(a) Income-tax---

----Writ---Revision---Notice---Writ petition filed against notice of revision without filing objections to notice---Not maintainable---Constitution of India, Art. 226---Indian Income Tax Act, 1961, S.263.

(b) Income-tax--

----Writ---Revision---Writ petition against revision notice---Interim order on petition permitting proceedings on notice to continue but with direction that order not to be given effect ---Assessee participating in proceedings pursuant to interim order---Writ petition not maintainable---Direction for communication of revision order to assessee to enable filing of appeal-- Constitution of India, Art.226---Indian Income Tax Act, 1961, S.263.

The Assessing Officer, while making the assessment for the assessment year 1982.83 by his assessment order passed on March 25, 1985, inter alia, omitted to allow depreciation on the staple fibre yarn machinery used by the petitioner, though he had in the said order decided to grant depreciation at 15 percent. on the said machinery. The petitioner filed an appeal against the said order to tire Commissioner of Income-tax (Appeals), who allowed the claim. By consequential order dated December 11, 1985, the Assessing Officer granted depreciation on staple fibre yarn machinery at 15 percent. The Commissioner, in exercise of powers of revision suo motu, issued notice dated February 24, 1987, proposing to revise the assessment and grant only, 10 percent. depreciation on the staple fibre yarn machinery. The assessee did not file objections to the notice but filed a writ petition. During the pendency of the writ petition, the Court directed that the order pursuant to the notice may be passed but it shall not be given effect to until the disposal of the writ petition. Pursuant to the direction, a director of the assessee appeared before the officer and he also argued the matter and placed materials in support the assessee's claim. The officer ultimately passed an order modifying the assessment by restricting the depreciation on staple fibre manufacturing machinery to 10 percent. The order of the Commissioner was passed on March 21, 1988, though it was not communicated to the assessee. On July 28, 1989, the writ petition was allowed by a Single Judge. On appeal: ,

Held, allowing the appeal, that the writ petition was not maintainable for two reasons. The first was that it was against the proposed action by the Department proposing to revise the rate of depreciation from 15 percent. to 10 per cent, and the second was that during the pendency of the writ petition, the Commissioner of Income-tax himself was permitted to pass final orders and during the enquiry by the Commissioner, the assessee was represented by one of his directors, who put forth his case before the Commissioner of Income-tax and when the assessee himself had participated in the proceedings before the Commissioner of Income-tax and contested the proceedings, it had to be presumed that the assessee was not interested in pursuing or proceeding with the writ petition. In this case, the Commissioner of Income-tax had passed the order on March 21, 1988, long prior to the order passed in the writ petition. The order passed by the Commissioner of Income-tax was not given effect to because of the direction given by the Court, awaiting the final outcome of the writ petition. The order of the Commissioner was appeal able. The Commissioner was, therefore, to communicate the order dated March 21, 1988, to the assessee immediately and the assessee was to have 60 days' time for filing an appeal before the Income-tax Appellate Tribunal from the date of service of the order.

Vedantham Raghaviah v. Third Additional ITO (1963) 49 ITR 314 (Mad.) ref.

(The decision of the single Judge in Writ Petition No. 2132 of 1987 dated July 28, 1995, ran as follows:)

D. Raju, J. ---This writ petition has been filed praying for a writ of certiorari to call for and quash the proceedings of the respondent in his file No. C. No. 401 /1 /104 of 1986-87 dated February 24, 1987, where under the respondent has chosen to call upon the petitioner to show cause as to why an order enhancing or modifying the assessment or cancelling the assessment and directing a fresh assessment should not be made. In the concluding portion of paragraph 4 of the impugned notice, it is stated that the depreciation as computed at 15 percent. in the original order dated March 25, 1985, but actually allowed in the revision order dated December 11, 1985, is prejudicial to the interests of the Revenue and hence erroneous requiring interference by the Commissioner under section 263 of the Income Tax Act, 1961.

