Law:

Section:

Section 263 of the Income-tax Act, 1961 - Revision - Of orders prejudicial to interest of revenue - Assessment year 2003-04 - Whether Commissioner has unfettered power to initiate proceeding by revision for re-examining and directing fresh inquiry on his own whim for change or having a different view - Held, no - Assessee was a travel agent and tour operator - It received commission from various airlines for booking tickets for its customers - A part of that commission was passed on to customers by way of discount and net commission was shown in assessee's books of account - Assessing Officer, after considering all details and explanations of assessee in that regard, made assessment - Commissioner, in exercise of power under section 263, set aside assessment and directed Assessing Officer to make further inquiry to verify net commission transferred to profit and loss account - Whether Commissioner had really made an effort to cause a routine inquiry with regard to matter that had already been concluded and such approach of Commissioner was impermissible - Held, yes FACTS The assessee-company was a travel agent and tour operator. After the assessment for the relevant assessment year was completed, the Commis-sioner issued a notice under section 263 on the ground that the amount of commission received by the assessee as per TDS certificates was much higher than the amount credited by the assessee in its profit and loss account which had resulted in under-assessment of income to that extent. The assessee replied that it had received commission from airlines for booking tickets for its customers a part of which was passed on to the customers by way of discounts and the net commission was shown in the books of account and offered to tax; and that, thus, the assessment made under section 143(3) was not erroneous and prejudicial to the interests of the revenue so as to attract any action under section 263. The Commissioner, however, held that in order to take a final view on the issue, further examination of books of account would be necessary which could be conducted by the Assessing Officer. Therefore, he set aside the assessment on the said limited point and…

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