High Court Of Madras
CIT vs. Andhra Civil Construction Ltd.
Sections 263
Asst. Year 1982-83
R. Jayasimha Babu & K. Raviraja Pandian, JJ.
Tax Case No. 438 of 1997
30th September, 2002
Counsel Appeared
J. Naresh Kumar, for the Applicant : None, for the Respondent
ORDER
R. JAYASIMHA BABU, J. :
The question referred at the instance of the Revenue is.
“Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the CIT was not correct in invoking the provisions of s. 263 of the IT Act, 1961 ?”
The assessee had filed a return for the asst. yr. 1982-83 showing a loss of Rs. 3,13,970. The AO merely endorsed ‘not assessable’ on that return. That order was thereafter suo motu revised by the CIT under s. 263 of the IT Act on the ground that unabsorbed investment allowance, unabsorbed depreciation as also unabsorbed development rebate ought to have been scrutinised by the AO before accepting that return. That failure to carry out such scrutiny had not only rendered the assessment erroneous but also caused prejudice to the Revenue. The assessee appealed to the Tribunal against that order of the CIT. The CIT took the view that when the AO ordered ‘not assessable’ it would amount to acceptance of the claims made by the assessee with regard to the losses and not its rejection and, therefore, prejudice had been caused to the revenue by reason of the order of the ITO. The Tribunal held that the pre-conditions for invoking the jurisdiction under s. 263 of the Act were not available to the CIT as the order had not resulted in any prejudice to the Revenue. Learned counsel for the Revenue invited our attention to the case of Esthuri Aswathiah vs. ITO (1961) 91 ITR 539 (SC) in which a threeJudge Bench of the apex Court held that an order stating ‘no proceeding’ by the ITO, in the circumstances of that case, meant acceptance of the return and the assessment of the income as ‘nil’. This Court also has held to the same effect in the case of V.S. Sivalingam Chettiar vs. CIT (1966) 62 ITR 678 (Mad). The Karnataka High Court has similarly held in the case ITO vs. M.P. Davis (1986) 50 CTR (Kar) 78 : (1986) 162 ITR 251 (Kar).
The view of the Tribunal that claims made by the assessee was rejected by reason of the order of ‘no assessment’ is, therefore, not correct. The further inference drawn by it that there was no prejudice caused to the Revenue as there was no acceptance of the claim which showed a substantial amount of a carry forward loss on unabsorbed investment allowance, unabsorbed depreciation and unabsorbed development rebate is also not correct. The CIT was justified in invoking his power under s. 263 of the IT Act. The question referred is answered in favour of the Revenue and against the assessee.
[Citation : 261 ITR 461]
