Holding

The doctrine of merger does not apply and the limitation period under Section 263(2) starts from the date of the original assessment order, making the Commissioner’s order barred by limitation.

Summary

Mis. Alagendran Finance Ltd. filed income‑tax returns for assessment years 1994‑95, 1995‑96 and 1996‑97, claiming a deduction under the Lease Equalisation Fund (LEF). The assessment orders accepted the LEF claim. In 2004 the Assessing Officer initiated reassessment proceedings for three unrelated items (share‑issue expenses, bad‑and‑doubtful debts, excess depreciation) and the Commissioner, invoking Section 263 of the Income‑Tax Act, reopened the original assessment only to disallow the LEF claim, which was not part of the reassessment. The Income Tax Appellate Tribunal and the Madras High Court held that the Commissioner’s order was barred by the two‑year limitation under Section 263(2) because the limitation runs from the date of the original assessment order, not from the reassessment order, and that the doctrine of merger did not apply since the LEF issue was not the subject of the reassessment. The Revenue appealed to the Supreme Court, which affirmed the lower courts, holding that the limitation period began on the assessment date and that the doctrine of merger was inapplicable, rendering the Commissioner’s order ultra vires.

Issues considered

The period of limitation under Section 263(2) of the Income‑Tax Act – does it commence from the date of the original assessment order or from the date of the reassessment order?
Whether the doctrine of merger applies when the Commissioner reopens an assessment under Section 263 for a head of income that was not the subject of the reassessment proceedings.

Legislation cited

Income Tax Act, 1961s. 147, s. 148, s. 22(2), s. 263(1), s. 263(2), s. 263(3)
Wealth Tax Act, 1957s. 17

Subjects

Income TaxSection 263Limitation periodDoctrine of mergerReassessmentLease Equalisation FundRevisional jurisdictionTax assessment

Judgment

'
>---

A COMMISSIONER OF INCOME TAX, CHENNAI
v.
MIS. ALAGENDRAN FINANCE LTD.

JULY 27, 2007

B [S.B. SINHA AND HARJIT SINGH BEDI, JJ.]

Income Tax Act, 1961-s. 263-Assessment-Revision by Commissioner- >-
limitation period-Date of commencement-Commissioner exercising its
C revisional jurisdiction reopened order of assessment only in relation to 'lease
equalization fund', which being not the subject of the reassessment
proceedings, period of/imitation providedfor under s. 263(2) would commence
from the date of original assessment order and not from the date of order of
reassessment-Doctrine of merger not applicable in a case of this nature.

D The Commissioner of Income Tax exercising its revisional jurisdiction
in terms of Section 263 of the Income Tax Act, 1961 reopened the order of
assessment only in relation to 'lease equalization fund' which was not the
subject of the reassessment proceedings.

In appeal before this Court, the question which arose for consideration
E is whether the period of limitation provided for under Sub-section (2) of Section
263 of the Act would begin to run from the date of the order of assessment
and not from the order of reassessment and that the doctrine of merger would
not apply in a case of this nature.

Dismissing the appeal, the Court
F
HELD: ·J.J. A bare perusal of the order passed by the Commissioner of
Income Tax would clearly demonstrate that only that part of order of
assessment which related to 'lease equalization fund' was found to be
prejudicial to the interest of the Revenue. The proceedings for reassessment
G have nothing to do with the said head of income. Doctrine of merger, therefore,
would not apply in a case of this nature. Furthermore, Explanation (c) appended
to Sub-section (1) of Section 263 of the Act is clear and unambiguous as in
terms thereof doctrine of merger applies only in respect of such items which
were the subject matter of appeal. (Paras 7 and 8) (564-A-C) \-- r:-
H 558
J
COMMNR. OF INCOME TAX, CHENNAI v. ALAGENDRAN FINANCE LID. [S.B. SINHA, J.) $59

__..
1.2. Once an order of assessment is reopened, the previous A
underassessment will be held to be set aside and the whole proceedings would
start afresh but the same would not mean that even when the subject matter
of reassessment is distinct and different, the entire proceeding of assessment
would be deemed to have been reopened. It is not a case where the subj~ct
matter of reassessment and subject matter of assessment were the same. Th~y
were not. [Paras 10 and 12) (565-H; 566-A-B; 567-F-G) B

1.3. Keeping in view the facts and circumstances of this case and, In
...-( particular, having regard to the fact that the Commissioner of Income Tax
exercising its revisional jurisdiction reopened the order of assessment only
in relation to lease equalization fund which being not the subject of the
reassessment proceedings, the period of limitation provided for under Sub-
c
section (2) of Section 263 of the Act would begin to run from the date of the
I
order of assessment and not from the order of reassessment.
[Para 15) (569-B-DJ
Commissioner of Wealth-Tax v. A.K. Thanga Pillai, 252 ITR 260 an~
Commissioner of Income-Tax v. Kanubhai Engineers (P.) Ltd, 241 ITR 665, D
approved.
t·

Commissioner ofIncome-Tax v. Shri Arbuda Mills Ltd, 231ITR50, relied
on.

