee has contended that the limitation would reckoned from the original order - {in this case, processed u/s 143(1)} - for exercising the jurisdiction u/s 263 in respect of the issues which are not subject matter of the reassessment u/s 147. 13.1 It is settled proposition of law that the limitation for exerci....