Commissioner of Income Tax vs Tirupur Karur Transports (P.) Ltd.

A. Subbulakshmy, J.—At the instance of the Revenue, the following questions have been referred to us for consideration :

"(1) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that inasmuch as the assessment made u/s 143(3) read with Section 144B on the basis of the direction given by the Inspecting Assistant Commissioner cannot be subject-matter of revision by the Commissioner of Income Tax u/s 263 ?

(2) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that the order of the Income Tax Officer merged in the order of the Inspecting Assistant Commissioner and on this ground setting aside the order u/s 263 of the Commissioner of Income Tax ?"

The year of assessment involved is 1979-80.

The assessee is a private limited company which is running a transport business. The assessee-company sold two buses. As per the direction from the Inspecting Assistant Commissioner, the Income Tax Officer did not include the goodwill received as capital gains and the assessment was completed u/s 143(3) read with Section 144B of the Act. The assessment was subsequently revised by the Commissioner of Income Tax u/s 263 with a direction to calculate the capital gains arising from the transfer of the route permit after ascertaining the cost of the acquisition of the asset. On appeal by the assessee, the Tribunal set aside the order of the Commissioner of Income Tax. Under the circumstances, the reference has been made at the instance of the Revenue to this court.

Counsel for the Revenue relied on the decision in the case of Commissioner of Income Tax Vs. V.V.A. Shanmugam, wherein this court has held that the assessment order passed by the Income Tax Officer on the basis of the direction issued by the Inspecting Assistant Commissioner u/s 144A is also amenable to the jurisdiction of the Commissioner of Income Tax u/s 263, of the Income Tax Act. Following the decision of this court we hold that the Commissioner of Income Tax had got jurisdiction u/s 263 of the Act. The questions referred to us are answered in favour of the Revenue. The Tribunal has not considered the merits of the case. The Tribunal has stated that since it has decided the appeal on the question of jurisdiction, it is not making any pronouncement on the merits of the case.

In view of the finding of this court in the decision rendered in Commissioner of Income Tax Vs. V.V.A. Shanmugam, that the Commissioner of Income Tax has got jurisdiction to pass orders u/s 263 of the Act in respect of assessments u/s 143(3) read with Section 144B we direct the Tribunal to decide the case on the merits. The matter is remanded to the Tribunal.