The petitioner-company claims to own a textile mill and that it is an assessee on the file of the Inspecting Assistant Commissioner of Income-tax (Assessment), Madurai. For the assessment year 1982-83, the assessment order was said to have been passed on March 25, 1985. At paragraph 14, sub paragraph (c), the question or issue relating to depreciation was considered by the assessing authority and though it is referred to therein that 15 percent. depreciation is claimed in respect of staple fibre machinery and though the claim was allowed, according to the petitioner, it was not really computed properly. Therefore, the. petitioner pursued the matter on appeal before the First Appellate Authority, namely, the Commissioner of Income tax (Appeals) IV, Madras-34. The Appellate Authority has dealt with the appeal pertaining to the assessment year in question in LT.A. No. 70 of 1985-86,from paragraph 14 onwards. At paragraph 27, the issue relating to the mistake in computation of depreciation at Rs.8,97,.482 is adverted to and the Appellate Authority has stated that though the Inspecting Assistant Commissioner stated in paragraph 14 of the assessment order that he would allow a depreciation of Rs.8, 97, 482, but, actually he forgot to allow this deduction while computing the total income which he arrived at Rs.31, 90, 314. This happened and in the view of the Appellate Authority it ought to have been by oversight also, and, therefore, the Appellate Authority directed the Assessing Authority to rectify the, mistake and thereby allowed the ground of objection raised in the appeal pertaining to the assessment year in question. There is no dispute that the Inspecting Assistant Commissioner of Income-tax (Assessment) thereafter revised the assessment on December 11, 1985 allowing depreciation at 15 per cent on staple fibre machinery and plant to the extent of Rs. 8, 97, 482. While matters stood thus, the impugned notice came to be issued invoking the powers under section 263 of the Income-tax Act, as noticed supra. Aggrieved the petitioner has filed the above writ petition.

It is contended for the petitioner both in the affidavit filed in support of the writ petition as also at the time of hearing of the writ petition that the impugned notice is without jurisdiction and illegal in that when the Assessing. Authority carried out the directions of the Appellate Authority which allowed the claim in the appeal, the original order of assessment of the Assessing Authority has merged with the order of the Appellate Authority and, therefore, no order of the Assessing Authority survives or is available for revision under section 263 .of the Income Tax Act to justify the respondent having recourse to the suo motu powers of revision. It is also contended that section 263 of the Act enables the respondent who is the revisional authority to revise the order of his subordinate only, i.e., the Assessing Authority and has no right or jurisdiction to meddle with the order of the Appellate Authority. It is stated in support of the said plea that since the order of the Assessing Authority has merged with that of the Appellate Authority and inasmuch as the ground on which the respondent seeks to revise the original assessment has been specifically urged, adverted to and allowed by the Appellate Authority, the respondent has no jurisdiction to invoke the powers under section 263 of the Act.

The respondent has filed a counter-affidavit contending that staple fibre machinery was entitled to depreciation only at 10 per cent and not at 15 per cent as presumed and granted by the Inspecting Assistant Commissioner of Income-tax, Madurai. While adverting to the conclusions of the Appellate Commissioner in respect of a claim for depreciation for the assessment year 1979-80, it is stated that the grant of depreciation at 15 percent. for the assessment year 1982-83 was prejudicial to the Revenue and, therefore, there was every justification for the respondent to invoke the suo motu powers of revision under section 263 of the Act an order to revise the assessment and grant only 10 percent. depreciation on the staple fibre yarn machinery. It is further contended that no exception could be taken to the action of the respondent, which according to the stand taken to the counter- affidavit, is perfectly valid in law.. In paragraph 9 of the counter-affidavit, it is also contended that in the case on hand, notice was issued for the purpose of restricting the depreciation granted to staple fibre yarn machinery to 10 percent. instead of 15 percent. that had been granted at the time of assessment. It is also stated that in the appeal before the Commissioner of Income-tax (Appeals), the only issue that was considered and decided as far as the assessment year 1982-83 was concerned, was whether the Assessing Officer having stated that the-petitioner would be entitled to the depreciation is right in not having allowed the same. The Appellate Authority, according to the stand taken in the counter-affidavit, has held that the non-grant of depreciation was. a mistake and an oversight and the issue as to the correct rate of depreciation that would be allowable to the staple fibre yarn machinery was not in issue at all before the Commissioner of Income-tax (Appeals) for the assessment year in question, though the same was considered for the earlier assessment year 1979-80. Reliance is placed also on Explanation (c) to section 263(1) of the Act to justify the invocation of revisional powers in the matter. The further plea in the counter-affidavit is that since the impugned notice was issued on February 24, 1987, well within the period of limitation contemplated under subsection (2) of section 263, it could not be said to be barred by limitation and, therefore, there are no merits in the writ petition. The learned senior counsel appearing for the respondent reiterated the above stand.

