TaxTMI 
TaxTMI 
2006 (10) TMI 118
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....order passed under Section 263 on the ground that the Commissioner of Income Tax had not stated in his order as to how the assessment order was erroneous and prejudicial to the interest of the revenue? (ii) Whether in the facts and circumstances of the case the Tribunal was right in looking at the form of the Commissioner's order of revision rather than the substance of the same? 2. The brief facts leading to the above questions of law are as under: The assessee is a company in which the public are substantially interested. The relevant assessment year is 1989-90 and the corresponding accounting year ended on 31.03.1989. The assessee company derives income from the following sources: (i) Warehousing charges (ii) Supervision cha....
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....cer in respect of the assessability of the amount received by the assessee from Group Gratuity Scheme with LIC and hence the said order of assessment is erroneous and also prejudicial to the interest of the Revenue. When both the conditions are satisfied, the Commissioner is right in invoking the provisions of Section 263 of the Act. Hence the order of the Tribunal is wrong, illegal, without basis and justification. 4. Heard the counsel. Section 263 of the Act which is relevant for the purpose, reads as under: 263. Revision of orders prejudicial to Revenue - (1) The Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Assessing Officer is erroneous in ....
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....ct assumption of facts or an incorrect application of law will satisfy the requirement of the order being erroneous. In the same category fall orders passed without applying the principles of natural justice or without application of mind. The Tribunal correctly followed the above principles of the Supreme Court and held as follows: For the purpose of invoking provisions of Section 263, twin conditions i.e. (i) that assessment order was erroneous and (ii) it was prejudicial to the interests of Revenue, are to be satisfied. There is no finding of the fact as to what extent amount was claimed as deduction in a particular assessment. The assessee has admitted the amount of Rs. 8,22,925/- as liability in the balance sheet. Merely because the....