COMMISSIONER OF INCOME-TAX vs. LAKHABHAI LAVJIBHAI

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ITR/11/1991HC GujaratGJHC24013248199117 July 2002Bench: HONOURABLE MR. JUSTICE MOHIT S. SHAH,HONOURABLE MR. JUSTICE K.A.PUJ2 pages
AI SummaryRemanded

What did the High Court hold?

The High Court answered the question referred in the negative, in favour of the revenue and against the assessee. The Court followed the decision of the Apex Court in CIT vs. Shri Arbuda Mills Ltd. (1998) 231 ITR 50. This judgment clarified that the Explanation to Section 263(1), as amended retrospectively from June 1, 1988, grants the Commissioner powers to revise orders even if an appeal has been filed, specifically concerning matters not decided in that appeal. The retrospective effect means these extended powers are deemed to have always been available. Therefore, the Tribunal's finding that the Commissioner's order was without jurisdiction was incorrect in light of this legal position. The reference was disposed of accordingly.

What were the facts?

This is an Income Tax Reference filed by the revenue (Commissioner of Income-tax) against the assessee, Lakhabhai Lavjibhai, for the assessment year 1981-82. The reference concerns a decision by the Income Tax Appellate Tribunal (ITAT) which set aside an order passed by the Commissioner of Income-tax under Section 263 of the Income-tax Act, 1961, holding it to be without jurisdiction. The revenue's counsel presented arguments, while the assessee did not appear despite being served notice. The High Court was asked to provide its opinion on the question referred.

What were the issues?

1. Whether, in law and on facts, the Appellate Tribunal was right in setting aside the order made by the Commissioner of Income-tax in exercise of his powers under section 263 of the Income-tax Act, 1961 as without jurisdiction? Assessee's Contention: The judgment does not record any specific contentions made by the assessee. The ITAT had previously held the Commissioner's order under Section 263 to be without jurisdiction. Revenue's Contention: The revenue relies on the decision of the Apex Court in CIT vs. Shri Arbuda Mills Ltd. (1998) 231 ITR 50. They argue that the Explanation to Section 263(1), amended retrospectively by the Finance Act, 1989, with effect from June 1, 1988, extends the Commissioner's powers to matters not considered and decided in an appeal, and this extension is deemed to have always existed.

Which sections of the Income-tax Act were involved?

Section 263

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No 11 of 1991

For Approval and Signature:

Hon'ble MR.JUSTICE M.S.SHAH and Hon'ble MR.JUSTICE K.A.PUJ

============================================================ 1. Whether Reporters of Local Papers may be allowed : NO to see the judgements?

2.

To be referred to the Reporter or not? : NO

3.

Whether Their Lordships wish to see the fair copy : NO of the judgement?

4.

Whether this case involves a substantial question : NO of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder?

5.

Whether it is to be circulated to the concerned : NO Magistrate/Magistrates,Judge/Judges,Tribunal/Tribunals? @ COMMISSIONER OF INCOME-TAX Versus LAKHABHAI LAVJIBHAI -------------------------------------------------------------- Appearance: 1. INCOME TAX REFERENCE No. 11 of 1991 MR TANVISH U BHATT for Petitioner No. 1 NOTICE SERVED for Respondent No. 1

--------------------------------------------------------------

CORAM : MR.JUSTICE M.S.SHAH and MR.JUSTICE K.A.PUJ

Date of decision: 17/07/2002

ORAL JUDGEMENT

(Per : MR.JUSTICE M.S.SHAH) In this reference at the instance of the revenue, the following question is referred for our opinion in respect of assessment year 1981-82:-

"Whether, in law and on facts, the Appellate Tribunal was right in setting aside the order made by the Commissioner of Income-tax in exercise of his powers under section 263 of the Income-tax Act, 1961 as without jurisdiction?"

2.

We have heard Mr Tanvish U Bhatt, learned counsel for the applicant- revenue. Though served, none appears for the respondent- assessee.

3.

Our attention is invited to the decision of the Apex Court in CIT vs. Shri Arbuda Mills. Ltd. (1998) 231 ITR 50 wherein the Apex Court had held that in view of the Explanation to section 263(1) which was amended by the Finance Act, 1989 with retrospective effect from June 1, 1988, to the effect that where any order referred to in the sub-section and passed by the Assessing Officer had been the subject mater of any appeal (filed on or before or after the 1st day of June, 1988), the powers of the Commissioner under the sub-section shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in such appeal. The consequence of the amendment made with retrospective effect is that the powers under section 263 of the Commissioner shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in an appeal.

Following the aforesaid decision, our answer to the question referred for our opinion is in the negative i.e. in favour of the revenue and against the assessee.

4.

The Reference accordingly stands disposed of with no order as to costs.

(M.S. Shah,J) (K.A. Puj,J) zgs/-

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