Hind Wire Industries Ltd v. Commissioner ofIncome Tax, 212 ITR 639; 1 E
Commissioner of Income Tax v. Sun Engineering Works P. Ltd, 198 ITR 297,
and V Jaganmohan Rao v. CIT and CEPT, 75 ITR 373, referred to.

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 3301 of2007.
I. From the Judgment & Order 18.01.2006 of the High Cout of Judicature F
~-I
at Madras in Tax Appeal No. 1384 to 1386 of2005 and TCMP Nos. 1203-1204
of2005.

Rajiv Dutta, B.L. Chiber, M.F. Humayunisa, Kumar Dushyant Singh and ·
B. V. Balaram Das for the Appellant.
·G
',,, Anil Diwan, T.N. Seetharaman, Bina Gupta and Shweta Venna for the
Respondents.
I
-/ The Judgment of the Court was delivered by

S.B. SINHA, J. 1. Leave granted. H
\

560 SUPREME COURT REPORTS [2007] 8 S.C.R.
)._ -
·-
A 2. Whether for the purpose of computing the period of limitation
>--
envisaged under Sub-section (2) of Section 263 of the Income Tax Act, 1961
(for short "the Act"), the date of order of assessment or that of the
reassessment, is to be· taken into consideration is the question involved in
this appeal which arises out of a judgment and order dated 18.01.2006 passed
by a Division Bench of the High Court of Judicature at Madras passed in
B Income Tax Appeal No. 1384 to 1386 of2005.

3. The said question arises on the following facts :

Respondent is a company incorpora!ed under the Indian Companies >---
Act, 1956. It filed its returns for assessment' under the Act for the assessment
c years 1994-95, 1995-96 and 1996-97 on 23 .11.1994, 27.l L 1995 and 26.11.1997
respectively. Assessment for the year 1994-95 was completed on 27 ;02.1997
and those of the Assessment Years 1995-96 and 1996-97 were completed on
12.05.1997 and 30.03.1998 respectively. In the said orders of assessment, the ·
assessee's return under the Head 'Lease Equalization Fund' was accepted.
D However, proceedings for reassessment were initiated by the assessing officer
on 05.03.2004. Orders ofreassessment were passed on 28.03.2002. Proceedings ·-'
for reassessment, however, were initiated only in respect of three items, viz., ~
(i), the expenses claimed for share issue, (ii), bad an~ doubtful debts and (iii),
excess depreciation on gas cylinders and goods containers.

E Although the assessee's return in respect of lease equalization was not
the subject matter of the reassessment proceedings, the Commissioner of
Income Tax purported to invoke his revisional jurisdiction in terms of Section
263 of the Act and by an order dated 29.03.2004 held as under:

"5. In short, from the example given it is the depreciation on the leased
F assets that is clamed as Book Depreciation and disallowed in the
)r~
computation of income, the assessee sought to claim in the form of
Lease Equalisation from the lease rentals by virtue of the guidelines
note of the Institute of Chartered Accountants of India.

*** *** ***
G
7. Since the assessee has not given the complete details, the method ...
adopted by the assessee in arriving at the correct profit for the
corresponding year cannot be checked. I clearly feel that the orders
\ .by the Assessing Officer are prejudicial to the interest of the revenue \--
a~ the lease rentals had not been properly brought to tax. Hence, all
H :..
COMMNR. OF INCOME TAX, C.~NNAI ''· ALAGENDRAN FINANCE LTD. (S.B. SINHA, J.] 561

the three assessments are reopened u/s 263 and the Assessing Officer A
is directed to check and assess the lease rentals from Lease equalisation
fund, if any, and to bring to tax the same for all the above three years."

