CIT vs Jacob J. Thaliath

C.N. Ramachandran Nair, J.—In these two appeals, the only question raised is whether the Tribunal was justified in cancelling the suo motu revisional order issued by the Commissioner of income tax u/s 263 of the income tax Act for the reason that the order sought to be revised was the revised assessment issued u/s 147, which was rectified u/s 154 for modification of interest levied u/s 234D. The Tribunal cancelled the order issued by the Commissioner on the ground that original assessment only could be revised u/s 263. Admittedly, for the assessment year 1995-96, the Tribunal followed a decision of the Bhopal Bench of the Tribunal, which though was confirmed by the High Court, was later reversed by the Supreme Court. We feel the Tribunal has committed a patent error in cancelling a section 263 order on the ground that original order got merged in revised assessment, which cannot be revised u/s 263. There is no bar in section 263 restricting the power of the Commissioner by limiting his jurisdiction to revise only original orders issued by the Assessing Officer. In fact, any proceedings issued by the Assessing Officer, whether it be original assessment or revised assessment issued u/s 147 or even a rectification order issued u/s 154, could be revised in exercise of powers u/s 263, if the order is erroneous or is prejudicial to the interest of the revenue. We, therefore, allow ITA No. 1037/2009 by reversing the order of the Tribunal and by restoring the order issued by the Commissioner u/s 263.

Insofar as ITA No. 1197/2009 is concerned, the Tribunal interfered with section 263 order issued for the year 1992-93 for the reason that the revised assessment issued u/s 147, that was the subject-matter of revision u/s 263, itself is an invalid order. We do not think that the Tribunal has any such power to consider the validity of any such order, while considering the appeal filed against the order issued by the Commissioner u/s 263. The assessee having not challenged the revised assessment, cannot also contest validity of that proceedings before the Tribunal in an appeal filed against the order issued u/s 263. The Tribunal, being the 2nd appellate authority, cannot consider validity of an assessment or reassessment order while considering the appeal filed against an order issued u/s 263. So much so, the order of the Tribunal is liable to be vacated. Therefore, we allow ITA No. 1197/2009 by vacating the order of the Tribunal and by restoring the order issued by the Commissioner u/s 263.

These appeals are allowed as above.

In favour of revenue.