The learned senior counsel appearing for the respondent invited my attention to the decision of a Division Bench of this Court in Vedantham Raghavaiah v. ITO (Third Addl.) (1963) 49 IM 314. The assessee therein who was the petitioner before this Court, was by profession a dance director of motion pictures and he was also a partner of a firm which produced motion pictures. For the particular assessment year under consideration in that case, the petitioner was assessed as an individual to a total income of Rs.2,508 and after the assessment of the firm in which he was also a partner, the petitioner's individual assessment was modified after due notice by the Income-tax Officer under section 35(5) of the Indian Income-tax Act, 1922, by way of rectification so as to include his share of income from the firm resulting in a tax demand of Rs.77,000-odd. The assessee did not appear to have filed any application by way of revision to the Commissioner against the said order made under section 35(5) of the Act. Appeals were said to have been taken from the assessment made on the firm to the Appellate Assistant Commissioner and thereafter to the Appellate Tribunal and as a result of the order of the Appellate Tribunal, the assessee's individual assessments had to be once again rectified. For the said purpose, the Income-tax Officer appeared to have passed an order without issuing any notice to the assessee rectifying the petitioner's individual assessment resulting in the tax liability of the assessee being reduced from Rs. 77, 000 odd to Rs.49, 965. It was in such circumstances, the assessee came before this Court with a writ petition contending (a) that no order could have been passed as had been done on March 23, 1960, when for the second time a rectification of assessment came to be made without any notice or opportunity to the assessee; and (b) that after the first order of rectification made in January, 1968, there was no assessment as such which could be rectified by invoking the provisions of section 35(5) of the Act. Only while considering such a plea in the peculiar facts and circumstances of that case, the learned Judges of the Division Bench have held, that "it is impossible to accept the contention that the orders became ineffective or wiped out by reason of the order of the Appellate Tribunal in a proceeding relating to the firm of which no doubt the petitioner was a partner. After the prior order of rectification the position was that there was an assessment against the petitioner individually in a particular figure. Once an order of rectification is passed, the assessment itself is modified and what remains is not the order of rectification, but only the assessment as rectified". In my view, tile reliance sought to be placed upon this observation of the Division Bench is not well merited and it is not appropriate to extract the said observation from out of its context de hors the actual issue before the Court-and the circumstances under which such observations carne to be made.

