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C.I.T. v. M/S A.B.Co.Ltd. - INCOME TAX REFERENCE No. 224 of 1992  RD-AH 631 (4 March 2005)
Income Tax Reference No. 224 of 1992
The Commissioner of Income Tax, Meerut
M/s Amrit Banaspati Co. Ltd. Ghaziabad
Hon'ble R.K.Agarwal, J.
Hon'ble Prakash Krishna, J.
The Income Tax Appellate Tribunal, New Delhi has referred following two question of law under section 256 (2) of the Income Tax Act, 1961 (here in after referred to as the Act) for opinion to this Court:
Whether on the facts and in the circumstances of the case, the ITAT was legally correct to cancel the order passed by the CIT under section 263 because when ITAT passed the order the ,the law stood amended and applied to all years before or after the amendment?"
The reference relates to the assessment year 1982 83
Briefly stated the facts are as under:
The respondent assessee is a public limited company deriving income from manufacture and sale of vegetable ghee, refined oil, soap and paper. It had filed return of income finally at Rs.79,26,250/- . The assessment was completed under section 143 (3) of the Act by the assessing officer vide order dated 29-3-1985, determining the income at Rs.92,58,170/-.
Feeling aggrieved the respondent preferred an appeal before the CIT ( Administration), who disposed of the same on 23-1-1987. The CIT ( Administration) on examination of assessment records of the respondent was of the prima facie view that the assessment order passed by the assessing authority was erroneous and prejudicial to the interest of revenue. He accordingly issued a notice on 6-3-1987 inviting objections as to why action under section 263 be not taken. The respondent filed its reply vide letter dated 27-3-1987. The CIT (Administration) was not satisfied with the reply filed by the respondent, he passed an order under section 263 on 30-3-1987, where in he has issued directions to the assessing officer for making fresh inquiry and giving opportunity to the assessee, fresh assessment order was passed by the assessing authority on 20-12-1988. Feeling aggrieved the respondent preferred an appeal before the Tribunal against the decision of CIT (Administration) Meerut. The Tribunal allowed the appeal on the ground that assessment order having been passed on 29-3-1985, the CIT ( Administration) could have invoked the jurisdiction under section 263 by the end of March 1987, if the order passed by the assessing officer was considered to be erroneous and prejudicial to the interest of Revenue. The Tribunal was further of the view that amended provision of Section 263 relates to partial merger were not applicable retrospectively. While holding so the Tribunal relied on the decision in the case of J.K.Synthetics Limited 105 ITR 344 has held that law has been amended with effect from 1-6-1988 when the jurisdiction under section 263 to be exercised by the Commissioner had expired on 31-3-1987.
Heard Sri A.N.Mahajan, learned Standing Counsel for the Revenue and Sri Anshu Agarwal holding brief of Sri P.K.Jain, learned counsel for the assessee respondent.
It has been stated by Sri Mahajan .We find that Supreme Court in the case of Commissioner of Income Tax Vs. Arbuda Mills 1998 231 ITR page 50 has held that consequence of the amendment made with retrospective effect is that power under section 263 shall extend and shall be deemed to be extended as if has not been considered and decided the appeal. Accordingly in respect of items which have not been considered, the power of the Commissioner shall be extended to them.
Respectfully following the aforementioned decision we are of the opinion that amendment order of the Tribunal can not be justified. We accordingly answer the question referred to us in negative i.e. in favour of the Revenue and against the assessee. However, there shall be no order as to costs.
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