- (1.) THE Tribunal, Delhi, referred the following question of law under s. 256(1) of the IT Act, 1961, hereinafter referred to as 'the Act' for opinion to this Court : "Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in cancelling the order of the CIT passed under s. 263 of the Act treating it as without jurisdiction -
(2.) THE reference relates to the asst. yr. 1978 -79. The assessment for the asst. yr. 1978 -79 was completed on 27th not been the subject -matter of appeal, was prejudicial to the interest of the Revenue. He initiated the proceedings under s. 263 of the Act and after giving opportunity of hearing to the assessee had set aside the assessment order with the direction to the ITO to pass afresh assessment order. Feeling aggrieved by the aforesaid order, the assessee preferred an appeal before the Tribunal. The Tribunal relying upon the decision of this Court in the case of J.K. Synthetics Ltd. vs. Addl. CIT & Anr. (1976) 105 ITR 344 (All) quashed the order passed under s. 263 of the Act on the ground that the assessment order has got merged in the appellate order, therefore, the assessment order could not have been revised under s. 263 of the Act. Heard Sri A.N. Mahajan, learned standing counsel appearing for the Revenue. Nobody has appeared for the assessee.
(3.) IT may be mentioned here that cl. (c) of the Explanation to s. 263(1) of the Act has been amended by the Finance deemed always to have extended" have been inserted therein. The effect of the aforesaid amendment came up for consideration before the apex Court in the case of CIT vs. Shri Arbuda Mills Ltd. (1998) 147 CTR (SC) 474 : (1998) 231 ITR 50 (SC) and the apex Court has held as follows : "The consequence of the said amendment made with retrospective effect is that the powers under s. 263 of the CIT shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in an appeal. Accordingly, even in respect of the aforesaid three items, the powers of the CIT under s. 263 shall extend and shall be deemed always to have extended to them because the same had not been considered and decided in the appeal filed by the assessee. This is sufficient to answer the question which has been referred." Thus, the CIT was well within his jurisdiction under s. 263 of the Act in cancelling that part of the assessment order which was not subject -matter of appeal. In view of the foregoing discussion, we answer the question referred to us in negative, i.e., in favour of the Revenue and against the assessee. However, there shall be no order as to costs.;