High Court upholds Commissioner's revision power under section 263 despite formalities, directs Tribunal review.

The High Court affirmed the Commissioner of Income-tax's jurisdiction under section 263 to revise an assessment order, despite formalities followed during its issuance under section 144B. The Court held that the assessment order did not merge with the appellate order, allowing the Commissioner to revise aspects not challenged in the appeal. The Court directed the Tribunal to assess if there were sufficient materials for the Commissioner to invoke revisional power. The decision favored the revenue, denying costs to either party.

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Issues:
Jurisdiction of Commissioner of Income-tax under section 263 - Revision of assessment order after obtaining directions under section 144B - Merger of assessment order with appellate order.

Analysis:
The case involved a question of law referred by the Income Tax Appellate Tribunal regarding the jurisdiction of the Commissioner of Income-tax under section 263 of the Income Tax Act, 1961. The Tribunal questioned whether the Commissioner had the authority to revise an assessment order made by the Income Tax Officer after following the statutory formalities under section 144B and obtaining directions from the Inspecting Assistant Commissioner. The High Court, citing a previous decision, held that the Commissioner indeed had the jurisdiction to revise such an assessment order, as it remained subject to revision under section 263 despite the formalities followed during its issuance.

Regarding the issue of merger of assessment order with the appellate order, the High Court referred to a Supreme Court decision which stated that the Commissioner could revise a part of the Income Tax Officer's order that was not considered in appeal before the higher authority. In this case, the assessee did not challenge the grant of depreciation by the Income Tax Officer, and the appeal was limited to other aspects. The High Court concluded that the order of the Income Tax Officer granting depreciation did not merge with the order of the Commissioner (Appeals), as the latter did not address the rate of depreciation granted by the former. Therefore, the Commissioner was not precluded from exercising his power of revision under section 263.

The High Court also addressed the issue of reliance on the chartered engineer and registered valuer's report by the Commissioner. The Court noted that the Appellate Tribunal did not decide whether there were sufficient materials for the Commissioner to invoke his revisional power under section 263 or assess the merits of the case. As a result, the High Court directed the Tribunal to consider these aspects and determine the Commissioner's authority to revise the assessment order.

In conclusion, the High Court answered the question of law in the negative and in favor of the revenue, affirming the Commissioner's jurisdiction under section 263. The Tribunal was instructed to evaluate the availability of materials for the Commissioner to exercise his revisional power and assess the case on its merits. No costs were awarded in this matter.

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