Income Tax,Kolhapur v. M/S Arvind Trading Co

:1: IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.17 OF 1999 INCOME TAX APPEAL NO.17 OF 1999 The Commissioner of Income Tax,Kolhapur .... Appellant V/s M/s Arvind Trading Co. Akluj, Dist.Solapur ... Respondent Mr.A.S.Rao for appellant None for respondent CORAM: S. RADHAKRISHNAN AND J.H.BHATIA, JJ. DATE : 5TH JULY,2005. P.C. 1. Heard the learned counsel for the Revenue. None appears for the respondent though served. 2. The following substantial question of law has been raised. "Whether on the facts and in the circumstances of the case, the Tribunal was justified in holding that since the assessment was framed under section 143(1) of the Income Tax Act, the C.I.T. was not justified in invoking the jurisdiction under section 263 of the Income Tax Act, even if the Assessment was erroneous and prejudicial to the interests of the Revenue ?" 3. In the above matter, as far as respondent is concerned, the assessment years involved are 1986-1987 and 1987-1988. It appears that assessment as far as the respondent concerned was completed on 31.03.1989 under section 141 of the Income Tax Act accepting the :2: return of assessee. 4. The C.I.T. after examining income tax record of the respondent-assessee was of the view that order passed by the Assessment Officer Revenue as prejudicial to interest of Revenue within meaning of section 263 of the Income Tax Act and accordingly, notices were issued to the assessee. After hearing the assessee, C.I.T. come to the conclusion that C.I.T. could not have exercised its power under section 263 on the ground that assessment order was erroneous and prejudicial to the interest of the Revenue. 5. Revenue has preferred this appeal only on the above question of law. In the sense, whether C.I.T. could exercise its power under section 263 of the Income Tax Act whenever it has found that assessment order was erroneous and prejudicial to the interest of the Revenue. 6. The learned counsel appearing on behalf of appellant has brought to our notice a judgment of Bombay High Court in the case of Commissioner of Commissioner of Income-tax v. Rajkumar Dipchand Phade reported in Income-tax v. Rajkumar Dipchand Phade reported in(2001)249 ITR 0520.In the above judgment, very same (2001)249 ITR 0520 :3: issue was raised as the above question of law and the Court has very clearly held that the Commissioner has to exercise its power under section 263 of the Income Tax Act whenever it has found that order of assessment to be erroneous or prejudicial to the interest of the Revenue. 7, Under the facts and circumstances, the aforesaid question is answered in negative. Appeal in favour of the Revenue and against the Assessee. S.RADHAKRISHNAN,J. J.H.BHATIA,J.