[CIT v. ICICI Bank Ltd., 343 ITR 74 (Bom.)]
For the A.Y. 1996-97, the assessment order u/s.143(3) of the Income-tax Act, 1961 was passed on 10-3-1999 allowing the deduction claimed u/ss. 36(1)(vii) and (viia) and the foreign exchange rate difference. Subsequently, a reassessment order u/s.147 was passed on 22-2-2000 reworking the deduction u/s.80M. An appeal against the order u/s.143(3) was decided by the Commissioner (Appeals) on 28-3-2001. Thereafter, another reassessment order u/s.147 was passed on 26-3-2002, for reworking of the deduction u/s.36(1) (viii). On 28-3-2003, the Commissioner passed an order u/s.263 for disallowance u/s.36(1)(vii) and (viia) and in respect of foreign exchange rate difference. The Tribunal set aside the order as barred by limitation.
On appeal by the Revenue, it was contended that when the Assessing Officer passed the reassessment order on 26-3-2002, the Explanation to clause (vii) of section 36(1) had been introduced on the statute book and the Assessing Officer was duty bound to apply the law as amended, which he failed to do, and that Explanation 3 to section 147 of the Act having been amended to provide that the Assessing Officer may assess or reassess the income in respect of any issue, which has escaped assessment and coming to his notice subsequently in the course of the proceedings.
The Bombay High Court upheld the decision of the Tribunal and held as under: “
(i) Where the jurisdiction u/s.263(1) is sought to be exercised with reference to an issue which is covered by the original assessment order u/s.143(3) and which does not form the subject-matter of reassessment, limitation must necessarily begin to run from the order u/s.143(3).
(ii) Neither in the first reassessment, nor in the second reassessment was any issue raised or decided in respect of the deductions u/s.36(1) (vii), (viia) and the foreign exchange rate difference. The order of the Commissioner u/s.263(2) had not been passed with reference to any issue which had been decided either in the order of the first reassessment or in the order of second reassessment, but sought to revise issues decided in first order of assessment u/s.143(3) dated 10-3-1999.
(iii) The order dated 10-3-1999, did not merge with the orders of reassessment in respect of issues which did not form the subject-matter of the reassessment. Consequently, Explanation 3 to section 147 would not alter that position. Explanation 3 only enables the Assessing Officer, once an assessment is reopened, to assess or reassess the income in respect of any issue, even an issue in respect of which no reasons were indicated in the notice u/s.148(2). This, however, will not obviate the bar of limitation u/s.263(2). The invocation of the jurisdiction u/s.263(2) was barred by limitation.”
