Law:

Section:

Section 153, read with section 263, of the Income-tax Act, 1961 - Income escaping assessment - Time limit for competition of reassessment - Assessment order was passed and appeal was preferred by assessee against said order - Commissioner (Appeals) directed Assessing Officer to allow claim of assessee with regard to investment allowance - Subsequently, Commissioner, in exercise of powers under section 263, held that order of assessment passed by ITO was erroneous inasmuch as claim under head 'lease rent' was excessively allowed and that investment allowance was also wrongly allowed and, therefore, he directed Assessing Officer to make fresh assessment - Commissioner did not discuss other issues which had been discussed by Assessing Officer in his assessment order - Assessing Officer did not pass any order pursuant to directions contained in order passed by Commissioner under section 263 as period of limitation had already crept in - He, however, proceeded to pass order on basis of order passed by appellate authority - Whether by virtue of order passed by Commissioner under section 263, entire order of assessment was not totally put to naught or stood cancelled - Held, yes - Whether order of assessment having not been nullified, direction remained intact as per order of appellate authority and, therefore, bar of limitation under section 153 would not come into effect - Held, yes FACTS The assessment order was passed and an appeal was preferred by the assessee. The Commissioner (Appeals) directed the ITO to allow the investment allowance as per law as a deduction from the assessee's total income. Thereafter, the Commissioner initiated proceedings under section 263, holding that there was an excess allowance under the head 'lease rent' and that investment allowance on well and tank and trolley which being not in the nature of plant, wrongly allowed by ITO. Therefore, the order of assessment was set aside and the ITO was directed to make a fresh assessment in accordance with law after giving an opportunity of being heard to the assessee. The Assessing Officer, however, did not pass any order pursuant to the directions contained in the order passed by the…

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