Pursuant to or in furtherance of the said order, reassessment proceedings
were carried out in respect of the aforementioned assessment years by the
Assistant Commissioner of Income Tax only in respect of the income on B
equalization reserve stating:

"I have considered the various arguments of the asses see' s
representative and I am satisfied that the deduction made from the
gross lease rent is only a provisional and not an actual expenditure
and therefore the same is to be disallowed and added to the income C'
returned ... "

The mati:er came up for consideration before the· Income Tax Appellate
Tribunal wherein the contention of the respondent that the said purported
proceedings under Section 263 of the Act were barred by limitation, found
favour with, opining: D

"6. We have carefully gone through th,e record and considered the
rival submissions. In our view, the contentions of the Assessee deserve
to succeed. The facts of the case clearly show the claim of lease
equalisation fund, if at all accepted, is an error committed by the E
Assessing Officer in his order passed under Sec. 143(3) of the Act for
the Asst. Year 94-95 on 27.2.97, for the Asst. Year 95-96 on 12.5.97 and
for the Asst. Year on 30.3.98. The Assessee, no doubt, took up these
assessments in appeal before the CIT (Appeals) and thereafter the
assessment itself was subject to proceedings und~r Sec. 148 and
ultimately, the orders of reassessment were framed on 28.3.2002. All F
the ?u.bsequent events are in respect of matters other than the
allowance of lease equalization fund. In other words, the error, if any,
has been committed, it was done in the order of the Assessing Officer
passed Asst. the year 97-98. Therefore, these ordeis very much subsist
despite the subsequent proceedings under sec. 148 of the Act."
G
The learned Tribunal referred to several decisions of this Court and
other High Courts for arriving inter a/ia at the following conclusion:
-·1
"8. In the light of the above decisions and authorities, we are of the
opinion that the impugned order passed under Sec. 263 on 29.03.2004 H
562 SUPREME COURT REPORTS (2007] 8 S.C.R.

A are clearly barred by limitation with reference to the orders passed
under Sec. 143(3) by the Assessing Officer for the above Asst. years
on 27.2.97; 25.12.97 and 30.3.98 respectively. Accordingly, the orders
of the CIT under Sec. 263 are vacated and the ground taken by the
Assessee is allowed."

B Revenue preferred an appeal thereagainst before the High Court which
was dismissed by a Division Bench stating:

"2. Learned Senior Central Government Standing Counsel submits that
the very same issue has been raised and decided by the Court against
the Revenue in the case of CWTv. A.K. Thanga Pillai, (252 ITR 260)."
c
Aggrieved by and dissatisfied therewith, the Revenue is before us.

4. Mr. Rajiv Dutta, learned senior counsel appearing on behalf of the
appellant in support of the appeal inter alia would submit that having regard
to the Explanation appended to Sub-section (3) of Section 263 of the Act as
D also in view of the doctrine of merger, the Tribunal committed a manifest error
in passing the impugned judgment insofar as it failed to take into consideration
that in law computation of period oflimitaiion was to commence from the date
of passing of the order ofreassessment viz., 28.03.2002 and not from the date
of the initial assessment, and as the proceeding under Section 263 was
E initiated on 05.03.2004, the provision of sub-section (2) of Section 263 would
not be attracted in the instant case. Strong reliance in this behalf has been
placed on Hind Wire Industries Ltd. v. Commissioner of Income Tax, [212 ITR
639].

5. Mr. Anil Diwan, learned senior counsel appearing on behalf of the
F respondent - assessee, on the other hand, submitted:
x-
(i) The income head 'lease equalization fund' being not the subject
matter of the reassessment proceedings, the doctrine of merger
will have no application in the instant case and in that view of
the matter, the impugned order of the Tribunal as also the High
G Court is unassailable.
......
(ii) The issue has rightly been held by the High Court to be squarely
covered by the decision of the Madras High Court in
Commissioner of Wealth-Tax v. A.K. Thanga Pillai, [252 ITR \--
260].
H
COMMNR. OF INCOME TAX, CHENNAI v. ALAGENDRAN FINANCE LTD. [S.B. SINHA, J.J 563

-<
6. Before embarking upon the rival contentions of the parties raised A
before us, we may notice the relevant part of Section 263 of the Act which
is as under:

"263. Revision oforders prejudicial to revenue - ( l) The Commissioner
may call for and examine the record of any proceeding under this Act,
and if he considers that any order passed therein by the Assessing B
Officer is erroneous in so far as it is prejudicial to the interests of the
. revenue, he may, after giving the assessee an opportunity of being
,
{ -...: heard and after making or causing to be made such inquiry as he
deems necessary, pass such order thereon as the circumstances of the
case justify, including an order enhancing or modifying the assessment,
or cancelling the assessment and directing a fresh assessment.
c
( Explanation.-For the removal of doubts, it is hereby declared that, for
the purposes of this sub-section,-

(a) ••• ••• •••
D
(b) ...... ***
;..
(c) where any order referred to in this sub-section and passed by the
Assessing Officer had been the subject matter of any appeal filed on
or before or after the lst day of June, 1988, the powers of the
Commissioner under this sub-section shall extend and shall be deemed E
always to have extended to such matters as had not been considered
and decided in such appeal.

