TMI Blog1996 (12) TMI 120X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner of Income-tax, Companies Circle-I(Inv.), Madras, under section 143(3). In the said assessment order, he allowed depreciation as under : Asset W.D.V Rate Amount Rs. Rs. Cranes (old) 3,33,235 40% 1,38,394 Cranes (new) 19,15,032 40% 7,66,012 3. Subsequently, the CIT felt that the above assessments were erroneous and also prejudicial to the interest of the revenue. He, therefore, initiated proceedings under section 263 by issuing the notice under section 263 dated 22-3-1990 by observing as under :-- "On a perusal of the assessment records in the above case, it is observed that the assessment completed by the Asstt. Commissioner, Comp. Cir. I (Inv.), Madras, on 30-3-1988 for the assessment years 1985-86 and 1986-87 is erroneous and is also prejudicial to the interest of Revenue due to the reason that the Asstt. Commissioner has wrongly allowed the excess depreciation at 40% instead of 15% on the two crawler cranes. 2. I, therefore, propose to alter, amend, cancel, enhance or set-aside the assessment under the powers vested in me under section . . . . of the . . . . Act with a direction to the Asstt. Commissioner, Co. Cir. I (Inv.) Madras, to redo the same acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer. 8. The entire assessments are therefore set aside. The Asstt. Commissioner is directed to verify the claim of the assessee regarding the nature of the crane and the claim that this is an industrial undertaking and redo the assessment according to law, after giving assessee the reasonable opportunity of being heard." Aggrieved by the said order under section 263, the assessee filed the present appeals before the Tribunal. 5. The assessee's counsel filed a paper book of 9 pages and urged to the following effect :-- The ACIT, Companies Circle-I (Inv.), Madras-34, issued a letter dated 5-9-1989 to the assessee calling for its objections as to why the depreciation should not be allowed at 15% on crawler cranes as against 40% allowed in the assessment order for the assessment year 1985-86 and the subsequent assessments for the assessment years 1986-87 and 1987-88 rectified. This letter can be seen at page 1 of the paper book. This was received by the assessee on 20-2-1990. The assessee filed its reply dated 14-3-1990 before the ACIT which can be seen at page 2 of the paper book. In the said letter dated 14-3-1990 the assessee urged that the cranes in questio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder :-- "In the order dated 30-3-1990 a small mistake has crept in. In para 8, while giving directions, the Assessing Officer was directed to verify the claim and redo the assessment according to law after giving the assessee a reasonable opportunity of being heard. 2. The directions should have been 'The Assistant Commissioner is directed to verify the claim of the assessee regarding the nature of the claim, etc., and modify the assessment accordingly after giving the assessee a reasonable opportunity of being heard'. 3. As this is a mistake, the above corrigendum is issued." This Corrigendum is time-barred and cannot form part of the order under section 263 dated 30-3-1990. According to section 263(2), the order under section 263 shall be made within two years from end of the financial year in which the order sought to be revised was passed. As the assessment order for the assessment year 1985-86 was passed on 30-3-1988, the order under section 263 cannot be passed beyond 31-3-1990. Similarly, as the assessment order for the assessment year 1986-87 was passed on 30-3-1989, the order under section 263 cannot be passed beyond 31-3-1991. Further the CIT cannot set aside the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 22-3-1990 stated "that the assessment completed by the Asstt. Commissioner, Comp. Cir. I (Inv.), Madras, on 30-3-1988 for the assessment years 1985-86 and 1986-87...". Factually the assessment order for the assessment year 1985-86 was passed on 30-3-1988 by Mr. M. Sriramachandra Murthy in his capacity as Income-tax Officer, Companies Circle I(7), Madras-34, and the assessment order for the assessment year 1986-87 was passed by Mr. M. Sriramachandra Murthy in his capacity as Assistant Commissioner of Income-tax, Company Circle I(Inv.), Madras-34. The CIT simply says that "the Asstt. Commissioner has wrongly allowed the excess depreciation at 40% instead of 15% on the two crawler cranes". He did not give any basis or ground to allege that the allowance of depreciation at 40% instead of 15% on crawler cranes is wrong. In other words, how it was "wrongly allowed" was not at all indicated. However, the CIT in his order under section 263 dated 30-3-1990 gave the following grounds for coming to the conclusion that the allowance of depreciation at the rate of 40% was incorrect :-- "5. I have carefully considered the arguments of the assessee. On perusal of the records, it is seen th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ACIT to verify the claim of the assessee that it is an industrial undertaking and redo the assessments according to law. This direction of the CIT to the Assessing Officer to verify the claim of the assessee that it is an industrial undertaking is also not permissible in an order under section 263. As held by the Hon'ble Madras High Court in the case of Hindu Bank Karur Ltd. v. Addl. CIT [1976] 103 ITR 553, the power of the CIT under section 263 is restricted only to the errors so far as they are prejudicial to the interests of the revenue and not to any other errors if they are not prejudicial to the interests of the revenue. Thus, even, if there be other errors of the latter variety pointed out by the assessee in the course of section 263 hearing, the Commissioner is to ignore them. In other words, the Hon'ble High Court held that the CIT in an order under section 263 cannot correct the errors prejudicial to the assessee. On this reasoning also we cannot sustain the order of the CIT setting aside the entire assessments. 10. Even the corrigendum dated 15-11-1991 is confusing and vague and cannot save the main order dated 30-3-1990. In the corrigendum dated 15-11-1991, "The Assi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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