The Commissioner Of Income-Tax, Bombaycity-Viii, Bombay v. Devji Kanji Shah, Adenwala Bldg. Bombay-25

IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX REFERENCE No. 80 of 1995. The Commissioner of Income-tax, BombayCity-VIII, Bombay ... Applicant. Versus Devji Kanji Shah, Adenwala Bldg. Bombay-25. ... Respondent. Mr Sureshkumar for the appellant. CORAM : J.P. Devadhar & A.R. Joshi, JJ. DATE : 16 January, 2012. P.C. :- 1.At the instance of the Revenue the ITAT has referred the following question of law for the opinion of this Court. Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the order under Section 263 passed on 17.3.1986 by the CIT was barred by the limitation of time though the Section 263 of the I.T. Act was amended with effect from 1.10.1984? 2.The assessment year involved herein is AY 1981-82. 3.In the Assessment year in question original assessment order was passed on 26.9.1983. The said assessment order was subject to Section 263 proceedings and by an order dated 17.3.1986 the CIT directed the ITO to make a fresh assessment. The question before the ITAT was whether in lieu of the amendment to Section 263 (2) of the Income-tax Act, 1984 with effect from 1.10.84 the order passed by the CIT u/s 263 was beyond the period of limitation prescribed therein. The ITAT relying upon the CBDT Circular No. 402 dated 1.12.84 held that the order passed by the CIT was beyond the period of limitation prescribed under the Act. 4.The Circular No.402 dated 1.12.1984 issued by the C.B.D.T. reads thus :- “As a consequence of the amendment of Section 263 of the Income-tax Act, 1961, by Section 47 of the Taxation Laws (Amendment) Act, 1984, the limitation for passing an order under Section 263 will in view of general principles of interpretation of statutes, stand extended in cases where the period of limitation originally laid down in that section had not expired before 1[st ]October, 1984. However, with a view to avoiding controversy and litigation in the matter, it is desirable that order under Section 263 of the Income-tax Act are passed, as far as possible, within two years of the date of the order sought to be revised in cases where the order sought to be revised was passed before 1[st] October, 1984.” 5.Counsel for the Revenue fairly states that in the light of the CBDT Circular, it is clear that in respect of the assessment orders passed prior to 1[st ]October 1984 the orders under Section 263 of the Act have to be passed within two years from the date of the orders which are sought to be revised. In the present case, since the assessment order was passed on 26.9.1983 and the order Ladda under Section 263 was passed on 17.3.1986 i.e. beyond the period of limitation, the ITAT was justified in holding that the order passed by the CIT under Section 263 of the Act was beyond the time prescribed under Section 263 (2) of the Act. In this view of the matter, the question referred to us in the above reference is answered in the affirmative i.e. in favour of the assessee and against the Revenue. Reference is disposed of accordingly, with no order as to costs. (A.R.Joshi,J) (J.P.Devadhar,J.)