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Issues: (i) Whether revision under section 263 could be challenged on the ground that the assessment order had been approved under section 153D; (ii) Whether the revision order was sustainable when it simultaneously computed the proposed addition and also directed the Assessing Officer to make further enquiry.
Issue (i): Whether revision under section 263 could be challenged on the ground that the assessment order had been approved under section 153D.
Analysis: Section 263 confers independent revisional jurisdiction on the Principal Commissioner to examine whether an assessment order is erroneous and prejudicial to the interests of revenue. Prior approval under section 153D does not place any fetter on that statutory power. The revisional authority is not denuded of jurisdiction merely because the assessment order was passed after obtaining approval from a superior assessing authority.
Conclusion: The objection based on section 153D approval was rejected and the issue was decided against the assessee.
Issue (ii): Whether the revision order was sustainable when it simultaneously computed the proposed addition and also directed the Assessing Officer to make further enquiry.
Analysis: The revision order proceeded on two inconsistent approaches. On one hand, it quantified the addition that, according to the revisional authority, ought to have been made. On the other hand, it invoked lack of enquiry and directed fresh examination by the Assessing Officer. Such inconsistency rendered the order unsustainable in law. The appropriate course was to send the matter back for fresh consideration after hearing the assessee.
Conclusion: The revision order was set aside to that extent and the matter was remitted for fresh adjudication in accordance with law.
Final Conclusion: The assessee succeeded only on the challenge to the manner in which the revisionary order was framed, while the jurisdictional challenge to section 263 failed; the matter was sent back for reconsideration.
Ratio Decidendi: Approval under section 153D does not curtail the independent revisional power under section 263, but a revisional order that is internally inconsistent between determining the addition and directing further enquiry cannot be sustained.
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