Ramesh Beekay and Co. vs Commissioner of Income Tax

This is an income tax reference u/s 256(1) of the income tax Act.1961 (''the Act'') in which three questions have been referred to this Court but we have reframed them into an single question on the order sheet which is in the following terms:

"Whether, when the Commissioner has set aside the assessment u/s 263, the appeal filed by the assessee before Commissioner (Appeals) becomes infructuous ?"

We have heard Shri Vikram Gulati, the learned counsel for the assessee, and Shri Shekhar Srivastava for the department.

The relevant year for the assessment year is 1972-73 and for this year an assessment order was passed on 23-9-1978. Against this order, the assessee filed an appeal before the Commissioner (Appeals) whereas the Commissioner took proceedings u/s 263 of the Act and passed an order u/s 263 on 1-2-1980 while the appeal was still pending. By the said order of the Commissioner u/s 263 the assessment order has been set aside and the case was remanded. Subsequently, the Commissioner (Appeals) by his order dated 15-2-1993 also allowed the appeal on merits. The Commissioner (Appeals) in para 10 of its order rejected the contention of the appellant that the appeal had become infructuous in view of the order u/s 263 of the Commissioner (Appeals). Thereafter, the assessee went in Second Appeal before the Tribunal but the said appeal has been dismissed. Aggrieved, he filed an application u/s 256(1) in which the question has been referred to us. In our opinion, since the Commissioner had set aside the assessment by his order dated 1-2-1980 u/s 263 the appeal of the assessee became infructuous. As such, the Commissioner (Appeals) and the Tribunal wrongly held that the appeal has not become infructuous. In view of the above, we answer the question in affirmative in the favour of the assessee and against the department. No order as to costs.