(2) No order shall be made under sub-section (I) after the expiry of
two years from the end of the financial year in which the order sought
•·· to be revised was passed . F
.,.. ).
(3) Notwithstanding anything contained in sub-section (2), an order
in revision under this section may be passed at any time in the case
of an order which has been passed in consequence of, or to give
effect to, any finding or direction contained in an order of the Appellate
-I
Tribunal, the High Court or the Supreme Court. G
Explanation.-In computing the period of limitation for the purposes
of sub-section (2), the time taken in giving an opportunity to the
-J
assessee to be reheard under the proviso to section 129 and any
period during which any proceeding under this section is stayed by
H
~.

564 SUPREME COURT REPORTS [2007] 8 S.C.R.

A an order or injunction of any court shall be excluded."
-~

7. A bare perusal of the order passed by the Commissioner of Income
Tax would clearly demonstrate that only that part of order of assessment
which related to lease equalization fund was found to be prejudicial to the
interest of the Revenue. The proceedings for reassessment have nothing to
B do with the said head of income. Doctrine of merger, therefore, would not
apply in a case of this nature.

8. Furthermore, Explanation (c) appended to Sub-section (I) of Section }- '
263 of the Act is clear and unambiguous as in terms thereof doctrine of merger '
applies only in respect of such items which w~re the subject matter of appeal
c and not which were not. The question came up for consideration before this
Court in Commissioner of Income Tax v. Sun Engineering Works P. Ltd, 198
ITR 297. Therein the assessee raised a contention that once jurisdiction under
Section 147, of the Act is invoked, the whole assessment proceeding became
reopened, which was negatived by the court opining: I
;
D "Section 147, which is subject to Section 148, divides cases of income
escaping assessment into two clauses i.e. viz. (a) those due to the -I
non-submission of return of income or non-disclosure of true and full
facts and (b) other instances. Explanation ( 1) defines as to what
constitutes escape of assessment. In order to invoke jurisdiction
E under Section 147(a) of the Act, the ITO must have reason to believe
that some income chargeable to tax of an assessee has escaped
assessment by reason of the omission or failure on the part of the
assessee either to make a return under Section 139· for the relevant
assessment year or to disclose fully and truly material facts necessary
for the assessment for that year. Both the conditions must exist before
F an ITO can proceed to exercise jurisdiction under Section 147(a) of the
.4

x-
Act. Under Section 147(?) the Income-tax Officer also has the
jurisdiction to initiate proceedings for reassessment where he has
reason to. believe, on the basis of information in his possession, that
income chargeable to tax has been either under-assessed or has been
G assessed at too low a rate or has been made the subject of excessive
relief under the Act or excessive loss or depreciation allowance has
been computed. In either case whether the Income-tax Officer invokes
his jurisdiction under Clause (a) or Clause (b) or both, the proceedings
\-
for bringing to tax an 'escaped assessment' can only commence by
issuance of a notice under Section 148 of the Act within the time
H
- COMMNR. OF INCOME TAX. CHENNAI '" ALAGENDRAN FINANCE LTD. (S.B. SINHA, J.] 565

prescribed under the Act. Thus, under Section 147, the assessing A
.officer has been vested with the power to "assess or reassess" the
escaped income of an assessee. The use of the expression "assess qr
reassess such income or recompute the loss or depreciation allowance"
in Section 147 after the conditions for reassessment are satisfied, is
only relatable to the preceding expression in Clauses (a) and (b) viz., B
"escaped assessment". The term "escaped assessment" includes both
"non-assessment" as well as "under assessment". Income is said to
have "escaped assessment" within the meaning of this section when
it has not been charged in the hands of an assessee in the relevant'.
year of assessment. The expression "assess" refers to a situation.
where the assessment of the assessee for a particular year is, for the · C
first time, made by resorting to the provisions of Section 14 7 because
the assessment had not been made in the regular manner under the
Act. The expression "reassess" refers to a situation where an
assessment has already been made but the Income-tax Officer has, on
the basis of information in his possession, reason to believe that there
has been under assessment on account of the existence of any of the D
grounds contemplated by the provisions of Section 147(b) read with
the Explanation (I) thereto."

