Section 263 reference affirmed; Commissioner's order set aside and ITO assessment restored after proper enquiries found no prejudice

HC held that the Tribunal rightly reversed the Commissioner's order under section 263 and restored the Income-tax Officer's assessment. The Tribunal found the assessee had furnished all requisite information and the ITO, after considering the facts, made proper enquiries rather than completing the assessment in undue haste. Consequently the Commissioner had not shown the assessment was erroneous or prejudicial to Revenue. The court affirmed the Tribunal's findings and decided the reference in favour of the assessee.

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Issues Involved:
The judgment involves a question of law regarding the reversal of an order made u/s 263 of the Income-tax Act, 1961 by the Commissioner of Income-tax and the restoration of the original assessment order made by the Income-tax Officer.

Summary:
The Commissioner of Income-tax found discrepancies in the assessment order made by the Income-tax Officer without proper enquiry. The Commissioner issued a notice u/s 263 to the assessee, who contended that the original order was not erroneous. After considering the explanation, the Commissioner set aside the original order and directed a fresh assessment. The assessee appealed to the Tribunal, which found that the initiation of proceedings u/s 263 was not justified and allowed the appeal. The Revenue's application for reference was initially rejected but later allowed by the High Court.

Judgment Details:
Upon hearing the arguments, the High Court concluded that the reference must be answered in favor of the assessee. It was established that the Income-tax Officer had not made the assessment hastily and had considered all relevant information provided by the assessee. The Tribunal's findings supported that proper enquiries were made before completing the assessment, justifying the reversal of the Commissioner's order u/s 263.

Therefore, the High Court answered the question in the affirmative and in favor of the assessee, stating that the Tribunal was justified in reversing the Commissioner's order. Each party was directed to bear their own costs in this reference.

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