Revisionary jurisdiction cannot cure invalid reassessment approval or create prejudice from a jurisdictionally defective foundation.
Jurisdictional defects in reassessment initiation may be examined collaterally in revision proceedings to test whether the underlying order has a legally sustainable foundation; participation, waiver, acquiescence, or failure to appeal cannot validate an inherent lack of jurisdiction. Where reassessment is initiated after the prescribed period, approval from the specified authority under section 151(ii) is a condition precedent. Approval under section 151(i), an office-holder's description, or subsequent departmental communication does not establish compliance. Revisionary jurisdiction under section 263 requires both error and prejudice and cannot cure invalid sanction or create lawful prejudice from defective reassessment proceedings.
Issues: (i) Whether the assessee could, in appeals against revision orders under section 263, collaterally challenge the jurisdictional validity of the foundational reassessment orders?; (ii) Whether the revision orders under section 263 could stand when approvals for reassessment were not validly obtained from the specified authority under section 151(ii)?
Issue (i): Whether the assessee could, in appeals against revision orders under section 263, collaterally challenge the jurisdictional validity of the foundational reassessment orders?
Analysis: A jurisdictional defect in the reassessment proceedings may be examined in collateral proceedings under section 263 solely to determine whether the order sought to be revised had a legally sustainable foundation. Such examination does not amount to entertaining a direct appeal against, or formally annulling, the reassessment order. Participation in reassessment proceedings, failure to separately appeal, consent, waiver or acquiescence cannot validate an order affected by an inherent want of jurisdiction.
Conclusion: The limited collateral challenge to the jurisdictional foundation of the reassessment orders was maintainable, in favour of the assessee.
Issue (ii): Whether the revision orders under section 263 could stand when approvals for reassessment were not validly obtained from the specified authority under section 151(ii)?
Analysis: Since more than three years had elapsed from the end of each relevant assessment year when the orders under section 148A(d) and notices under section 148 were issued, approval from the specified authority under section 151(ii) was a jurisdictional condition precedent. For the first year, approval from the Principal Commissioner under section 151(i) was insufficient. For the second year, the contemporaneous record treated the approval as one from the Principal Commissioner under section 151(i); the officer's description as a Chief Commissioner holding charge of that office, and a later departmental communication, did not establish compliance with the statutory conditions for approval under section 151(ii). The extended period under the relaxation legislation had expired, and neither the transitional reassessment directions nor the administrative instruction dispensed with the requisite approval. Revisionary jurisdiction under section 263 required cumulative error and prejudice; it could neither cure the jurisdictional defect nor create lawfully remediable prejudice from reassessment proceedings initiated without valid sanction.
Conclusion: The approvals did not satisfy section 151(ii), and the reassessment orders could not furnish a legally sustainable foundation for revision under section 263, in favour of the assessee.
Final Conclusion: The statutory preconditions for invoking revisionary jurisdiction were absent for both assessment years, and the directions for further verification based on the jurisdictionally deficient reassessment initiation could not operate.
Ratio Decidendi: A reassessment initiated without the jurisdictional sanction mandated by section 151 cannot provide a legally sustainable foundation for revisionary jurisdiction under section 263, which cannot cure that defect or independently establish lawful prejudice to the Revenue.