A. V. BALASUBRAMANYAM, J.M.: This is appeal by assessee from order of CIT passed under s. 263. assessee is registered firm. regular assessment for 1979-80 h d been completed under s. 143(3) r/w s. 144B on 1st June, 1982. This assessment appeared to CIT as erroneous and prejudicial to interests of Revenue. facts are like this. assessee is carrying on business as commission agents in textiles. On 19th Jan., 1978, it had declared 202 High Denomination Notes under High Denomination Notes (Demonitisation) Ordinance, 1978. It had been stated in said declaration that money had been received in usual course of its business as commission agents. At time of assessment, it had been submitted before ITO that high denomination notes formed part of its cash balance on relent date (19th Jan., 1978) which was Rs. 2,19,852. It may be mentioned here that case of Lalchand Bhagat Ambica Ram vs. CIT (1959) 37 ITR 288 (SC) had been relied upon. ITO was not inclined to accept explanation of assessee and by draft assessment he proposed to Rs. 2,02,000 as unexplained investment. assessee objected to this. It was stand of assessee that it had borrowed heavy amount from Vrajlal Karsondas (HUF). Besides, sum of Rs. 70,000 said to have been withdrawn from Canara Bank one month earlier was available as on date of declaration, namely, 19th Jan., 1978. In s. 144B proceeding, IAC was convinced that amount withdrawn from bank consisted of different series of high denomination notes and that declared high denomination notes were entirely different. It appears to us that this point was not pursued by assessee. However, by letter dt. 24th June, 1982, assessee agreed to addition of Rs. 80,000 "to avoid litigation". IAC gave directions to cause addition of Rs. 80,000 as unexplained cash in hands of assessee which was treated as income of this year. Accordingly, regular assessment was passed by ITO in accordance with directions given by IAC. According to CIT, explanation given by assessee, that it had borrowed amounts form parties, was totally unacceptable for various reasons, facts and circumstances and that IAC was in error in accepting suggestion of assessee by letter dt. 24th June, 1982 for addition of Rs. 80,000. He issued notice to which assessee recorded its objections. Before CIT, there was two-fold contention. One was that CIT lacked jurisdiction inasmuch as this was assessment passed in accordance with directions given by IAC under s. 144B and that such assessment is not revisable under s. 263. other was that explanation was eminently acceptable. assessee was heard and on question of jurisdiction CIT held that provisions of s. 144B were procedural in nature and that directions of IAC are only guidance to ITO and that final assessment made by ITO is proper order and that assessment was, therefore, revisable under s. 263. With regard to explanation of assessee, CIT was of view that assessing officer should re-examine matter taking note of various facts and circumstance shown in order passed by him. assessment passed by ITO was set aside with direction to make fresh one in accordance with law. assessee has come up in appeal challenging order passed by CIT under s. 263. It was contended by Sri Y. P. Trivedi, ld. counsel for assessee, that CIT had no jurisdiction to proceed under s. 263 inasmuch as assessment had been passed in accordance with directions given by IAC under s. 144B and he heavily relied upon decision of Special Bench of Tribunal in case of East Coast Marine Products (P) Ltd. vs. ITO (1983) 4 ITD 73 (Hyd) (SB). He also brought to our notice decision of Tribunal (Bombay Bench) in case of Madanlal Chaganlal (P) Ltd. (ITA No. 6245/Bom/1983). Another contention of Sri Trivedi was that assessment passed was "agreed assessment" made on basis of letter dt. 24th June, 1982 consenting to addition of Rs. 80,000 "to avoid litigation" and that Revenue cannot now go back by resorting to powers under s. 263. So far as validity or explanation is concerned, ld. counsel relied upon reasons given by IAC in his 144B order. CIT refers to decision of Special Bench of Tribunal in case of Rex Cinema Co-owners vs. Sixth ITO (1983) 3 ITD 633 (Bom) (SB) and another Bombay Bench decision in case of Jethwani to say that provisions of s. 144B are procedural in nature. There is no doubt that directions under s. 144B are binding on ITO and letter has to complete assessment in terms of instructions so given. But point is whether assessment so completed is still assessment made by ITO for sake of s. 263. Special Bench decision in case of East Coast Marine Products (P) Ltd. (supra) is in support of argument put up by Sri Treivedi. But, Sri Subramanian, arguing for Revenue, invited our attention to Explanation added to s. 263 by Taxation Laws (Amendment) Act, 1984 which reads as follows: "Explanation: For removal of doubts, it is hereby declared that, for purposes of this sub-section order passed by ITO include (a) order of assessment made on basis of directions issued by IAC under s. 144A or s. 144B; and (b) order made by IAC in exercise of powers or in performance of functions of ITO conferred on, or assigned to, him under cl. (a) of sub- s. (1) of s. 125 or under sub-s. (1) of s. 125A." It was also stated that Explanation is only declaration of pre- existing position in law and that same must be deemed to have existed from very in section of clause. authority relied upon was decision of Kerala High Court in case of CIT vs. K. A. Vamana Pai (1986) 51 CTR (Ker) 164: (1985) 158 ITR 211 (Ker). rejoinder of Sri Trivedi was that introduction of this Explanation has no retrospective effect inasmuch as amending statute says that it was effective from 1st Oct., 1984. He also invited our attention to Special Bench decision of Tribunal in case of Schrader- Scovill Duncal Ltd. (ITA Nos. 47/Cal/1982 and 2463/Cal/1981) where applicability of s. 37(5) introduced by Finance Act, 1983 was interpreted. Sec. 37(5) also reads that for removal of doubts meaning of "guest house" was declared and said provision was not held to be retrospective in effect except form day with which said clause was made effective. Merely because words "for removal of doubts" are found in Explanation, it cannot be straightaway inferred that Explanation was clarificatory in nature. This is not Explanation given in relation to provision pertaining to procedural law. Further s. 263(1) deals with powers of CIT and if affects rights of parties whose assessments have been concluded by assessing authority. In East coast Marine Products (P) Ltd. (supra) jurisdiction of CIT to revise ITO s order giving effects to directions given by IAC under s. 144B has been specially considered. Once again, Tribunal has in case of Madanlal Chaganlal (P) Ltd. (supra) examined same legal position particularly in light of decision on Bombay High Court in case of CIT vs. Tejaji Farasram Kharawala (1953) 23 ITR 412 (Bom). Th Explanation cannot be retrospective in effect if it really enlarges scope of s. 263(1). As we have already said, s. 263 deals with powers of CIT in matter of revising completed assessment of party and it is in relation to substantive law. Taking all facts into consideration, we are of view that Explanation cannot be retrospective in nature when amending statute itself says that it is effective from 1st Oct., 1984. Following decisions of Tribunal reported in East Coast Marine Products (P) Ltd. vs. ITO (1983) 4 ITD 73 (Hyd) (SB) and in case of Madanlal Chaganlal (P) Ltd. (ITA No. 6245/Bom/1983), we hold that CIT had no jurisdiction to act under s. 263 and impugned order passed by him is required to be set aside. In view of our conclusion on point of jurisdiction, it will be sheer academic to consider other submissions of Sri Trivedi and in circumstance, we do not wish to take them up for consideration. In result, appeal is allowed. impugned order passed by CIT under s. 263 is set aside. *** VINODKUMAR JAICHAND SHAH v. INCOME TAX OFFICER