TMI Blog2006 (3) TMI 77X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of income which was not interfered with by the appellate authority in the appeal filed by the assessee on other grounds, is the question to be considered in this writ petition. Short facts. The petitioner is the assessee, a partnership firm. The assessment year is 1992-93. Section 44AC in the matter of computation of income was available on the statute book at the relevant time. It was the usual practice at that time, both for the assessee and the Revenue, to take 40 per cent, of the purchase price of alcoholic liquor for human consumption other than IMFL as the profit. The petitioner also adopted the same method and returned an income of Rs. 5,25,645 from arrack business (40 per cent, of the purchase cost). After setting off the loss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the assessing authority to recompute the income on the basis of the decision of the Supreme Court referred to above-compute the income on the basis of the profit and loss account and not at 40 per cent, as was done on a wrong interpretation of section 44AC. The Supreme Court held that section 44AC read with section 206C is only a machinery provision and not a charging section and that those provisions do not dispense with the regular assessment as provided under sections 28 to 43C of the Income-tax Act. Sri P. Balakrishnan, learned counsel appearing for the petitioner, contends that the computation of income as per section 44AC had attained finality as per exhibit P1 order of assessment dated February 7, 1995, as confirmed in exhibit P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al contentions, it is necessary to refer to the scheme and purpose of section 263 of the Income-tax Act. The section reads as follows: "263. Revision of orders prejudicial to Revenue.-(1) The Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Assessing Officer is erroneous in so far as it is prejudicial to the interests of the Revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thstanding anything contained in sub-section (2), an order in revision under this section may be passed at any time in the case of an order which has been passed in consequence of, or to give effect to, any finding or direction contained in an order of the Appellate Tribunal, the High Court or the Supreme Court. Explanation.-In computing the period of limitation for the purposes of sub-section (2), the time taken in giving an opportunity to the assessee to be reheard under the proviso to section 129 and any period during which any proceeding under this section is stayed by an order or injunction of any court shall be excluded." Three conditions must be satisfied for the Commissioner to exercise the power: (1) There must be an order by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder dated February 7, 1995, at 40 per cent, of the profit and loss account. The contention of Sri Balakrishnan is that such computation of income having not been interfered with by the appellate authority in the appellate order dated December 13, 1995 (exhibit P2) and the Revenue having not taken any steps in that regard at that time, the assessing authority is justified in passing exhibit P3 order dated March 6,1998, maintaining the income as 40 per cent, of the profit and loss account. The contention cannot be appreciated. On the facts it has to be seen that what has been done in exhibit P-2 order of the appellate authority is to set aside the assessment order dated February 7, 1995. It has also to be seen that the appellate authority in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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