2011 (1) TMI 70 - HC - Income Tax

Assessment proceedings - Block assessment order - Commissioner of Income Tax revised the order in exercise of its power under section 263 of the Income Tax Act on the ground that the assessment order is prejudicial to the Revenue - Tribunal directed the CIT(A) to decide the appeal of the assessee on merits Appeal rejected

Summary

Issues:
Appeal against judgment of Income Tax Appellate Tribunal - Revision of assessment order by Commissioner of Income Tax - Appeal before CIT (A) - Appeal before Tribunal - Question of law regarding appeal becoming infructuous.

Analysis:
The appeal was filed against the judgment of the Income Tax Appellate Tribunal, which had allowed the appeal filed by the assessee. The background facts revealed that the respondent assessee, a Director in a company, had his residential premises searched by the Income Tax Department, leading to assessment proceedings for a block period. The Commissioner of Income Tax revised the assessment order under Section 263 of the Income Tax Act, setting it aside as prejudicial to Revenue, and directing a fresh assessment. The assessee had also appealed against the original assessment order. Subsequently, the CIT (A) dismissed the appeal as infructuous due to the order under Section 263. The assessee then appealed before the Tribunal, which held that the original assessment order was revived, directing the CIT (A) to decide the appeal on merits.

The main question of law framed in the appeal was whether the Tribunal was justified in holding the Department's appeal as infructuous. The Court, after hearing the arguments, noted that the order of the CIT (A) under Section 263 had been set aside, making the original assessment order valid again. Therefore, the Tribunal's decision to direct the CIT (A) to decide the appeal on merits was deemed justified. It was concluded that no substantial question of law was involved in the appeal, leading to the summary rejection of the appeal.

In summary, the judgment involved a complex interplay of legal procedures, including the revision of assessment orders, appeals before different authorities, and the interpretation of the revival of original orders. The Court's analysis focused on the validity of the Tribunal's decision in light of the set-aside order under Section 263, ultimately leading to the rejection of the appeal.