TMI Blog2002 (3) TMI 38X X X X Extracts X X X X X X X X Extracts X X X X ..... " The brief facts of this case are as follows "On or about March 25, 1985, the assessment was made for the first time by the Income-tax Officer for the assessment year 1984-85. We are concerned only with that single year. On January 7, 1986, the Income-tax Officer purported to rectify and amend the original assessment order. The most significant point, and indeed the only point of this rectification for our purpose was that a sum upwards of Rs. 32,00,000 was sought to be added as sales tax receipt by the assessee, which receipt had allegedly not been made over by them to the sales tax authorities." Needless to mention the assessee was aggrieved by the order of rectification and it preferred due departmental appeals. On February 17, 1987, notice was issued from the office of the Commissioner of Income-tax, West Bengal-XIV, proposing to pass orders in revision under section 263 for three assessment years, the last of which was 1984-85. The points that were raised there (in so far as the present assessment year is concerned) about (i) section 80HH deductions and (ii) sales tax realised from customers, and whether those have been shown as part of the assessee's income. It wil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the records that the Commissioner of Income-tax, West Bengal-XIV, passed an order under section 263 on February 26, 1987, cancelling the assessment order and directing the Income-tax Officer to pass a fresh assessment order after taking into consideration of the facts. As the original assessment order itself was set aside, the order under section 154 does not survive. 3. The appeal, has, therefore, become infructuous. It is treated as dismissed for statistical purposes". The fresh assessment after the conclusion of the proceeding in revision and appeal was made on the February 26, 1988. In the paper book before us neither the notice of revision dated February 17, 1987, is to be found, nor this fresh assessment dated February 26, 1988. The copies of these were handed up by Mr. Poddar, appearing for the assessee, and those should be kept countersigned on record as part of the records of these proceedings. From the fresh assessment order the appeal was heard and decided on October 30, 1988, and then the Tribunal gave its decision on December 17, 1993. Broadly speaking the Tribunal has opined that in the order passed in the revision there being no specific mention of the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erms of the appellate authority's direction the Income-tax Officer could not touch its own original order. In the second case deductions were sought to be withdrawn from the head of development rebate because the ships were sold within two years. This time the decision went in favour of the assessee; even though the ships had actually been sold, the rebate could not be withdrawn because the appellate authority's remand order did not permit the Income-tax Officer to reshape its assessment order on those issues. After the amendments made in the year 2001, section 263, which deals with revision, and section 251, which deals with appeals, have marked differences in wording. But previously, section 251 contained words which allowed the appellate authority in appropriate circumstances to set aside the entire assessment and call for a fresh assessment to be made. These words are no longer expressly there in section 251. But so far as section 263 is concerned, the power of cancellation of assessments made to the prejudice of the Revenue and of directions for fresh assessment were all along there and those are still there. Thus, the ratio given in the two above reference decisions of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e fresh assessment after an order is passed in revision. The principal reason why we say so is this. Suppose in the original assessment the Income-tax Officer assesses profit at Rs. 1 lakh; suppose a rectification order amends such assessment by adding Rs. 2 lakhs to the said sum of Rs. 1 lakh; suppose an order in revision thereafter finds that Rs. 5,000 was not properly left out and should have been added to the original assessment of Rs. 1 lakh. That order in revision directs a revision to be made by the making of the addition of Rs. 5,000. After making the fresh assessment, the profits are now assessed at Rs. 3,05,000. If the sum of Rs. 2 lakhs which is inserted in the fresh assessment becomes immune from attack, in spite of it being passed and assessed inappropriately under section 154 in the first place, then and in that event each and every small amount of revision, even if undeniably necessary to stop prejudice to the interests of the Revenue, would upset the whole process of assessment and the structure of rights available to the assessee and the Revenue. We do not wish to impute any wrong motive to any party, but theoretically, an eager Commissioner in revision might e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so. If the Commissioner in revision realises that section 154 has been invoked in a wrong way, he should make it plain and specific in the order in revision that the invocation is wrong. He should there after cancel the order passed on section 154 saying that it has been wrongly invoked and such wrong invocation is to the prejudice of the Revenue. If thereafter he finds on the merits, that the amount ought to be added, then he should himself pass a direction in that regard, by applying his own mind, and pass an order which will be followed by the Income-tax Officer in the fresh assessment. If such direction is followed, the fresh assessment will not repeat the section 154 order, but, on the other hand, follow the direction in revision, and since the section 154 order is not repeated, no portion of the fresh assessment will be subject to challenge as being a result of a wrong invocation of section 154. We make this above clarification only to avoid future problems of the Commissioners in revision who might well be faced with a situation in future like the one in the present case. In all such cases the Commissioner should be fully articulate and say that the section 154 matter is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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