Section 263 revisional power cannot set aside an assessment order already under appeal.

Where an assessment order has already been carried in appeal before the Appellate Assistant Commissioner, the Commissioner cannot use revisional power under section 263 of the Income-tax Act, 1961 to set aside the entire order. The High Court treated the appeal as covering the assessment order itself and, following the connected decision, held that section 263 cannot be invoked to nullify the whole assessment in that situation. The revisional jurisdiction was therefore unavailable on the facts, and the issue was answered in favour of the assessee.

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Issues: Whether the Commissioner could invoke section 263 of the Income-tax Act, 1961 to set aside the entire assessment order when that order had been carried in appeal before the Appellate Assistant Commissioner.

Analysis: The reference was reframed to confine the real controversy to the Commissioner's revisional competence under section 263 in relation to an assessment order that formed the subject-matter of an appeal. The Court held, on the basis of the connected decision in the companion reference, that where the assessment order itself is the subject-matter of appeal, the revisional power under section 263 cannot be used to set aside the whole order.

Conclusion: The Commissioner was not competent under section 263 of the Income-tax Act, 1961 to set aside the entire assessment order in the circumstances of the case; the question was answered in the affirmative and in favour of the assessee.

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