COMMISSIONER OF INCOME TAX Vs. SHANKAR RAJKHOWA

JUDGEMENT

(1.) IN this reference under S. 256 (1) of the IT Act, 1961 ('the Act') the Tribunal referred the following questions for opinion of this Court:

(2.) FOR the purpose of answering these questions the facts are: The assessee is an individual and the questions referred to above relates to the asst. yr. 1983-84. The assessee on 16th Jan., 1985 filed this return of income showing total income at Rs. 1,04,790 as his income from business. On 25th March, 1986 the AO completed assessment under S. 144 of the Act computing the total income at Rs. 2,40,970 by way of best judgment. Being aggrieved by the order passed by the AO, the assessee preferred an appeal before the CIT, Shillong. The CIT by his order dt. 13th June, 1988 set aside the assessment order by invoking power under S. 264 of the Act and directed the AO to pass fresh order in accordance with law. During the pendency of the above revision, the assessee on 26th March, 1987 filed another return purportedly under the 'Amnesty Scheme' showing a total income of Rs. 1,10,790 comprising business income of Rs. 1,04,790 plus Rs 6,000 being the income from house property. On 3rd July, 1987 the assessee informed the CIT (A) that he had already filed return under the 'Amnesty Scheme' and he may be allowed to withdraw the appeal. On 17th July, 1987 the CIT (A) dismissed the appeal on withdrawal. On 6th Nov., 1987 the assessee filed a petition under S. 264 before the CIT against the order of assessment dt. 25th March, 1986 passed by the AO under S. 144. In the meantime, the AO before whom the second return was filed under the 'Amnesty Scheme' declined to accept the same and initiated a proceeding under S. 147 of the Act to include the fresh income of Rs. 6,000 disclosed in the 'Amnesty Scheme'. On 31st Dec., 1987 the AO passed order of reassessment under S. 143 (3) r/w S. 147 of the Act computing income at Rs. 2,46,790, i.e., Rs. 6,000 more than the amount computed in the order dt. 25th March, 1986. On 3rd May, 1988 the assessee preferred an appeal before the CIT (A) against the reassessment order dt. 31st Dec., 1987, however, the CIT (A) dismissed the appeal and confirmed the order dt. 31st Dec., 1987. On 13th June, 1987 the CIT before whom the assessee's petition under S. 264 was filed, set aside the order of assessment dt. 25th March, 1986 by invoking power under S. 144 and directed for a fresh assessment in accordance with law. While the appeal against the order dt. 3rd May, 1988 was pending before the Tribunal, the AO on the basis of the direction of the CIT dt. 13th June, 1988 passed another order of assessment under S. 143 (1) accepting the income of Rs. 1,10,790 which was filed under Amnesty Scheme on 26th March, 1987. On 29th May, 1990 the Tribunal dismissed the appeal as infructuous on the ground that since the CIT on 13th June, 1988 set aside the assessment order dt. 25th March, 1986 under S. 264, the original assessment was no longer in existence. On 1st Nov., 1990 the CIT issued notice to the assessee calling upon him to file objection as to why action should not be taken under S. 263 of the Act for cancelling the order of assessment dt. 4th Oct., 1988. On 30th Nov., 1990 the CIT passed order holding that the order of assessment dt. 31st Dec., 1987 was the only valid order of assessment and the order of assessment dt. 4th Oct., 1988 was erroneous and prejudicial to the interests of the Revenue, and, therefore, the CIT cancelled the order dt. 4th Oct., 1988. Against this order, the assessee preferred an appeal before the Tribunal and the Tribunal by its order dt. 19th Jan., 1993 quashed the order dt. 30th Nov., 1990. Hence, the present reference.

(3.) ON the rival contentions of the parties it is to be seen whether the order of the Tribunal was justified? Sec. 263 of the Act provides for revision of the order by the CIT. However, the CIT does not have unfettered discretion to revive the order and the condition necessary for invoking the power must exist. As per S. 263 the CIT has the jurisdiction to revise the order only when he considers that any order passed by the AO is erroneous on so far as it is prejudicial to the interests of the Revenue. This order of cancellation must contain of enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment.