Case: Messrs South India Steel Rolling Mills, Madras Vs. Commissioner of Income Tax, Madras

These appeals, by certificate granted under Section 261 of the Income Tax Act, 1961 (hereinafter referred to as the Act), Have be en filed by the assessee against the judgement of the Madras High Court dated November 2, 1981. By the said judgment the High Court has answered the following question referred to it by the Income Tax Appellate Tribunal (hereinafter referred to as the Tribunal) against the assessee and in favour of theon the facts and circumstances of the case the revision of assessment under Section 263 by the Commissioner for withdrawing the development rebate granted for assessment years 196268 andis proper and justified."assessee as a partnership firm having been constituted on September 1.1960. It was r unning a steel rolling mill. Initially, there were four partners, namely, M/s S.L.Nahata, M.S.Bedi, Biharilal and M.K.Raheja, in the assessee firm. Two of the partners Biharilal and M.K.Raheja, subsequently retired from the partnership and the partnership was reconstituted with the remaining two partners continuing the same business. On March 3, 1968, Shri M.S. Bedi one of the two partners died. Since only one surviving partner was left the partnership stood dissolved. On March 4, 1968 a new partnership was constituted comprising of Shri S.L.Nahata and the Legal heirs of Shri M.S. Bedi to carry on the business under taking previously carried on by the partnership firm of which shri M.S. Bedi was a partner.

Court's reasoning:
We are unable to hold that the said principle requires to be invoked while construing Section 33(1)(a) and opinion, has rightly held that in view of Section 34(3)(a) the appellantassessee could not avail the benefit of developmentother contention of Ms. Ramachandran was that the Commissioner could not invoke his jurisdiction under Section 263 of the Act and that the matter could be dealt of rectification under Section 155 of the Act. The submission is that since Section 155 is a special provision dealing with the partnership firms, the general provision Contained in Section 263 could not be invoked. It was also contended that the power under Section 263 can only be invoked on the basis of the record as it stood when the order was passed by the Income Tax Officer and that it was not open to the Commissioner to take into account the dissolution of the assessee firm, which took place after the passing of the order, because that circumstance is not disclosed in the record before the Income Tax officer. As pointed out by the High Court , no question as to the competence of the Commissioner to exercise his power s of decision was raised by the assessee either before the Commissioner or before the Tribunal. Even otherwise there is no merit in this contention. Merely because the Income Tax Officer could have rectified the order, the Commissioner could not be precluded form the exercising the power conferred on him under Section 263 . the power of rectification conferred on the Income Tax officer under Section 155 and the power of revision conferred on the Commissioner under Section 263 are distinct powers. The pri nciple that one is a special provision and the other is a general provision has no application. The revisional power conferred on the commissioner under Section 263 is of wide amplitude . It enables the Commissioner to revise an order passed b y the Assessing Officer if he considers it to b erroneous and prejudice to the interests of the Revenue. We find no reason to limit this power by reference to Sectionregards his taking into consideration an event which had occurred subsequent to the passing of the order by the Income Tax Officers, it may be stated that in Explanation (b) in Section 263 there is an express provision wherein it is prescribed that "record shall include and shall be deemed always to have include d all records relating to any proceeding under this act available at the time of examination by the commissioner". The death of one of the two partners resulting in the dissolution of the assessee firm on account of such death took place prior to the passing of the order by the commissioner and it could, therefore, be taken into consideration by him for the purpose of exercising his powers under Section 263 of the Act.