R.C. Patnaik, J.
1. In this writ petition the short question raised is if the Commissioner of Income-tax while exercising jurisdiction under Section 264 of the I.T. Act, 1961, in a revision filed against the order of the ITO, was right in ignoring the direction given by the Income-tax Appellate Tribunal ?
2. The petitioner is a partnership-firm dealing in G.I. pipes, ceramic sanitary wares, etc. The ITO did not accept the return for the assessment year 1976-77 filed by the petitioner showing its income at Rs. 31,430. Making certain additions to the figure returned, the ITO assessed the income at Rs. 40,630. The AAC issued notice of enhancement and adjudged the income at Rs. 67,397. The petitioner carried an appeal to the Tribunal. The Tribunal found that the accounts produced by the assessee-petitioner were neither 'correct nor complete' and hence the case attracted the provision contained in the proviso to Section 145(1) of the I.T. Act anl assessment was to be made according to best of judgment. The Tribunal, however, did not approve the way the ITO had made the assessment and observed :
'...the approach of the Income-tax Officer was neither fair to the assessee, nor correct in law. Similar breakages were being allowed to the assessee, rightly or wrongly, in the earlier years. The assessee, in our opinion, should not be worse off merely because it maintained partial accounts than an assessee who maintained no accounts at all Hence, we are of the opinion that the accounts produced by the assessee had to be rejected under the proviso to Section 145(1) and a fair estimate had to be made by the Income-tax Officer on the basis of comparable cases.....'
3. The Tribunal set aside the orders passed by the Assistant Commissioner and the ITO and directed a fresh assessment observing that in no case should the income finally assessed exceed Rs. 67,397 as determined by the AAC. The ITO after remand disallowed breakage as trading expense and, estimating the net income at Rs. 77,206, reduced it to Rs. 67,397 as per the direction of the Tribunal. The petitioner carried revision under Section 264 of the I.T. Act to the CIT. Trading, profit and loss accounts as recast showing the net profit at Rs. 29,437 were filed by the petitioner before the revisional authority. The Commissioner observed that the change in the recast accounts was to the effect that the breakage claimed at 5 per cent, had been shifted from the profit and loss account to the trading account. He held that the claim on the ground of breakage was a fictitious one and was 'a claim for the second time in the trading account'. Adding the said amount to the profit shown by the petitioner and a further sum of Rs. 1,048 towards income-tax payment, the Commissioner determined the income at Rs. 66,160. Though it was urged before the Commissioner that comparable cases should be taken into account, as per the direction given by the Tribunal, while determining the income of the petitioner, the Commissioner held that when determination could be made on the basis of accounts, 'the question of comparable cases fade into insignificance. As the determination of income has been done on the basis of the data furnished by the assessee, I do not consider that comparable cases are to be again taken into account in determining the income'.
4. Mr. Pasayat, the learned counsel for the petitioner, vehemently urged that the Commissioner went wrong in ignoring the direction given by the Tribunal.
5. The Tribunal had remitted the matter to the ITO for fresh assessment with a direction that he would take comparable cases into consideration while determining the income of the petitioner. The jurisdiction of the ITO, therefore, was circumscribed by the said direction. The ITO was obliged to complete the assessment by scrupulously following the said direction of the Tribunal. As the ITO did not complete the assessment adhering to the said direction, the petitioner made a grievance before the Commissioner. The scope of the revision, therefore, was whether the ITO erred in law by straying away from the direction given by the Tribunal. It was not correct on the part of the Commissioner to say : 'I do not consider that comparable cases are to be again taken into account in determining the income.' The limits of the exercise of jurisdiction had been fixed by the Tribunal. The ITO was to operate within that. In revision the ambit of the exercise could not be widened. In our opinion, therefore, the Commissioner went wrong in giving a go-by to the mode, directed by the Tribunal, to be followed while making the assessment. We, therefore, set aside the order of the Commissioner in revision as in annex. 4 and remit the matter to him for a fresh disposal in accordance with the observations contained herein.
6. In the result, the writ petition is allowed. There would be no order as to costs.
B.K. Behera, J.