Revision under section 263 over assessment completed after prior approval for special assessment quashed; revisional power exceeded its scope

Challenge concerns whether a revisional order under section 263 can be sustained where the assessment had been completed after obtaining prior approval for action under special assessment provisions; the tribunal held that where the Assessing Officer completed assessment following prior approval, the Commissioners invocation of section 263 exceeded statutory scope and could not independently declare the assessment erroneous and prejudicial to revenue, resulting in quashing of the section 263 order and allowing the assessees appeal.

---

---

Issues: Whether the Principal Commissioner of Income Tax (PCIT) could invoke revisional jurisdiction under section 263 of the Income-tax Act, 1961 to set aside an assessment completed under section 153C/153A of the Act where the assessment had been completed after obtaining prior approval under section 153D of the Act.

Analysis: The Tribunal examined whether a revision under section 263 could be validly initiated against an assessment framed under sections 153C/153A when that assessment was completed after prior approval by the competent authority under section 153D. The Tribunal considered coordinate Bench decisions and relevant High Court/tribunal precedents holding that when an assessing order is passed after prior approval under section 153D, the revisional authority must also examine the record of that prior approval and cannot declare the assessment erroneous and prejudicial to the revenue without first finding that the prior approval itself was vitiated or erroneous. Applying these principles to the facts, the Tribunal found that the PCIT did not record any finding that the prior approval under section 153D was vitiated and therefore exceeded the scope of section 263 by setting aside the assessment.

Conclusion: The revisional order passed by the PCIT under section 263 quashing the assessment completed under section 153C/153A is quashed; the appeal is allowed in favour of the assessee on this ground.

Ratio Decidendi: Where an assessment under sections 153C/153A is completed after prior approval under section 153D, the revisional authority under section 263 cannot set aside that assessment as erroneous and prejudicial to the interest of revenue unless it records a specific finding that the prior approval under section 153D itself was vitiated or erroneous.

---