Revisionary jurisdiction and finality of unchallenged findings governed reassessment and sale consideration under section 41(2).

Revision under section 263 remained available where a reassessment failed to give effect to earlier binding revisional directions and was thereby erroneous and prejudicial to the Revenue. For computation under section 41(2), the agreed transfer price of the capital assets was Rs. 13 lakhs, and contingency reserve, development reserve and regular payment deposits could not be deducted from that consideration. An earlier unchallenged revisional finding on those items had attained finality and could not be reopened in later proceedings. The Revenue's position was upheld on both the revision and valuation issues.

---

---

Issues: (i) Whether the Commissioner was justified in invoking revisionary jurisdiction under section 263 of the Income-tax Act, 1961 in respect of the reassessment made after directions under section 144A. (ii) Whether the sale consideration for computing profit under section 41(2) had to be taken at Rs. 13 lakhs or at the reduced figure adopted by the assessee. (iii) Whether the assessee could reopen the effect of the earlier unchallenged revisional order excluding the contingency reserve, development reserve and regular payment deposits from deduction.

Issue (i): Whether the Commissioner was justified in invoking revisionary jurisdiction under section 263 of the Income-tax Act, 1961 in respect of the reassessment made after directions under section 144A.

Analysis: The reassessment dated 9-7-1982 did not carry out the earlier revisional directions dated 11-12-1980 in the manner required. The order under section 144A could not override the Commissioner's earlier order under section 263, and the Commissioner's revisionary power was not lost merely because the ITO had acted on directions of the IAC. The reassessment was, therefore, regarded as erroneous and prejudicial to the interests of the Revenue.

Conclusion: The revision under section 263 was valid and the assessee's challenge failed.

Issue (ii): Whether the sale consideration for computing profit under section 41(2) had to be taken at Rs. 13 lakhs or at the reduced figure adopted by the assessee.

Analysis: The agreement showed that Rs. 13 lakhs was the agreed price for the capital assets transferred to the Electricity Board. The amounts described as contingency reserve, development reserve and regular payment deposits were held to be liabilities not deductible from the sale price, and the earlier revisional order had already directed that the sale price should not be reduced by those items. The assessee's reliance on the contrary computation was rejected.

Conclusion: The correct sale consideration was Rs. 13 lakhs for the purpose of section 41(2).

Issue (iii): Whether the assessee could reopen the effect of the earlier unchallenged revisional order excluding the contingency reserve, development reserve and regular payment deposits from deduction.

Analysis: The earlier order under section 263 had conclusively held that those three items were not deductible, and the assessee had not appealed against that order. The later reassessment and subsequent proceedings could not permit a fresh challenge to findings that had already become final between the parties.

Conclusion: The assessee was precluded from reagitating those items.

Final Conclusion: The reassessment was rightly revised, the full sale price was required to be adopted for computation under section 41(2), and the Revenue's position was upheld.

Ratio Decidendi: An assessment can be revised under section 263 where the reassessment fails to follow earlier binding revisional directions and thereby becomes erroneous and prejudicial to the interests of the Revenue; an unappealed revisional finding on a specific item attains finality and cannot be reopened in subsequent proceedings.

---