Law:

Section:

section 3(4) of the income-tax act, 1961-previous year-change of-whether successor-ito is entitled in law to summarily withdraw permission granted by his predecessor for change of previous year-held, no section 246(c) of the income-tax act, 1961-appellate assistant commissioner-appealable order-whether order passed by ito under section 3(4) is appealable-held, yes Facts The assessee's sources of income were from remuneration, interest, dividend, share from a firm and from a proprietary concern. Since the firm and the proprietary concern had the financial year as their previous year, the assessee sought permission to change his previous year from Diwali year to the financial year from the assessment year 1973-74 onward. By an order under section 3(4), the ITO granted the required permission on the condition that the assessee should not object to be assessed for 17 months for the assessment year 1973-74. The assessee, accordingly, filed his return for the assessment year 1973-74 covering a period of 17 months. The successor-ITO, however, decided not to allow the said change of the previous year and completed the assessment with Diwali year as the previous year. The AAC confirmed the ITO's order. The Tribunal upheld the assessee's contention that the successor-ITO could not revoke his predecessor's order granting permission and also rejected the contention of the revenue that no appeal lay against an order passed by the ITO under section 3(4). On reference : Held 1. The assessee was given permission to change the accounting period by the ITO having jurisdiction over his case at the material time. That order was communicated to the assessee and had become final and conclusive. His successor-in-office could not summarily revise that decision while passing the assessment order. Such a decision could not be supported even under section 154 since there was no mistake apparent from the record. Thus, the successor-ITO's decision to treat the Diwali year as the previous year for the assessment year 1973-74 was clearly erroneous and without jurisdiction. 2. In order to decide what is the correct income, it has to be seen what is the correct account period and the amount of…

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