Law:

Section:

Section 263 of the Income-tax Act, 1961 - Revision - Of orders prejudicial to interests of revenue - Assessment years 1967-68 and 1968-69 - Commissioner issued notice under section 263(1) which was served on authorised representative of assessee firm and on family member of its partner - Notice was served at Indore one day before date of hearing at Bhopal - None appeared before Commissioner on behalf of assessee - Commissioner after setting aside assessment order directed ITO to make fresh assessment - Tribunal held Commissioner's order to be void ab initio and also refused to direct Commissioner to pass fresh order after giving assessee further opportunity of being heard - Whether no notice was required to be issued by Commissioner before exercising jurisdiction to proceed under section 263(1) and, hence, question of its validity did not arise nor did, it affect Commissioner's jurisdiction to exercise power under section 263(1) - Held, yes - Whether however, on facts, there was no proper opportunity to assessee to show cause why an order against assessee be not passed by Commissioner under section 263(1) - Held, yes - Whether breach of principles of natural justice might affect legality of order but not Commissioner's jurisdiction - Held, yes - Whether, therefore, exercise of jurisdiction by Commissioner under section 263(1) was valid and his order was not void ab initio - Held, yes - Whether since Tribunal's finding that order of Commissioner was void ab initio was not justified, it was not right in refusing to direct Commissioner to pass an order under section 263(1) afresh after giving due opportunity to assessee - Held, yes FACTS The ITO allowed the assessee's claim for exemption in respect of profits earned by sale of certain agricultural land. The Addl. Commissioner, acting under section 263 issued notices to the assessee's advocate as well as to the husband of one of its partners at Indore, directing the assessee to appear at the hearing fixed for the next day at Bhopal. None appeared on behalf of the assessee, and the Commissioner set aside the assessments on the ground that the profits earned was chargeable to tax, and directed the ITO to make fresh…

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