Festo Elgi Pvt. Ltd., Combined Industries Ltd. and Elgi Equipments Ltd. vs Commissioner of Income Tax

R. Jayasimha Babu, J.—The Commissioner of Income Tax 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 very permission granted

earlier the ground for interfering with the order of the Income Tax Officer who had merely given effect to the permission which the Commissioner

himself has granted earlier on March 11, 1988, in exercise of his power u/s 263 of the Act. That order dated March 11, 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 paragraph 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 impose only such conditions as are legal and are in accordance with

law. Thereafter, the Income Tax 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 March 6, 1991, it is stated

in the opening paragraph ""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 interests 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 abler 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, W. M. P, is dismissed as

unnecessary.