Revision: S/s. 143 and 263: A. Y. 2006-07: ITO had jurisdiction at the time issuing notice u/s. 143(2): Assessment order u/s. 143(3) passed by ITO when jurisdiction was with Dy. Commissioner/ Assistant Commissioner as per Departmental Circular: Assessment order not invalid: Commissioner does not have power to revise such order u/s. 263:

For the A. Y. 2006-07, the assessee had filed the return of income declaring income of Rs. 2,32,969/-. The ITO completed the assessment u/s. 143(3) of the Incometax Act, 1961 making an addition of Rs. 4,50,000/-. The Commissioner initiated proceedings u/s. 263 of the Act, but being satisfied with the submissions of the assessee dropped the proceedings. Subsequently, another Commissioner set aside the order of the ITO holding that the ITO had no jurisdiction to complete the assessment as the income of the subsequent A. Y. 2007-08 was over Rs. 5 lakh and the jurisdiction lay with the Dy. Commissioner/ Asst. Commissioner and not with the ITO . The Tribunal set aside the order of revision.

On appeal by the Revenue, the Rajasthan High Court upheld the decision of the Tribunal and held as under:

“i) T he Commissioner does not have unfettered or unchequered discretion to revise the order u/s. 263 of the Income-tax Act, 1961. He can do so within the bounds of the law and has to satisfy the need of fairness in action. The Commissioner cannot invoke the powers to correct each and every mistake or error committed by the Assessing Officer. Every loss to the Revenue cannot be treated as prejudicial to the interest of the Revenue.

ii) T he notice u/s. 143(2) was issued on 11-01-2007 by the ITO and at that particular time, the income for the subsequent A. Y. 2007-08 was not submitted, rather the financial year had not ended by then and the ITO assumed valid jurisdiction. The return for the A. Y. 2007-08 was submitted on 31-08-2007, and merely because the assessment order was passed after 31- 08-2007, the assessment order u/s. 143(3) passed by the ITO on 30-09-2008, could not be said to be without jurisdiction. The assessment order passed on 30-09- 2008 was within jurisdiction and validly passed.

iii) M oreover, one Commissioner had issued notice u/s. 263 for the same assessment year and he having been satisfied dropped the proceedings and it was only thereafter that another Commissioner came to the conclusion about the jurisdiction while the earlier Commissioner was also aware of this fact. The order of the Commissioner was at best a result of change of opinion and tantamount to abuse of powers granted to the Commissioner. The practice adopted by the Commissioner is de hors and it amounts to unnecessary harassment to the assessee for no fault of his. Therefore, the order of revision was not valid.

iv) We do not find any infirmity or perversity in the order of the Tribunal. The appeal, being devoid of any merits, is hereby dismissed.”