1989 (2) TMI 79 - HC - Income Tax

Commissioner exceeded revisional jurisdiction under section 263 by directing fresh assessment without forming firm opinion that order was erroneous

HC held that the Commissioner exceeded revisional jurisdiction under section 263 by failing to form a firm opinion that the Income-tax Officer's order was ... Powers of revisional jurisdiction - HELD THAT:- A reading of the entire order of the Commissioner clearly goes to show that he did not furnish his opinion or consider the cited cases or the argument raised and merely observed that these were the points which deserved consideration and after setting aside the order of the Income-tax Officer, issued a direction for making assessment afresh. This is not permissible under the provisions contained in section 263 of the Act. The Commissioner had to come to a firm decision that the order of the Income-tax Officer was erroneous and was prejudicial to the interests of the Revenue. Since no decision about the erroneous nature of the order was firmly taken, the Tribunal was right in vacating the order. Accordingly, we answer the question in favour of the assessee, that is, in the affirmative, with no order as to costs. Issues involved: Assessment under section 263 of the Income-tax Act, 1961 for the assessment year 1979-80.Judgment Summary:The High Court of Punjab and Haryana addressed the assessment for the year 1979-80, where the Commissioner of Income-tax set aside the assessment due to various infirmities, including the determination of business loss and deductions under section 80J. The Income-tax Appellate Tribunal concluded that the Commissioner did not firmly establish the assessment as erroneous, leading to the order being set aside. The Tribunal referred the matter to the High Court, questioning the correctness of vacating the Commissioner's order under section 263 of the Income-tax Act.Upon review, the High Court found that the Commissioner's decision lacked firm conclusions and did not adequately address the issues raised by the assessee. The Commissioner merely observed the points needing consideration without firmly establishing the assessment as erroneous and prejudicial to revenue interests, as required by section 263 of the Act. Consequently, the Tribunal's decision to vacate the Commissioner's order was upheld, ruling in favor of the assessee without costs.