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Section 263 of the Income-tax Act, 1961 - Revision - Orders prejudicial to revenue - Whether Commissioner can set aside assessment order passed by ITO on ground that there was no mention of initiation of penalty proceedings in assessment order - Held, no Section 256 of the Income-tax Act, 1961 - Reference - Academic question - Commissioner set aside ITO's order acting under section 263 on ground that ITO had failed to initiate penalty proceedings under section 271(1)(c) - Tribunal cancelled Commissioner's order following Delhi High Court decision in Addl. CIT v. J.K. D'Costa [1982] 133 ITR 7 - Supreme Court had dismissed special leave application against CIT v. J.K. D'Costa [Special Leave Petition (Civil) Nos. 11391 and 11392 of 1981 dated 2-3-1984] - Whether no reference from Tribunal's decision was called for as question involved was an academic question - Held, yes Facts The Commissioner passed an order under section 263 setting aside the assessment order on the ground that the ITO had not initiated penalty-proceedings in respect of a cash credit surrendered by the assessee and gave a direction to the ITO for making de novo assessment. The Tribunal held that the ITO's order was not prejudicial to the revenue's interest. The Tribunal rejected the Commissioner's application seeking reference under section 256(1), relying on Addl. CIT v. J.K. D'Costa [1982] 133 ITR 7 (Delhi). On application under section 256(2) : Held In J.K. D'Costa's case (supra), it was held that the Commissioner was not entitled to set aside the assessment order passed by the ITO on the ground that there was no mention of initiation of penalty proceedings in the order and that he could not direct the ITO to make fresh assessment to initiate penalty proceedings. The Supreme Court has dismissed the special leave petition in the said case in Special Leave Petition (Civil) Nos. 11391 and 11392 of 1981, dated 2-3-1984 [1984] 147 ITR (St.) 1. As the position was concluded and settled by the Supreme Court, the question which was sought to be referred could not be said to be a substantial question of law arising out of the Tribunal's order. It was only a question of academic nature. Cases referred…

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