Facts of the Case

The Commissioner of Income Tax exercised revisional powers under Section 263 of the Income-tax Act and sought to revise an assessment order passed by the Assessing Officer.

The assessee challenged the revisional order before the Income Tax Appellate Tribunal. The Tribunal accepted the assessee’s contention and set aside the order passed by the Commissioner under Section 263.

Aggrieved by the Tribunal’s decision, the Revenue preferred an appeal before the Delhi High Court.

During the pendency of the matter, the issue forming the basis of the revision under Section 263 came to be conclusively settled by the Supreme Court in CIT vs. Walfort Shares & Stock Brokers Ltd., 326 ITR 1.

Issues Involved

  1. Whether the Commissioner was justified in invoking revisional jurisdiction under Section 263 of the Income-tax Act.
  2. Whether the Revenue’s appeal could survive when the substantive issue sought to be revised had already been conclusively settled by the Supreme Court.
  3. Whether any interference with the Tribunal’s order was warranted in light of the Supreme Court’s decision.

Petitioner’s (Revenue’s) Arguments

  • The Revenue challenged the Tribunal’s order setting aside the revisional order passed under Section 263.
  • It was contended that the Tribunal erred in interfering with the Commissioner’s exercise of revisional jurisdiction.
  • The Revenue sought restoration of the Commissioner’s order.

Respondent’s (Assessee’s) Arguments

  • The assessee supported the Tribunal’s decision.
  • It was contended that the order passed under Section 263 was unsustainable.
  • The assessee relied upon the legal position which ultimately stood affirmed by the Supreme Court in CIT vs. Walfort Shares & Stock Brokers Ltd., 326 ITR 1.

Court Findings

The Delhi High Court observed that it was not necessary to examine whether the Commissioner’s order under Section 263 was proper, valid, or within jurisdiction.

The Court noted that the very issue on the basis of which the Commissioner sought to revise the assessment order had already been conclusively determined by the Supreme Court in CIT vs. Walfort Shares & Stock Brokers Ltd., 326 ITR 1.

Since the controversy stood settled by the Supreme Court, the foundation of the Revenue’s challenge no longer survived.

Court Order

The Delhi High Court dismissed the Revenue’s appeal.

The Court held that in view of the authoritative pronouncement of the Supreme Court in CIT vs. Walfort Shares & Stock Brokers Ltd., 326 ITR 1, no further consideration of the Revenue’s challenge was required.

Important Clarification

The judgment emphasizes that where the issue forming the basis of revision under Section 263 has already been conclusively settled by the Supreme Court, continuation of litigation on the same issue becomes unnecessary.

The Court clarified that it was not even required to adjudicate upon the correctness or jurisdictional validity of the Commissioner’s order under Section 263 because the underlying issue itself stood finally resolved by the Supreme Court.

 

Sections Involved

  • Section 263 of the Income-tax Act, 1961
  • Powers of Revision by Commissioner of Income Tax

Link to download the order -

https://delhihighcourt.nic.in/app/case_number_pdf/2010:DHC:9929-DB/AKS30092010ITA12402009_162316.pdf 

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