So far as the facts and circumstances of the case before me are concerned to which a detailed reference has been made supra, it could go to show that the issue, relating to the claim or allowance or disallowance of depreciation was specifically noticed and dealt with by the original order of assessment by the Inspecting Assistant Commissioner of Income-tax (Assessment). While computing the benefit of the depreciation, there was an error and the petitioner has filed' an appeal before the Appellate Commissioner. The consideration in paragraph 27 would go to show that the subject-matter for the issue relating to the allowance of the claim relating to depreciation was very much before the Appellate Authority and considered and dealt with and ultimately allowed as noticed in the said paragraph itself. It is not the reason for which a claim is allowed by an Appellate Authority that is relevant for appreciating the question as to whether a particular claim was the subject-matter of the appeal before the Appellate Authority but to see whether really the issue relating to the subject of claim was for consideration before the Appellate Authority. It would be futile for the respondent to contend that in the appeal before _the Appellate Authority, they could not have agitated or opposed the claim of the petitioner for the allowance of depreciation at 15 per cent as against the permissible actual entitlement, as claimed now in the proceedings under challenge, that it should be only 10 percent. Having miserably failed before the Appellate Authority to project the claim of the. Department properly and thereby oppose the claim of the assessee the only remedy that the respondent should have thought of as available with, it was to direct the filing of an appeal before the Tribunal and not to invoke the suo motu powers of revision under section 263 of the Act. The mere reference to the proceedings dated March 25, 1985 and December 11, 1985, in paragraph 4 of the impugned notice as granting a depreciation which in the view of the respondent was not legally eligible to be claimed by the petitioner is to say the least, sheer manipulation of matters to usurp jurisdiction where properly speaking and legally the respondent has none. The respondent, perhaps wilfully too, has omitted to give due weight to the indisputable fact that it is only on the directions of the Appellate Authority, that the order dated December 11, 1985, granting ultimately the depreciation at the rate of 15 per cent has been allowed by the Inspecting Assistant Commissioner of Income-tax (Assessment). The plea taken in the counter-affidavit to which a reference has already been made that the issue relating to the correct rate of depreciation was not the subject-matter of appeal before the Appellate Commissioner is far-fetched. As noticed earlier, when the very issue relating to the grant of depreciation as claimed by the petitioner at 15 per cent was the subject-matter of adjudication before the Appellate Authority, it was inevitably not only the claim for depreciation, but also the rates at which it has to be allowed which was implicitly involved in issue before the Appellate Authority. In my view, for the lapse on the part of the Department in not opposing the claim in a proper' manner at the appropriate stage, the respondent is trying to make up by issuing the notice under challenge. In my view, the respondent cannot place reliance or have the advantage of Explanation (c) to section 263(1), in view of my specific finding supra that the question of the correct rate also was and ought to be held as having been part and parcel of the claim of depreciation claimed and allowed in the appeal. Countenancing the claim of the respondent and allowing such hair-splitting exercise itself would amount to virtually permitting the respondent to usurp the jurisdiction and power to deal with, by way of colourable exercise of its powers, the. orders passed by the quasi -judicial authority like the Appellate Commissioner. For the said reason also I do not feel persuaded to accept the plea on behalf of the respondent.

For all the reasons stated above, the impugned proceedings are hereby quashed and the writ petition shall stand allowed as prayed for. No costs.

S.V. Subramanian for Kala Ramesh for Appellant.

Nemo for Respondent.

JUDGMENT

A.R. LAKSHMANAN, J.----The above writ appeal is directed against the order of the learned single judge of this Court made in W. P. No.2132 of 1987 dated July 28, 1995, allowing the writ petition filed by the respondent herein and thereby quashing the proceedings of the Commissioner of Income-tax, Madurai, in C. N. 401/1/104/86-87 dated February 24, 1987, where under the appellant herein has chosen to call upon the respondent herein to show cause as to why the order enhancing or modifying the assessment or cancelling the assessment and directing a fresh assessment should not be made. In the concluding portion of paragraph 4 of the impugned notice, it is stated that the depreciation as computed at 15 percent., in the original order dated March 25, 1985, but actually allowed in the revision order dated December 11, 1985, is prejudicial to the interests of the Revenue and hence erroneous, requiring interference by the Commissioner under section 263 of the Income Tax Act, 1961.

The Inspecting Assistant Commissioner of Income-tax (Assessment) Madurai, as the Assessing Officer while making the assessment of the assessment year 1982-83 by his assessment order passed on March 25, 1985, inter alia, omitted to allow depreciation on the staple fibre yarn machinery used by the petitioner, though he had in the said order decided to grant depreciation at 15 percent. on the said machinery. The writ petitioner filed an appeal against the said order to the Commissioner of Income-tax (Appeals). Madurai, who by his order in I.T.A. Nos.51/84-85, 61/85-86 and 70/85-86 dated October 14, 1985, allowed the claim of the writ petitioner in the following terms:

"Mistake in computation of depreciation Rs.8,97,482--the Inspecting Assistant Commissioner in para. 14 of the assessment order (stated ?) that he would allow a depreciation of Rs.8,97,482 but actually he forgot to allow this deduction while computing the total income which he arrived at Rs.31,90,314. This appears to be an oversight. He is directed to rectify this mistake. This ground is allowed. "

Pursuant to this direction the Inspecting Assistant Commissioner of Income-tax, Madurai, passed his consequential order, dated December 11, 1985, granting depreciation on staple fibre yarn machinery at 15 percent. The said order reads thus:

"Proceedings of The Inspecting Assistant Commissioner of Income tax

(Assessment) Range-I. Madurai

Present: Shri A Selvaraj

47-016-C04063Dated 11-12-1985

Sub: Income-tax assessment 1982-83---Sithalakshmi Mills,

Mills Premises, Thirunagar, Revision of Reg.

