Revisional order under income-tax law set aside for ignoring material objections and enhancing construction cost without departmental appeal.

A revisional order under section 264 of the Income-tax Act was held unsustainable where the authority failed to consider the assessee's specific objections on supervision of construction, electrical and sanitary fittings, and the rate adopted for mosaic flooring. The authority instead proceeded on its own estimate and enhanced the construction cost without any departmental appeal seeking such enhancement, which showed non-application of mind to the issues actually urged. The order was quashed and the matter was remitted for fresh disposal after hearing the parties in accordance with law.

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Issues: Whether the revisional order under section 264 of the Income-tax Act was unsustainable for non-consideration of the assessee's material objections and for proceeding to enhance the estimated cost of construction without any departmental appeal.

Analysis: The revisional authority dismissed the application without dealing with the assessee's specific objections regarding supervision of construction, electrical and sanitary fittings, and the rate adopted for mosaic flooring. Instead, it proceeded on its own estimate and treated the construction cost as low, notwithstanding that there was no appeal by the Department to seek enhancement of the assessed figure. Such an approach was legally impermissible and showed non-application of mind to the points actually urged.

Conclusion: The revisional order was bad in law and was quashed. The matter was remitted to the Commissioner for fresh disposal after hearing the parties in accordance with law.

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