9. We may at this juncture also notice the decision of this Court in· Hind
Wire Industries Ltd (supra) wherein the decision of this Court in V. Jaganmohan E
Rao v. CIT and CEPT, [75 ITR 373] interpreting the provisions of Section 34
of the Act was reproduced which reads as under:

"Section 34 in terms states that once the Income-tax officer decides
to reopen the assessment, he could do .so within the period prescribed
by serving on the person liable to pay tax a notice cont~ining all or F
any of the requirements which may be included in notice undera
section 22(2) and may proceed to assess or reassess such income,
profits or gains. It is, therefore, manifest that once assessment is
reopened by issuing a notice under sub-section (2) of section 22, the
previous underassessment is set aside and the whole assessment
proceedings start afresh. When once valid proceedings are started G·
under section 34(1 )(b ), the Income-tax Officer had not only the
jurisdiction, but it was his duty to levy tax on the entire income that
. -j
had escaped assessment during that year."

10. There may not be any doubt or dispute that once an order of
assessment is reopened, the previous underassessment will be held to be set H
566 SUPREME COURT REPORTS [2007) 8 S.C.R.

A aside and the whole proceedings would start afresh but the same would not
mean that even when the subject matter of reassessment is distinct and
different, the entire proceeding of assessment would be deemed to have been
reopened.

11. In Sun Engineering Works P. Ltd (supra) also, V. Jaganmohan Rao,
B (supra) was noticed stating:
"The principle laid down by this Court in Jaganmohan Rao's case,
therefore, is only to the extent that once an assessment is validly
reopened by issuance of a notice under Section 22(2) of the 1922 Act
(corresponding to Section 148 of the Act) the previous under
c assessment is set aside and the ITO has the jurisdiction and duty to
levy tax on the entire income that had escaped assessment during the
previous year ... The judgment in Jaganmohan Rao's case, therefore,
cannot be read to imply as laying down that in the reassessment
proceedings validly initiated, the assessee can seek reopening of the ,..
D whole assessment and claim credit in respect of items finally concluded
in the original assessment. The assessee cannot claim recomputation
-i
of the income or redoing of an assessment and be allowed a claim
which he either failed to make or which was otherwise rejected at the
time of original assessment which has since acquired finality. Of
course, in the reassessment proceedings it is open to an assessee to t
I
E show that the income alleged to have escaped assessment has in truth
and in fact not escaped assessment but that the same had been ~
shown under some inappropriate head in the original return, but to
~
read the judgment in Jaganmohan Rao's case, as if laying down that
reassessment wipes out the original assessment and that reassess11_1ent
is not only confined to "escaped assessment" or "under assessment"
F x-
but to the entire assessment for the year and starts the assessment
proceeding de novo giving the right to an assessee to reagitate
matters which he had lost during the original assessment proceeding,
which had acquired finality, is not only erroneous but also against the
phraseology of Section 14 7 of the Act and the object of reassessment
G proceedings. Such an interpretation would be reading that judgment ~
I
totally out of context in which the questions arose for decision in that
case. It is neither desirable nor permissible to pick out a word or a
sentence from the judgment of this Court, divorced from the context \-
of the question under consideration and treat it to be the complete
'law' declared by this Court. The judgment must be read as a whole .,.l
H
l
COMMNR. OF INCOME TAX, CHENNAI t•. ALAGENDRAN FINANCE LTD. [S.B. SINHA, J.) 567 ,

and the observations from the judgment have to be considered in the A
light of the questions which were before this Court. A decision of this
Court takes its colour from the questions involved in the case in
which it is rendered and while applying the decision to a later case,
the courts must carefully try to ascertain the true principle laid down
by the decision of this Court and not to pick out words or sentences
from the judgment, divorced from the context of the questions under 13
consideration by this Court, to support their reasonings ... "

It was furthermore held:

"As a result of the aforesaid discussion, we find that in proceedings
under Section 147 of the Act, the Income Tax Officer may bring to C
charge items of income which had escaped assessment other than or
in addition to that item or items which have led to the issuance of
notice under Section 148 and where ressessment is made under Section
147 in respect of income which has escaped tax, the Income Tax
Officer's jurisdiction is confined to only such income which has escaped D
tax or has been under-assessed and does not extend to revising,
reopening or reconsidering the whole assessment or permitting the
assessee to reagitate questions which had been decided in the original
assessment proceedings. It is only the under-assessment which is set
aside and not the entire assessment when reassessment proceedings
are initiated. The Income Tax Officer cannot make an orcP.r of E
reassessment inconsistent with the original order of assessment in
respect of metters which are not the subject-matter of proceedings
under Section 147 ... "