Ref:Order of the CIT(A) in ITA no. 70/85-86

(IAC. No 14-10-1985).

ORDER

The assessment completed under section 143(3) on March 25, 1985, is revised for the following reasons:

1. To give effect to the Commissioner of Income-tax (Appeals)'s order cited above.

2. The business income arrived at should be Rs.35,98,223 instead of Rs.34,98,223. A letter was issued on September 12, 1985, to the assessee calling for objection. The assessee requests allowance of depreciation omitted to be allowed Rs.8,97,482, while it has no objection for rectifying the error in total income. The Commissioner of Income-tax (Appeals) has also allowed the depreciation on staple fibre machinery. Therefore, depreciation at 15 per cent, on stable fibre machinery is allowed and the error in totalling is rectified in this order as under:

(Sd.) A. Selvaraj

Inspecting Assistant Commissioner

According to the Revenue, the staple fibre machinery was entitled to depreciation only at 10 percent. and not at 15 percent. as presumed and granted by the Inspecting Assistant Commissioner of Income-tax, Madurai, and that the order of the Commissioner of Income-tax (Appeals). Madurai, dated October 14, 1985, referred to above dealt with the appeal relating to the three assessment years 1978-79, 1979-80 and 1982-83. In respect of the assessment year 1979-80, one of the issues that was considered and decided in the said order related to the amount of depreciation that .will be allowable in respect of staple fibre machinery. In disposing of the issue, the Commissioner of Income-tax (Appeals) Madurai, held as follows:

"The appellant says that depreciation at the rate of 15 percent. should be allowed on these machines which manufacture staple fibre yarn and the appellant says that the Inspecting Assistant Commissioner himself has allowed this higher rate for the subsequent assessment year 1981-82.

I find thaw item III(ii) B(3) of the Depreciation Table speaks of 'Artificial silk manufacturing machinery and plant except wooden parts'. This does not speak of 'staple fibre' as claimed by the appellant. Hence, the assessee's argument has no force."

Accordingly, the Department felt that the excess grant of depreciation at 15 percent. on the staple fibre machinery for the assessment year 1982-83 was prejudicial to the interests of Revenue and hence the Commissioner of Income-tax, Madurai, exercised his suo motu revisional power under section 263 of the Income Tax Act, 1961, in order to revise the assessment and grant only 10 percent. depreciation on the staple fibre yarn machinery and issued his notice dated February 24, 1987. In the notice dated February 24, 1987, in para. 4 and para. 5 it is stated as under:

" 4. Instead of the 10 percent. normal depreciation, the assessee had claimed the higher rate of Depreciation in respect of the staple fibre machinery and plant. Item III(ii) B(3) of the Depreciation table specks of 'artificial silk manufacturing machinery and plant except wooden parts'. But this does not speak of 'staple fibre' as claimed by the assessee. Chambers' 20th Century Dictionary defines 'staple' as manufactured wool or other raw material textile fibre. Hence, the staple fibre machinery will not fall or fit in the group of 'artificial silk manufacturing machinery and plant'. Therefore, the depreciation as computed at 15 percent. in the original order dated March 25, 1985 (but actually allowed in the revision order dated December 11, 1985). is prejudicial to the interests of the Revenue and hence erroneous requiring interference by the Commissioner under section 263 of the Income Tax Act, 1961.

5. In exercise of the powers conferred on me under section 263 of the Income-tax -Act, 1961, it is proposed to pass such order as the circumstances of the case justify, including an order enhancing or modifying the assessment or cancelling the assessment and directing a fresh assessment to be made."

The assessee was permitted to file their objections, if any, in writing against the proposed action.

