Reassessment based on a set-aside revision order cannot survive, even while a reference against that order is pending.

A reassessment made solely in pursuance of a Commissioner's direction under section 263 cannot survive once that foundational order is set aside by the Tribunal. The pendency of a reference against the Tribunal's order does not keep the cancelled direction alive or preserve the reassessment's legal basis. On that reasoning, the reassessment was held invalid and the issue was answered in favour of the assessee and against the Revenue.

---

---

Issues: Whether the reassessment made pursuant to the Commissioner's order under section 263 of the Income-tax Act, 1961 remained valid after the Tribunal had set aside that very order, despite a reference against the Tribunal's decision being pending.

Analysis: The reassessment depended entirely on the direction issued under section 263. Once that foundational order was set aside by the Tribunal, the reassessment lost its legal basis. The pendency of a reference against the Tribunal's order did not keep the set-aside direction alive, and the reassessment could not be sustained merely because further proceedings were pending.

Conclusion: The reassessment was rightly held invalid and the question was answered in the affirmative, in favour of the assessee and against the Revenue.

Ratio Decidendi: A reassessment made solely in pursuance of a section 263 direction cannot survive once that direction is set aside, even if a reference against the setting-aside order is pending.

---