Law:

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Section 263 of the Income-tax Act, 1961 - Revision - Of orders prejudicial to interest of revenue - Assessment year 1999-2000 - Commissioner, by invoking powers under section 263, set aside assessment order and directed Assessing Officer to calculate taxable income according to mercantile system of accounting - Commissioner gave a specific direction to Assessing Officer to pass consequential order within a period of three months approximately - On appeal, Tribunal found that Assessing Officer had not framed any assessment order in consequence of impugned order and time for passing such order had expired - Tribunal, therefore, dismissed appeal as having become infructuous - Whether Tribunal had come to a correct conclusion - Held, yes FACTS The Commissioner, by invoking the provisions of section 263, set aside the assessment framed under section 143(3) and directed the Assessing Officer to calculate taxable income according to the mercantile system of accounting. The Commissioner gave a specific direction that the consequential order should be passed within a period of three months approximately. On appeal, the Tribunal found that no consequential order had been passed pursuant to the order passed by the Commissioner. It, therefore, held that appeal before it had become infructuous. The appeal was dismissed accordingly. On appeal, the department, referring to the provisions of section 153(2A) and 153(3)(ii), contended that no period of limitation has been prescribed for passing orders consequential to the order passed by the Commissioner under section 263. HELD The order passed by the Tribunal did not call for any interference. There were several reasons for that. First of all, the Tribunal had not invoked any statutory provision to set up a statutory bar of limitation for passing a consequential order. Therefore, the submissions made by the revenue pertaining to the provisions of section 153(2A) and 153(3)(ii ) were of no consequence. Secondly, the Tribunal had only gone by the direction given by the Commissioner in his order passed under section 263. Under section 263(1), the Commissioner may pass any order as the circumstances of the case justify. In the…

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