The assessee instead of filing objections to the notice dated February 24, 1987, to the Commissioner of Income-tax under section 263 of the Act, rushed to this Court and filed the above writ petition to call for the records of the respondent dated February 24, 1987, and to quash the same, and consequently to restrain the Commissioner of Income-tax from taking any further proceedings in this regard to the assessment of the petitioner pursuant to his notice in C. No 401/1/104/1986-87 dated February 24, 1987, for the assessment year 1982-83. In the writ petition, it was contended that the original assessment order of the assessing authority has merged with the order of the appellate authority and, therefore, no order of the assessing authority survives or is available for revision under section 263 of the Act by the Commissioner and that section 263 empowers the Commissioner to revise the orders of his subordinates only, i.e., the assessing authority, and inasmuch as the order of the assessing authority has merged with that of the appellate authority and inasmuch as the ground on which the respondent seeks to revise the original assessment has been considered and allowed by the appellate authority, the respondent has absolutely no jurisdiction to invoke the powers under section 263 of the Act.

The writ petitioner was resisted by the Department contending that the notice issued by the Commissioner is perfectly legal and valid in law and cannot at all be assailed or taken exception to, as stated by the writ petitioner: It is also stated that the impugned notice was issued by the Commissioner for the purpose of restricting the depreciation granted to staple fibre yarn machinery to 10 percent. instead of 15 per cent, that had been in the assessment, and that the issue as to the correct rate of depreciation that would be allowable to the staple fibre yarn machinery was not in issue before the Commissioner of Income-tax (Appeals) for this assessment year though the issue was considered for an earlier assessment year 1979-80 and hence it is submitted that by reason of Explanation (c) to section 263(1) extracted earlier, the issue of the impugned notice by the Commissioner of Income-tax was perfectly in order and cannot be taken exception to.

The learned Single Judge of this Court, by order dated July 28, 1995, has allowed the writ petition and quashed the notice dated February 24 1987. According to the learned single judge the subject-matter of the issue relating to the allowance of the claim relating to depreciation was very much before the appellate authority and considered and dealt with and ultimately allowed as noticed in the said order and it is not the reason for which the claim is allowed by an appellate authority that is relevant for appreciating the question as to whether a particular claim was the subject-matter of the appeal before the appellate authority but to see whether really the issue relating to the subject of the claim was for consideration before the appellate authority. The learned Judge has also found that the Department has failed before the appellate authority to project the claim of the Department properly, and thereby oppose the claim of the assessee and, therefore, the Department cannot invoke the suo motu powers of revision under section 263 of the Act. The learned Single Judge also held that the Department cannot place reliance or have the advantage of Explanation (c) to section 263(1), in view of his specific finding in the order that the question of the correct rate also was and ought to be held as having been part and parcel of the claim of depreciation claimed and allowed in the appeal.

Aggrieved by the above order, this writ appeal has been filed in this Court.

Mr. S. V. Subramanian, learned senior standing counsel for Income-tax contended that the learned Singly Judge is not correct in his view that para. 27 of the order of the appellate authority would show that the subject-matter of the issue relating to allowance of the claim relating to depreciation was very much before the appellate authority and considered and dealt with and ultimately allowed by the said appellate authority. He has also relied on the decision in Vedantham Raghaviah v. Third Addl. ITO (1963) 49 ITR 314 (Mad), which according to him is the authority for the decision that once the order of rectification is passed, the assessment itself is modified and what remains is not the order of rectification but only the assessment as rectified. In ground No. 9 it has been specifically stated that the writ petition having been filed only against a show-cause notice, the respondent herein should not have been permitted to bypass the remedy under the statute but should have been directed to file its reply to the said show-cause notice and pursue the remedies under the statute.

The writ petition was admitted on March 5, 1987, and interim stay of further proceedings was granted by this Court and subsequently by order dated December 17, 1987, this Court directed that the order pursuant to the impugned notice may be passed but shall not be given effect to until the disposal of the writ petition. Venkataswami, J. (as he then ,was) passed the above order in the following terms:

"The interim stay is made absolute, only to the extent of giving effect to the order. In other words, the Income-tax Officer can pass final orders in the light of the order passed by the Commissioner of Income-tax, but cannot give effect to the revised order."

