Revision under section 263 sustained for ignoring binding TDS law and audit findings in cable signal payments assessment.

Revision under section 263 was upheld where the assessment order was found erroneous and prejudicial to the Revenue because the Assessing Officer failed to apply the binding jurisdictional High Court ruling that payments for obtaining TV signals attracted tax deduction at source under section 194C. The assessment was based on a factually distinguishable Tribunal decision and overlooked the auditor's observation about the absence of the requisite certificate in relation to payments covered by section 40A(3). On those grounds, the Principal Commissioner was justified in revising the assessment, and the revisionary order was held valid.

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Issues: Whether the Principal Commissioner was justified in invoking revisionary jurisdiction under section 263 of the Income-tax Act, 1961 on the ground that the assessment order suffered from error and prejudice to the Revenue for failure to make the disallowance relating to tax deduction at source and related payment compliance.

Analysis: The assessee was a cable operator and the facts were found to be identical to the jurisdictional High Court decision holding that payments made for obtaining TV signals were liable for deduction of tax at source under section 194C of the Income-tax Act, 1961. The assessment order was passed on an incorrect assumption of facts and law because the Assessing Officer relied on a Tribunal decision that was factually distinguishable and ignored the binding jurisdictional High Court ruling. The order also disregarded the auditor's observation regarding absence of the requisite certificate for payments covered by section 40A(3) of the Income-tax Act, 1961.

Conclusion: The revisionary order was valid, and the assessment order was rightly held to be erroneous and prejudicial to the interests of the Revenue.

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