Writ interference with section 263 notice is generally declined when prima facie revenue prejudice is recorded.

Writ interference with a show-cause notice under section 263 of the Income-tax Act is ordinarily refused where the Commissioner has recorded prima facie satisfaction that the assessment order is erroneous and prejudicial to the interests of the Revenue. At the notice stage, the court will not examine the intrinsic merits of the controversy unless an exceptional case for intervention is shown. On the facts noted, the Commissioner had recorded the necessary foundational satisfaction and the assessee had already replied, so interference under articles 226 and 227 was declined.

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Issues: Whether a writ court should interfere with a show-cause notice issued under section 263 of the Income-tax Act, 1961, on the ground that the Commissioner's prima facie satisfaction that the assessment order is erroneous and prejudicial to the interests of the Revenue is unsustainable.

Analysis: The power under section 263 of the Income-tax Act, 1961, is founded on the Commissioner's prima facie satisfaction that the Assessing Officer's order is erroneous and prejudicial to the interests of the Revenue. At the stage of notice, the court will not enter into the intrinsic merits of the controversy unless an exceptional case for interference is made out. Since the Commissioner had recorded the requisite foundational satisfaction and the petitioner had already filed a reply, the writ court found no basis to interfere under articles 226 and 227 of the Constitution of India.

Conclusion: Interference with the show-cause notice was declined and the challenge failed.

Ratio Decidendi: A writ court will not ordinarily interfere with a notice under section 263 of the Income-tax Act, 1961, when the Commissioner has recorded prima facie satisfaction of error and prejudice to revenue, and no exceptional case for interference is shown.

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