- (1.) ON an application filed under Section 256(1) of the Income-tax Act, 1961, the Tribunal has referred the following question for the opinion of this court: "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the order under Section 263, dated. March 19, 1991, was barred by limitation and consequently cancelling the order under Section 263 ?"
(2.) IN the case in hand, the original assessment was completed on December 16, 1988. While framing the assessment, the assessee was granted deduction under Section 32AB at the rate of 20 per cent, of the book profits. As the asses-see was aggrieved on certain additions/disallowances made in the original order, he preferred an appeal before the Commissioner of INcome-tax (Appeals). Out of three grounds taken before the Commissioner of INcome-tax (Appeals), two grounds were rejected and on the third ground regarding depreciation, the Commissioner of INcome-tax (Appeals) remanded the matter back to the Assessing Officer for fresh consideration. Following the directions of the Commissioner of INcome-tax (Appeals) and after examining the issue relating to depreciation, the Assessing Officer made a fresh assessment order on December 27, 1989. Subsequently, the Commissioner of INcome-tax assuming the jurisdiction under Section 263 of the Act, issued a show cause notice to the assessee dated December 31, 1991. After hearing the assessee, the Commissioner of INcome-tax (Appeals) was of the view that the deduction of Rs. 2,66,255 granted to the assessee under Section 32AB was not proper and, hence, it rendered the assessment to be erroneous and prejudicial to the interests of the Revenue. After giving due opportunity of hearing to the assessee, the Commissioner of INcome-tax made an order under Section 263 of the Act directing the Assessing Officer to reframe the assessment after re-examining the claim of the assessee for deduction under Section 32AB of the Act. In appeal before the Tribunal, the Tribunal held that the period of limitation starts with effect from the date of original assessment order dated December 16, 1988, since the issue related to deduction under Section 32AB stood settled in the earlier order itself. The subsequent assessment order was for a limited issue of depreciation only. The Tribunal also observed that if the contention of the Revenue is accepted, then every error in the original assessment discovered after the fresh assessments are made, would go on enlarging the limitation period. Thus, the Tribunal has quashed the order of the Commissioner of Income-tax under Section 263 on the ground of limitation. Heard learned counsel for the parties. Mr. Singhal, learned counsel for the assessee, has supported the view taken by the Tribunal. Mr. Singhi, learned counsel for the Revenue, has supported the order of the Commissioner of Income-tax under Section 263 of the Act. The admitted facts are that the original assessment order has been made on December 16, 1988. The assessee thereafter filed the appeal before the Commissioner of Income-tax (Appeals) but no ground was taken regarding deduction under Section 32AB of the Act. Thereafter, the Commissioner of Income-tax (Appeals) has issued notice and passed order under Section 263 on February 26, 1992, directing the Assessing Officer to withdraw the deduction allowed under Section 32AB of the Act.
(3.) MR. Singhal, learned counsel for the assessee, has brought to our notice the decision of the apex court in the case of CIT v. Shri Arbuda Mills Ltd. [1998] 231 ITR 50, wherein their Lordships held "items, which are not subject-matter of the appeal in view of retrospective insertion of Explanation (c) to Sub-section (1) of Section 263, the powers of the Commissioner of Income-tax 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 asses-see." It is true that the Commissioner of Income-tax has the power to revise the order of the Assessing Officer on the issues which are not taken in appeal before the Commissioner of Income-tax (Appeals), but if the limitation has expired, the Commissioner of Income-tax cannot revise the original order of the Income-tax Officer beyond the period of limitation. The period of limitation in this case is two years from the date of the order sought to be revised, i.e., December 16, 1988, but the order of the Commissioner of Income-tax under Section 263, dated February 26, 1992, i.e., beyond two years. Considering these facts, no interference is called for in the order of the Tribunal. ;