Law:

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Section 263 of the Income-tax act, 1961-Revision-Orders prejudicial to revenue-While passing assessment order, ITO failed to take steps to charge interest under sections 139(1) and 217 and also failed to initiate penalty proceedings under sections 271(1)(a) and 273(b)-Additional commissioner, acting under section 263, set aside assessment directing ITO to make fresh assessment considering question of levy of interest and penalty-Whether tribunal correct in holding that additional commissioner could not direct ITO about leviability of penalty and consequently modifying additional commissioner's order to that extent-Held, on facts, yes Facts While completing the assessments and passing the assessment order, the ITO had failed to take steps to charge interest under sections 139(1) and 217 and had also failed to initiate penalty proceedings against the assessee under sections 271(1)(a) and 273(b). The Additional Commissioner, acting under section 263, set aside the assessment orders and directed the ITO to make fresh assessments in accordance with law, considering the question of levy of interest and penalties. On appeal, the Tribunal pointed out that under section 263, the Additional Commissioner's jurisdiction was to call for the records of certain proceedings and to revise an order passed by the ITO in those proceedings. He could not travel beyond the subject-matter of the order passed by the ITO, nor could he travel beyond the proceedings in the course of which the order had been passed. Accordingly, it upheld only that portion of the order of the Additional Commissioner which related to the question of interest, but held that the Additional Commissioner could not give directions relating to penalties. Further, since the Tribunal was not satisfied that the circumstances of the case justified the setting aside of the whole assessment by the Additional Commissioner, it modified the latter's order by stating that the Additional Commissioner would merely direct the ITO to consider the question of levy of interest under sections 139(1) and 217 only. On reference: Held 1. Though the expression "assessment" is used in the Act with different meaning in different…

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