TaxTMI 
TaxTMI 
2005 (10) TMI 35
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....g that the assessee was not entitled for deduction of the entire cost of films in the year of payment?" The assessment years are 1979-80 to 1983-84 and the relevant accounting periods are Samvat years 2034 to 2038. The assessee, an individual carries on proprietary business of exhibition of 16 m.m. films on non-commercial basis in the name and style of Saurashtra Film Library. He also carries on the business of manufacturing and sale of projector spare parts in the name of Saurashtra Cine Traders. On January 16, 1987, the Commissioner of Income-tax (the CIT), issued notice under section 263 of the Act and it was stated in the show-cause notice: "I have called for and examined the abovementioned assessment order vis-a-vis the case records and other materials in your case and I am of the view that all these assessment orders are erroneous and prejudicial to the interests of the Revenue due to the following reasons: (1) The total investment in the films including cost of extra prints were not considered properly by the Income-tax Officer. (2) Write off of the cost of the films has been wrongly allowed in the assessments, apparently in terms of rule 9B though the Inspecting Assista....
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.... look into the abovementioned aspects and to redo the assessments keeping in view the direction given, made it clear that, in effect, the assessments were not set aside in entirety. The Tribunal, therefore, held that the Assessing Officer travelled beyond his jurisdiction while framing the fresh assessments as he had acquired jurisdiction to look into only those two aspects and nothing else in pursuance of the order under section 263 of the Act. Mr. Manish R. Bhatt, learned senior standing counsel appearing on behalf of the applicant-Revenue, submitted that the aforesaid findings of the Tribunal are not borne out from a plain reading of the order made by the Commissioner of Income-tax under section 263 of the Act as well as in law. It was submitted that the Commissioner of Income-tax had categorically observed in paragraph No. 7 of his order that the assessments under review are, therefore, set aside and the Assessing Officer was also permitted to take necessary consequential actions, as the case may be. Therefore, the entire assessment having been set aside, it was open to the Assessing Officer to consider all items for the purposes of assessment even if the items were not figuri....
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....h assessment, the Assessing Officer is entitled to examine items which did not form part of section 263 proceedings, the statutory requirement of framing an order under section 263 of the Act after giving the assessee an opportunity of being heard, stands obliterated or is made redundant. This interpretation goes against the clear unambiguous language in which the section is couched. The provision also requires the Commissioner of Income-tax to record that an order passed by the Assessing Officer is erroneous and prejudicial to the interests of the Revenue. The satisfaction of these two prerequisite conditions is a must before assumption of the jurisdiction under section 263 of the Act. This legal position is well established and bears no repetition. Hence, the Commissioner of Income-tax can exercise jurisdiction only after establishing on record that the assessment order is erroneous and prejudicial to the interests of the Revenue and for this purpose, he has to show from the record as to what portion of the assessment order is erroneous and prejudicial to the interests of the Revenue. In a given case, the entire order may be erroneous and prejudicial to the interests of the Reve....
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....ter satisfying the prerequisite conditions and jurisdictional facts. The Assessing Officer can disturb/reopen a finalised assessment by invoking his powers either under section 154 or under section 147 of the Act, provided he can show that the necessary requirements are fulfilled. If, what the Revenue contends today is accepted, these and other such provisions which empower different authorities to exercise jurisdiction at different points of time in distinct settings would be rendered otiose and that can never be the legislative intent. It is almost akin to providing separate keys for separate locked doors and the person wanting to open a particular door is required to apply the correct key which matches the concerned lock. Therefore, in proceedings to give effect to an order under section 263 of the Act, the Assessing Officer cannot be permitted to undertake an exercise not warranted by the legislative scheme. The Tribunal was, therefore, right in holding that the operative part of the order under section 263 of the Act has to be read in the context of what had preceded, namely, the discussion in the revisional order, and both the notice and the order under section 263 of the Ac....