KANHAIYALAL Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE Income-tax Appellate Tribunal, Jaipur Bench, Jaipur, has drawn up a statement of case and referred it to this court under Section 256(1) of the I.T. Act, 1961, hereinafter referred to as "the Act", upon an application by the assesses, M/s. Kanhaiyalal, Cycle Dealer, Bhilwara.

(2.) THE statement of the case is as follows :

(3.) WE have considered the rival contentions. The contention put forward before us by S. K. Kackar is devoid of substance, because the order passed by the ITO in the first instance under Section 143(1) of the Act must be regarded as subsisting and effective in law in spite of the fact that the subsequent order under Section 147(a) read with Section 143(3) of the Act was held to be illegal by the AAC and the assessment of the total income of the asses.-ee for the relevant assessment year at Rs. 29,399 was set aside by him. Hence, in our opinion, it cannot be safely held that the Commissioner lost jurisdiction under Section 263(1) of the Act to revise the assessment order passed by the, ITO under Section 143(1) of the Act after the order of the AAC setting aside the subsequent action taken by the ITO under Section 147(a) read with Section 143(3) of the Act. The proceedings taken under Section 147 of the Act, no doubt, could be deemed to relate to the original assessment proceedings which commenced with the return filed under Section 139(1) or the issue of the notice under Section 139(2) calling for a return of income. But when such proceedings taken under this Section were held to be illegal and set aside by the AAC, the assessment order passed by the ITO in the first instance under Section 143(1) of the Act being separate from and independent of the assessment or reassessment of the income of the assessee under Section 147 read with Section 143(3) of the Act subsists and is not rendered ineffective. Under Section 147 of the Act, reassessment is made in respect of the income which has escaped assessment and the jurisdiction of the ITO under this section is restricted to such income which has escaped assessment and cannot be extended to revising, reopening or reconsidering the whole assessment. In a proceeding under this section, the assessee is not permitted to agitate again questions which had been decided in the original assessment, nor can the ITO make a reassessment which is not consistent with the original assessment in respect of the matters which do not form part of the subject-matter of the proceedings under Section 147 of the Act. In this view of the matter, we answer question No. 1 in the negative. In our opinion, the order of the Commissioner dated March 26, 1969, under Section 263 of the Act had not the effect of revising an order of reassessment made by the ITO under Section 147 of the Act.