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TMI Blog2012 (2) TMI 308X X X X Extracts X X X X X X X X Extracts X X X X ..... llowing substantial question of law: Whether on the facts and in the circumstances of the case and in law the Tribunal was right in holding that the Order of the CIT dated 28.03.2003 passed under Section 263 of the Income Tax Act setting aside the Assessment Order dated 26.03.2002 passed under Section 143 read with Section 147 of the Income Tax Act by the Assessing Officer is barred by limitation under Section 263(2) of the Income Tax Act? 2. The appeal is admitted and is taken up for final disposal with the consent of the counsel. In the present case the facts fall within a narrow compass. On 24 November 1997 an intimation was issued under Section 143(1)(a). An order was passed under Section 154 on 30 March 1998 to give credit for advanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 36(1)(viia) and the foreign exchange rate difference; (iii) the order of the Commissioner under Section 263 has not been passed with reference to any issue which has been decided either in the order of the first reassessment or in the order of second reassessment dated 22 February 2000 or 26 March 2002; (iv) the order under Section 263 seeks to revise the issues decided in the first order of assessment passed under Section 143(3) on 10 March 1999. 3. Subsection (2) of Section 263 provides that no order shall be made under subsection (1) after the expiry of two years from the end of the financial year in which the order sought to be revised was passed. 4. The submission which has been urged on behalf of the Revenue is that Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry 1997, 12 May 1997 and 30 March 1998. In the said orders of assessment the assessee s return under the head lease equalisation ' " fund" was accepted. Proceedings for reassessment were initiated and were completed on 28 March 2002. The proceedings for reassessment, however, were in respect of three items and the assessee's return in respect of lease equalisation fund was not the subject matter of the reassessment proceedings. The Commissioner invoked his jurisdiction under Section 263 on 29 March 2004 in respect of the return under the head of "lease equalisation fund". On these facts the Supreme Court held that only that part of the order of assessment which related to the lease equalisation fund was found to be prejudicial to the intere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this basis it is urged that when the Assessing Officer reopened the assessment on 26 March 2002 the entire assessment was at large and hence he ought to have applied the amended provisions of Section 36(1)(vii), particularly the explanation thereto. 7. This aspect of the matter has been considered in a judgment of a Division Bench of this Court in Ashoka Buildcon Ltd. Vs. Assistant Commissioner of Income Tax2. The Division Bench considered a similar submission based on Explanation 3 which was inserted in Section 147 by the Finance Act of 2009 with retrospective effect from 1/4/1989. Negativing the submission, the Division Bench held as follows: ...Where a reassessment has been " made pursuant to a notice under Section 148, the order of r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts of the present case, was under a bar of limitation since limitation would begin to run from the date on which the original order of assessment was passed. We must however clarify that the bar of limitation in this case arises because the revisional jurisdiction under Section 263 is sought to be exercised in respect of issues which did not form the subject matter of the reassessment proceedings under Section 143(3) read with 147. In respect of those issues, limitation would commence with reference to the original order of assessment. If the exercise of the revisional jurisdiction under Section 263 was to be in respect of issues which formed the subject matter of the reassessment, after the original assessment was reopened, the com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dicated in the notice under Section 148(2). This, however, will not obviate the bar of limitation under Section 263(2). Where the jurisdiction under Section 263(1) is sought to be exercised with reference to an issue which is covered by the original order of assessment under Section 143(3) and which does not form the subject matter of the reassessment, as in the present case, limitation must necessarily begin to run from the order under Section 143(3). Before concluding we may also take notice of the fact that the second order of reassessment dated 26 March 2002 has been set aside by the Tribunal on 27 August 2010. An appeal against the order of the Tribunal is pending before this Court for admission. However, we have considered this appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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