Law:

Section:

I. Section 263 of the Income-tax Act, 1961 - Revision - Order prejudicial to interest of revenue - Assessment year 2002-03 - Not holding such inquiry as is normal and not applying mind to relevant material would certainly be 'erroneous' assessment warranting exercise of revisional jurisdiction [In favour of revenue] The exercise of the revisional jurisdiction has not been limited to the defect of jurisdiction. It could extend to an order which may be found to be 'erroneous' or 'not in accordance with law' for having been passed 'without making any enquiry in undue haste'. Not holding an inquiry as is normal and not applying mind to the relevant material would certainly be 'erroneous' assessment warranting exercise of revisional jurisdiction. An incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being 'erroneous'. Non-application of mind and omission to follow natural justice are in same category. Cases of assessment order passed on wrong assumption of facts, or incorrect application of law, without due application of mind or without following the principles of natural justice are not beyond the scope of section 263. Note: CIT v. Daga Entrade (P.) Ltd. [2010] 327 ITR 467 (Gau.) lays down correct law and the same is not in conflict with the earlier order of this court in Rajendra Singh v. Superintendent of Taxes [1990] 79 STC 10 (Gau.). II. Section 263 of the Income-tax Act, 1961 - Revision - Of order prejudicial to interest of revenue - Assessment year 2002-03 - Where there was non-application of mind by Assessing Officer on issue of allowing exemption under section 54F, interference by Commissioner under section 263 was valid [In favour of revenue] The Assessing Officer, in the course of assessment, allowed benefit to the assessee for long-term capital gain from sale of shares under section 54F. The shares in question were purchased on 21-4-2000, for Rs. 19,536 and sold on 2-5-2001, for Rs. 6,36,640. The Commissioner exercised suo motu revisional jurisdiction under section 263 on the ground that while accepting the genuineness of share transactions, the Assessing Officer failed to make such enquiry as was…

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