LETAPE INDIA P LTD Vs. SIXTH INCOME TAX OFFICER
LAWS(IT)-1989-8-11
INCOME TAX APPELLATE TRIBUNAL
Decided on August 01,1989

Appellant
VERSUS
Respondents

JUDGEMENT

M.A. Ajinkya, Accountant Member - (1.)THESE appeals are directed by the assessee against the orders Under Section 263 of the Act passed by the Commissioner of Income-tax, Bombay City III, Bombay, for the assessment years 1983-84,1984-85 and 1985-86. All these appeals were heard together and are disposed of by a consolidated order.
(2.)We will deal with the issues raised for each of the three years separately. The assessment order for the assessment year 1983-84 was passed by the I.T.O. on 27-3-1986. The assessee filed an appeal against this order to the Commissioner of Income-tax (Appeals)-VII, by a letter dated 30-4-1986, which was received in the office of the CIT (A) on 2-5-1986. The C.I.T. (A) passed his order on 13-11-1987. Thereafter, the Commissioner of Income-tax, City III, Bombay, issued a Notice Under Section 263 of the Act on 1-3-1988 and passed the order Under Section 263 of the Act on 29-3-1988 for the assessment year 1983-84 and this is the first of the three orders that is challenged in appeal.
Shri Dilip Dwarkadas, the learned counsel for the assessee, after giving the above facts argued that since the order of the I.T.O. had merged with that of the C.I.T. (A), the C.I.T., City III, Bombay, had no jurisdiction to pass orders Under Section 263 of the Act. Shri Dwarkadas relied on the decision of the Bomaby High Court in the case of C.I.T. v. P. Muncherji & Co. [1987| 167 ITR 671/32 Taxman 551.

Shri Keshav Prasad, the Departmental Representative, argued that the ratio of the decision of the Bombay High Court in the case of P. Muncherji & Co. (supra) no longer applies after the amendment brought about to Section 263 of the Act by the Finance Act, 1988 with effect from 1-6-1988 and the further amendment brought about by Finance Act, 1989, which had been given retrospective effect from 1-6-1988. Shri Keshav Prasad brought to our notice the provisions of Explanation to Section 263 which was inserted by the Taxation Laws (Amendment) Act, 1984 with effect from 1-10-1984 and which, as substituted by the Finance Act, 1988 and amended by the Finance Act, 1989 read as under :

(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 authorised by the Board in this behalf under Section 120;

(b) "record" (shall include and shall be deemed always to have included) all records relating to any proceeding under this Act available at the time of examination by the Commissioner;

(c) where any order referred to in this sub-section and passed by the Assessing Officer had been the subject matter of any appeal (filed on or before or after the 1st day of June, 1988), the powers of the Commissioner under this sub-section shall extend (and shall be deemed always to have extended) to such matters as had not been considered and decided in such appeal).

Shri Keshav Prasad drew our particular attention to the words "shall include and shall be deemed always to have included" appearing in Clause (b) and Clause (c) of the Explanation, which we have underlined above. He argued that these words should be interpreted to mean that where an order passed by an Assessing Officer has been the subject matter of any appeal, the powers of the C.I.T. Under Section 263(1) shall extend to such matters as had not been considered and decided in such appeal and such powers shall be deemed always to have extended. This, according to Shri Keshav Prasad, meant that the C.I.T. always had powers to revise such matters as had not been considered in appeal by the first appellate authority, where the Order of the Assessing Officer had become the subject matter of appeal. Shri Keshav Prasad argued that the effect of the amendments brought about by the Finance Acts, 1988 and 1989 was that the order passed by the C.I.T. Under Section 263 could no longer be challenged on the ground that the order of the I.T.O. had merged with the order of the C.I.T. (A), which was passed prior to the C.I.T. taking action Under Section 263 and that the decision of the Bombay High Court in P. Muncherji & Co. 's case (supra) did not any longer come in the way of the Tribunal upholding the order of the C.I.T. on the basis of the provisions of the law as they stood at the present moment.

(3.)SHRI Dilip Dwarkadas, on the other hand, argued that the amendment brought about by the Finance Acts, 1988 and 1989 did not make any difference to the applicability of the decision of the Bombay High Court in P. Muncherji & Co. 's case (supra) to the facts of the present case. The amendment, according to SHRI Dilip Dwarkadas, govern the powers of the C.I.T. in the matter of proceedings Under Section 263 of the Act after 1-6-1988. This amendment, according to SHRI Dilip Dwarkadas, could not be invoked to justify the order passed by the C.I.T. prior to that date.


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