Madras High Court
Festo Elgi Pvt. Ltd., Combined ... vs Commissioner Of Income-Tax on 10 September, 1998
Equivalent citations: [2000]246ITR705(MAD)
Author: R. Jayasimha Babu
Bench: R. Jayasimha Babu
JUDGMENT R. Jayasimha Babu, J.
1. The Commissioner of Income-tax after having given the permission to change the previous year in exercise of the powers conferred on him under Section 263 of the Income-tax Act, 1961, has once again after an interval of three years, made that very permission granted earlier the ground for interfering with the order of the Income-tax Officer who had merely given effect to the permission which the Commissioner himself has granted earlier on March 11, 1988, in exercise of his power under Section 263 of the Act. That order dated March 11, 1988, bears the caption "Revision under Section 263 of the Income-tax Act--Change of accounting year". There is no doubt whatsoever that what was approved by that order was the change in the accounting year. It is also made evident in the concluding paragraph of the order where it says that the Assessing Officer shall pass a fresh order permitting the assessee to change the previous year but shall impose only such conditions as are legal and are in accordance with law. Thereafter, the Income-tax Officer made an order imposing the conditions which had not been found fault with, by the Commissioner. It is that order which the successor Commissioner wanted to revise by initiating proceedings under Section 263. In the notice issued on March 6, 1991, it is stated in the opening paragraph "as a result of the permission granted for the change in previous year the assessment for 1986-87 has been skipped and there is loss of revenue. The above order is therefore, considered as erroneous and prejudicial to the interests of the Revenue."
2. This is clearly an instance of bolting the barn after the horse had run away. The Commissioner, who had given approval for the change of the accounting year earlier, did not consider these consequences as sufficient to deny the approval. Having granted approval, that approval cannot be revoked on the ground that the consequences which should have been considered, had not been considered. The successor who considered himself abler cannot on that score undo what his predecessor had done.
3. The impugned notice is unsustainable and, therefore, is quashed. The writ petition is allowed. Consequently, W. M. P, is dismissed as unnecessary.