12. We may at this juncture also take note of the fact that even the
Tribunal found that all the subsequent events were in respect of the matters F
other than the allowance of' lease equalization fund'. The said finding of fact
is binding on us. Doctrine of merger, therefore, in the fact situation obtaining
herein cannot be said to have any application whatsoever. It is not a case
where the subject matter of reassessment and subject matter of assessment
were the same. They were not. G
13. It may be of some interest to notice that a similar contention raised
-1 at the instance of an assessee was rejected by a 3-Judge Bench of this Court
in Commissioner ofIncome-Tax v. Shri Arbuda Mills ltd., [231ITR50). This
Court took note of the amendment made in Section 263 of the Act by the
Finance Act, 1989 with retrospective effect from June 1, 1988, inserting H
568 SUPREME COURT REPORTS [2007) 8 S.C.R.

A Explanation (c) to Sub-section ( 1) of Section 263 of the Act stating:

"The consequence of the said amendment made with retrospective
effect is that the powers under section 263 of the Commissioner shall
extend and shall be deemed always to have extended to such matters
as had not been considered and decided in an appeal. Accordingly,
B even in respect of the aforesaid three items, the powers of the
Commissioner under section 263 shall extend and shall be deemed
always to have extended to them because the same had not been
considered and decided in the appeal filed by the assessee. This is
sufficient to answer the question which has been referred."

C We, therefore, are clearly of the opinion that in a case of this nature,
'the doctrine of merger will have no application.

14. The Madras ,High Court in A.K. Thanga Pillai (supra), in our
opinion, has rightly considered the matter albeit under Section 17 of the
Wealth Tax Act, 1957 which is in pari materia with the provisions of the Act.
D Relying on Sun Engineering Works P. Ltd (supra), it was held:
~

"Under section 17 of the Wealth-tax Act, 1957, even as it is under
section 147 of the Income-tax Act, proceedings for reassessment can
be initiated when what is assessable to tax has escaped assessment
for any assessment year. The power to deal with underassessment
E
and the scope of reassessment proceedings as explained by the
Supreme Court in the case of Sun Engineering [ 1992] 198 ITR 297, is
in relation to that which has escaped assessment, and does not extend
to reopening the entire assessment for the purpose of redoing the
same de nova. An assessee cannot agitate jn any such reassessment
F proceedings matters forming part of the original assessment which are x~

not required to be dealt with for the purpose of levying tax on that
which had escaped tax earlier. Cases of underassessment are also
treated as instances of escaped assessment.

The order of reassessment is one which deals with the assessment
G already made in respe"t of items which are not required to be reopened,
as also matters which are required to be dealt with in order to bring
what had escaped in the earlier order of assessment, to assessment.
An assessee who has failed to file an appeal against the original order
\-
of assessment cannot utilis~ the reassessment proceedings as an
J
occasion for seeking revision or review of what had been ass~ssed
H \
1
COMMNR. OF INCOME TAX, CHENNAI 1·. ALAGENDRAN FINANCE LTD. [S.B. SINHA, J.) 569

earlier. He may only question the extent of the reassessment in so far 'A
as the escaped assessment is concerned.

The Revenue is similarly bound ... "

The same principle was reiterated by a Division Bench of the Calcutta
High Court in Commissioner of Income-Tax v. Kanubhai Engineers (P.) ltd., B
[241 ITR 665].

15. We, therefore, are clearly of the opinion that keeping in view the
.J... facts and circumstances of this case and, in particular, having regard to the
fact that the Commissioner of Income Tax exercising its revisional jurisdiction
reopened the order of assessment only in relation to lease equalization fund C
which being not the subject of the reassessment proceedings, the period of
limitation provided for under Sub-section (2) of Section 263 of the Act would
begin to run from the date of the order of assessment and not from the order
of reassessment. The revisional jurisdiction having, thus, been invoked by
the Commissioner of Income Tax beyond the period of limitation, it was wholly D
without jurisdiction rendering the entire proceeding a nullity.

16. The Tribunal and the High Court, therefore, in our opinion were
correct in passing the impugned judgment. The appeal, therefore, being devoid
of any merit is dismissed with costs. Counsel's fee assessed at
Rs. 25,000/-.
E
B.B.B. Appeal dismissed.

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