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Section 263, read with section 139(1)(iii) [As it stood at the relevant time], of the Income-tax Act, 1961 - Revision - Orders prejudicial to revenue - While passing assessment order ITO did not pass order qua interest leviable for belated tiling of return - Whether said assessment order could be revised under section 263 as prejudicial to interests op revenue - Held, yes Facts The assessee-firm filed its return for the assessment year 1967-68 belatedly without seeking extension of time. While completing the assessment, the ITO neither charged the interest leviable under section 139(1)(iii) [as it stood at the relevant time] nor explicitly waived it. Subsequently, acting under section 263, the Additional Commissioner set aside the assessment order as prejudicial to the interests of revenue and directed the ITO to levy the statutory interest. On appeal, the Tribunal held that in the absence of an order of the ITO either charging or waiving interest, the provisions of section 263 was not applicable, so that the Additional Commissioner's act ion was without jurisdiction. On reference: Held As already held in Premchand Sitanath Roy v. Addl. CIT [1977] 109 ITR 751 (Cal), where the statute gave an authority jurisdiction to exercise discretion on certain objective factors, the exercise of such discretion had to be manifest, so that it could be gathered whether the discretion had been properly exercised or not. The question was not of the validity of the exercise of discretion by the ITO but of non-application of law to the facts of the case. In the instant case, the ITO was bound to charge interest under section 139. He had, however, the power to waive or reduce it. He did not consider the question of interest as he was obliged to. His order was silent on the point of interest. The order could, therefore, be said to be erroneous and prejudicial to the interests of the revenue. The Commissioner had, therefore, jurisdiction under section 263 to revise it. Case review Premchand Sitanath Roy v. Addl. CIT [1977] 109 ITR 751 (Cal.) followed. IT REFERENCE NO. 118 OF 1974. Cases referred to Addl. CIT v. Saraya Distillery [1978] 115 ITR 34 (All.), Premchand Sistanath Ray v.…

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