Commissioner's order under section 263 upheld, fresh assessment directed.

The court held that the Commissioner's order under section 263 did not revise the reassessment order under section 147 as the original assessment order survived independently. The court found the Commissioner's order valid, as the Income Tax Officer's failure to consider relevant facts about property investments in the original assessment was deemed erroneous and prejudicial to revenue. The court upheld the Commissioner's order to set aside the assessment and direct a fresh assessment.

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Issues Involved:
1. Whether the order of the Commissioner of Income-tax u/s 263 had the effect of revising an order of reassessment made u/s 147.
2. Whether the impugned order of the Commissioner of Income-tax was valid in law.

Summary:

Issue 1: Revising an Order of Reassessment u/s 147
The court examined whether the Commissioner's order u/s 263 revised an order of reassessment made u/s 147. The ITO initially assessed the income of the assessee for the assessment year 1962-63 u/s 143(1) at Rs. 4,106. Later, the ITO reassessed the income u/s 143(3) read with s. 147 at Rs. 29,399 due to unexplained investments in house property. The AAC set aside this reassessment, declaring it illegal. The Commissioner then issued a notice to revise the original assessment u/s 143(1), which the assessee contested, arguing that the original order had merged into the reassessment order, and thus, the Commissioner could not revise it. The Tribunal and the court held that the original assessment order u/s 143(1) survived independently of the reassessment order set aside by the AAC. Therefore, the Commissioner's order u/s 263 did not revise the reassessment order u/s 147. The court answered this question in the negative.

Issue 2: Validity of the Commissioner's Order u/s 263
The court considered whether the Commissioner's order u/s 263 was valid. The Commissioner has the power to revise an ITO's order if it is erroneous and prejudicial to the interests of the revenue. The Commissioner found no evidence that the ITO had inquired about the investments in the property during the original assessment. Even if inquiries were made, the Commissioner could revise the order if the ITO's conclusions were erroneous and prejudicial to the revenue. The court agreed with the Commissioner that the ITO failed to consider relevant facts about the property investments, making the original assessment erroneous and prejudicial to the revenue. The court upheld the Commissioner's order to set aside the assessment and direct a fresh assessment. The second question was answered in the affirmative, validating the Commissioner's order.

Conclusion:
The reference made by the Income-tax Appellate Tribunal, Jaipur, was decided accordingly, with the court affirming the validity of the Commissioner's order u/s 263.

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