Law:

Section:

Section 263, read with section 35B(1), of the Income-tax Act, 1961 - Revision - Orders prejudicial to revenue - Whether when without any proper verification, ITO had given relief, such an order being an order prejudicial to revenue, could properly form subject-matter of revision under section 263 by Commissioner - Held, yes - Whether mere fact that subsequently Tribunal modified Commissioner's order as one remitting matter to ITO would not mean that Commissioner had no jurisdiction to deal with matter earlier under section 263 - Held, yes - Whether, when Commissioner, acting under section 263, could either set aside that portion of order of assessing authority which was against revenue straightaway or remit matter to ITO for further enquiry after setting aside relief given by him, Tribunal could also exercise such power - Held, yes - Whether if at least in respect of one item ITO's order was found to be prejudicial to revenue, initiation of proceeding by Commissioner under section 263 could not be questioned - Held, yes Section 256 of the Income-tax Act, 1961 - Reference - Question of fact - Whether on facts mentioned under heading 'Revision - Orders prejudicial to revenue' any referable question of law arose - Held, no Facts The assessee had business in export of readymade garments. In the relevant assessment year, the working sheet annexed to the profit and loss adjustment statement showed certain sums to be eligible for deduction and supporting the claim for an additional one-third of such expenditure which the assessee deducted as export markets development allowance under section 35B(1). The ITO completed the assessment without any proper verification. The Commissioner was of the opinion that the assessment, insofar as it gave relief in respect of expenditure incurred on air freight, insurance, carriage of goods and also on commission paid in India on export sales, was prejudicial to the interests of the revenue as these were not eligible for allowance and so issued a show-cause notice under section 263. The Commissioner, after considering the assessee's various representations, held that the grant of relief by the ITO was not proper and, therefore,…

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