Pursuant to this direction, the case was posted for haring on February 29, 1988, on which date Shri M. S. Sivanath, director of the assessee company, appeared and the case was discussed with him. The Commissioner of Income-tax, Madurai, after considering the representation of the assessee's representative and also of the records directed the Inspecting Assistant Commissioner (Assessment) Range-1, Madurai, to modify the assessment by restricting the depreciation on staple fibre manufacturing machinery to 10 percent. from 15 percent. This order was passed on March 21, 1988, but was not communicated to the assessee, as directed by this Court and was kept in abeyance until the matter is finally disposed of by this Court. An appeal against the said order would lie before the Income-tax Appellate Tribunal which should be filed within 60 days from the date of receipt of the order of the Commissioner of Income-tax, Madurai. In view of the direction given by this Court, the Commissioner of Income-tax has not so far served the order on the assessee. We, therefore, direct the Commissioner of Income-tax, Madurai, to serve a copy of the order in C. No. 401/1/51/ 87-88, dated March 21, 1988, on the assessee, so that the assessee would be in a position to file an appeal within 60 days from the date of receipt of the said order of his. As seen earlier, the Commissioner of Income-tax, Madurai, by his order under section 263 of the Act had proposed to pass an order reducing the depreciation from 15 percent. to 10 percent. and cancelling the assessment and directing a fresh assessment to be made. The assessee was asked to submit his objections in writing to the proposed action. However, the assessee without submitting his objections in writing has rushed to this Court by filing the above writ petition to quash the notice dated February 24, 1987. However, the writ petition was entertained by this Court and was allowed ultimately quashing the impugned notice. This apart, during the pendency of the writ petition, this Court permitted the Income-tax Officer, Madurai, to pass final orders pursuant to the impugned notice but directed that it shall not give effect to the same until the disposal of the writ petition. It is now stated that pursuant to the said direction, the Commissioner of Income-tax has passed his final orders on March 21, 1988, but as directed by the Court, it was not given effect to. The order passed by the Income-tax Officer, Madurai, in original was placed before us. The assessee was represented by Mr. M. S. Sivanath, director of the assessee, before the officer and he also argued the matter and placed materials in` support of their claim. The officer ultimately passed an order modifying the assessment by restricting the depreciation on staple fibre manufacturing machinery to 10 percent. Against this order, an appeal would lie before the Income-tax Appellate Tribunal which should be filed within 60 days from the date of receipt of the order. In our opinion, the writ petition is not maintainable or entertain able by this Court on two grounds. The first is that it is against the proposed action by the Department proposing to revise the rate of depreciation from 15 percent. to 10 percent. and the second is that during the pendency of the writ petition, the Commissioner of Income-tax himself was permitted to pass final orders and during the enquiry by the Commissioner, the assessee was represented by one of his directors, who put forth his case before the Commissioner of Income-tax and when the assessee himself has participated in the proceedings before the Commissioner of Income-tax and contested the proceedings, it has to be presumed that the assessee was not interested in pursuing or prosecuting the writ petition. In this case, the Commissioner of Income-tax has passed the order on March 21, 1988, long prior to the order passed in the writ petition. The order passed by, the Commissioner of Income-tax was not given effect to because of the direction given by this Court, awaiting the final outcome of the writ petition. We, therefore, are of the view that an opportunity must be given to the assessee to file an appeal to the Income-tax Appellate Tribunal within 60 days from the date of receipt of the order and contest the same on the merits and in accordance with law. Accordingly, the' Commissioner of Income-tax, Madurai, is directed to communicate the order, dated March 21, 1988 to the assessee immediately and the assessee will have 60 days time for filing an appeal before the Income-tax Appellate Tribunal from the date of service of order.

In view of the directions now given by this Court, the order of the learned single judge dated July 28, 1995, and made in W. P. No 2132 of 1987 is set aside -and the notice under section 263 of the Act issued for 1982-83 by the Commissioner of Income-tax, Madurai, dated February 2, 1987, and impugned in the writ petition is restored. However, the respondent herein, the writ petitioner, is at liberty to raise all the contentions which have been raised by them in the writ petition and also all the other factual and legal questions before the Income-tax Appellate Tribunal.

For all the foregoing reasons, the writ appeal is allowed with the above observations. However, there will be no order as to costs.

M.B.A./3236/FC Appeal allowed.