Festo Elgi (P.) Ltd. vs Commissioner of Income Tax

R. Jayasimha Babu, J.—The Commissioner after having given the permission to change the previous year, in exercise of the powers conferred on him u/s 263 of the income tax Act, 1961, has once again after an interval of three years, made that the very permission granted earlier as the ground for interfering with the order of the Assessing Officer who had merely given effect to the permission which the Commissioner himself has granted earlier on 11-3-1988 in exercise of his power u/s 263. That order dated 11-3-1988, bears the caption ''Revision u/s 263 of the income tax Act-Change of accounting year''. There is no doubt whatsoever that what was approved by that order was the change in the accounting year. It is also made evident in the concluding para of the order where it says that the Assessing Officer shall pass a fresh order permitting the assessee to change the previous year but, shall propose only such conditions as are legal and are in accordance with law. Thereafter, the Assessing Officer made an order imposing the conditions which had not been found fault with by the Commissioner. It is that order which the successor Commissioner wanted to revise by initiating proceedings u/s 263. In the notice issued on 6-3-1991, it is stated in the opening para "As a result of the permission granted for the change in previous year the assessment for 1986-87 has been skipped and there is loss of revenue". The above order is, therefore, considered as erroneous and prejudicial to the interest of the revenue. This is clearly an instance of bolting the barn after the horse had run away. The Commissioner who had given approval for the change of the accounting year earlier, did not consider these consequences as sufficient to deny the approval. Having granted approval, that approval cannot be revoked on the ground that the consequences which should have been considered, had not been considered. The successor who considered himself able cannot on that score undo what his predecessor had done.

The impugned notice is unsustainable and, therefore, is quashed. The writ petition is allowed. Consequently, miscellaneous petition is dismissed as unnecessary.