TMI Blog2007 (1) TMI 184X X X X Extracts X X X X X X X X Extracts X X X X ..... iction under section 263 in respect of the said issue in terms of the assessment order dated March 10, 1995? Held that:- Initiation of a proceeding under section 263 of the Act cannot be held to have become bad in law only because an order of rectification was passed. No such hard and fast rule can, in our opinion, be laid down. Each case is required to be considered on its own facts. In a given situation, the High Court may be held to be entitled to set aside both orders and remit the matter for consideration of the matter afresh. But in our opinion, it would not be correct to contend that only because a proceeding for rectification was initiated subsequently, the revisional jurisdiction could not have been invoked under any circumstances whatsoever. If such a proceeding was initiated, in our opinion, the contesting parties could bring the same to the notice of the Commissioner so as to enable him to take into consideration the subsequent events also. It goes without saying that if and when the Commissioner of Income-tax takes up for consideration a subsequent event, the assessee would be entitled to make its submission also in regard thereto. For the reasons aforementioned, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceedings under section 263 thereof or otherwise. The said contention of the assessee was upheld by the Tribunal, inter alia, relying on or on the basis of a decision of the Madhya Pradesh High Court in CIT v. Vippy Solvex Products P. Ltd. reported in [1997] 228 ITR 587. The Tribunal was furthermore of the opinion that the order passed under section 154 of the Act having been made upon due consideration of the explanation of the assessee for the proposed rectification on the point of excess deduction under sections 80HH and 80-I, the Commissioner lacked jurisdiction to make any order under section 263 thereof. An application in the aforementioned premise was filed before the High Court for a direction upon the Tribunal for reference of the following questions to it for its opinion: "1. Whether on the facts and in the circumstance of the case, the hon'ble Income-tax Appellate Tribunal was justified in law in holding that the Commissioner of Income-tax lacked jurisdiction to revise the order of assessment under section 263 of the Income-tax Act? 2. Whether on the facts and in the circumstances of the case, the hon'ble Income-tax Appellate Tribunal was justified in holding that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der of rectification can be passed on certain contingencies. It does not confer a power of review. If an order of assessment is rectified by the Assessing Officer in terms of section 154 of the Act, the same itself may be a subject matter of a proceeding under section 263 of the Act. The power of revision under section 263 is exercised by a higher authority. It is a special provision. The revisional jurisdiction is vested in the Commissioner. An order thereunder can be passed if it is found that the order of assessment is prejudicial to the Revenue. In such a proceeding, he may not only pass an appropriate order in exercise of the said jurisdiction but in order to enable him to do it, he may make such inquiry as he deems necessary in this behalf. When an order is passed by a higher authority, the lower authority is bound thereby keeping in view the principles of judicial discipline. This aspect of the matter has been highlighted by this court in Bhopal Sugar Industries Ltd. v. ITO [1960] 40 ITR 618 (SC); AIR 1961 SC 182, in the following terms: "If a subordinate Tribunal refuses to carry out directions given to it by a superior Tribunal in the exercise of its appellate powers, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... error apparent on the face of the record. It does not confer any power of review. An order of assessment mayor may not be rectified. If an order of rectification is passed by the assessing authority, the rectified order shall be given effect to. However, only because an order of assessment has undergone rectification at the hands of the Assessing Officer, in our opinion, the same would not mean that the revisional authority shall be denuded of exercising its revisional jurisdiction. Such an interpretation, in our opinion, would run counter to the scheme of the Act. The Tribunal relied on Vippy Solvex Products P. Ltd. [1997] 228 ITR 587 (MP). Therein the question was determined in the light of the decision of this court in Smt. S.R. Venkataraman v. Union of India, AIR 1979 SC 49. The ratio of the said decision was not at all applicable. The High Court, thus, committed a manifest error in relying on the said decision. In Smt. S.R. Venkataraman, AIR 1979 SC 49, this court was concerned with an administrative order passed by a statutory authority. It is trite that when an authority having discretionary power exercises the same for unauthorized purpose or on consideration of irrelev ..... X X X X Extracts X X X X X X X X Extracts X X X X
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