COMMISSIONER OF INCOME-TAX Vs. RALSON INDUSTRIES LTD

JUDGEMENT

(1.) THIS is an application under Section 256 (2) of the Income-tax Act, 1961 (for brevity "the Act"), by the Revenue. The assessee-company filed its return on December 31, 1992, declaring its income to Rs. 26,66,355 for the assessment year 1992-93. The Assessing Officer completed the assessment on March 10, 1995, under Section 143 (3) of the Act at a total income of Rs. 35,40,414. The Commissioner of Income-tax considered the above assessment as erroneous and prejudicial to the interests of the Revenue inasmuch as the Assessing Officer did not exclude certain accounts, transport receipts amounting to a sum of Rs. 27,62,982 and interest amounting to Rs. 1,41,878 as the income from the assessee's total income for the purpose of allowing deduction under Sections 80hh and 80-I of the Act. The said authority invoked the jurisdiction vested in him under Section 263 of the Act and set aside the assessment order with the directions to the Assessing Officer to make a fresh assessment.

(2.) BEING aggrieved by the aforesaid order passed by the Commissioner of Income-tax, the assessee preferred an appeal before the Income-tax Appellate Tribunal (hereinafter referred to as "the Tribunal" ). It was canvassed before the Tribunal that after passing of the assessment order under Section 143 (3) of the Act the Assessing Officer had issued a notice under Section 154 of the Act on October 26, 1995, to which the assessee had furnished a detailed reply and thereafter the Assessing Officer had passed an order under Section 154 of the Act on August 23, 1996, in which no modification on the point of excess deduction under Sections 80hh and 80-I on account of non-exclusion of transport receipts and interest from the total income was made although the Assessing Officer had modified the assessment order on other points.

(3.) THE Tribunal placed reliance on the decision rendered in the case of CIT v. Vippy Solvex Products P. Ltd. [1997] 228 ITR 587 (MP) and held that the Commissioner of Income-tax lacked jurisdiction under Section 263 to modify the assessment order after the rectification order was passed under Section 154 of the Act by the Assessing Officer inasmuch as the assessment order which was passed on the earlier occasion on March 10, 1995, ceased to exist. Quite apart from the above, the Tribunal expressed the view that the order passed under Section 154 of the Act was passed by the Assessing Officer on due consideration of the explanation of the assessee for the proposed rectification on the point of excess deduction under Sections 80hh and 80-I.