Income-tax---

----Revision---Appeal---Merger of assessment order in appellate order---No evidence that particular issue had not been considered by Appellate Authority---Order of revision with regard to such an issue was not valid-- Indian Income Tax Act, 1961, S.263.

Held, that, in the present case, it was not clear from the statement of the case as to whether the subject-matter in appeal before the appellate authority was other than what had been considered by the Commission while exercising his revisional powers under section 263(1) of the Income Tax Act, 1961. It was for the Revenue to have contended before the Tribunal and brought on record the fact that the subject-matter for consideration before the Commissioner in exercise of jurisdiction under section 263(1) was other than what had been considered by the Commissioner (Appeals) while deciding the appeal. The order of revision was not valid.

CIT v. Shri Arbuda Mills Ltd. (1988) 231 ITR 50 (SC) and CIT (Addl.) v. Vijayalakshmi Lorry Service (1986) 157 ITR 327 (Kar.) ref.

E.R. Indrakumar for the Commissioner.

King and Patridge for the Assessee.

JUDGMENT

ASHOK BHAN, J. ---At the instance of the Revenue, the Income-tax Appellate Tribunal; Bangalore, has referred the following question of law to this Court for its opinion:

"Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in cancelling 'the order of the Commissioner passed under section 263 of the -Income-tax Act, on the ground that the Commissioner had no jurisdiction to invoke the provisions of section 263 when the Commissioner (Appeals) had already passed an order in an appeal for the assessment year 1983-84 and the order sought to be revised by the Commissioner had already merged in the said order of the Commissioner (Appeals)?"

The question referred to us stands concluded by a Division Bench judgment of this Court in Addl. CIT v. Vijayalakshmi Lorry Service (1986) 157 ITR 327. Therefore, the question referred is answered in the affirmative, i.e., in favour of the assessee and against the Revenue.

Counsel for the Revenue brought to our notice Explanation (c) added to section 263(1) of the Income Tax Act, 1961, with effect from June 1, 1988, to contend that the Commissioner would have the jurisdiction to revise the orders even if the order of the Assessing Officer had been the subject-matter of an appeal. Explanation (c) added to section 263(1) was further amended by the Finance Act of 1989, with retrospective effect which reads as follows:

"Explanation--For the removal of doubts, it is hereby declared that for the purpose of this subsection.

(c) Where any order referred to in this subsection and passed by the Assessing Officer had been the subject-matter of any appeal filed on or before or after the 1st day of June., 1988, the powers of the Commissioner under this subsection shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in such appeal."

Explanation (c) amended by the Finance Act of 1989, with effect from June 1, 1989, was interpreted by the Supreme Court in CIT v. Shri Arbuda Mills Ltd. (1998) 231 ITR 50 and it was held that:

" ....the Explanation to section 263.(1) which was substituted by Finance Act, 1988, with effect from June 1, 1988, was again amended by the Finance Act, 1989, with retrospective effect from June, 1, 1988, to the effect that where any order referred to in the subsection and passed by the Assessing Officer had been the subject matter of any appeal (filed on or before or after the 1st day of June, 1988), the powers of the Commissioner under the subsection shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in such appeal. The consequence of the amendment made with retrospective effect is that the powers, under section 263, of the Commissioner- shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in an appeal. Accordingly, in respect of the aforesaid three items, the powers of the Commissioner under section 263 shall extend and shall be deemed always to have extended to them because the same had not been considered and decided in the appeal filed by the assessee. Therefore, the order of assessment passed by the Income-tax Officer on, March 31, 1978, had not merged with that of the Commissioner (Appeals), dated December 15, 1979, in respect of the three items in dispute so as to exclude the jurisdiction of the Commissioner of Income-tax under section 263". (reproduction from the headnote of the judgment).

In view of the interpretation put by the Supreme Court in the case supra, Explanation (c) added to section 263(1) as amended by the Finance Act of 1989, would not make any difference-in the present case as it is not clear from the statement of the case as to whether the subject-matter in appeal before the appellate authority was other then what had been considered by the Commissioner while exercising his revisional powers under section 263(1). It was for the Revenue to have contended before the Tribunal and bring on record the fact that the subject-matter for consideration before the Commissioner in exercise of jurisdiction under section 263(1) was other than what had been considered by the Commissioner (Appeals) while deciding the appeal. Dismissed.

M.B.A./4016/FC Order accordingly.