Law: Income Tax Act, 1961

Section: 263,282

Income-tax-----Revision---Orders prejudicial to interests of Revenue---Jurisdiction of Commissioner---Issue of notice under 5.263---Not a mere procedural requirement- --Notice should state reason for exercising revisional jurisdiction---Notice will not be valid, unless it bears signature of concerned officer and bears seal of office---Telegram sent by Commissioner to assessee not containing reason as to how order was prejudicial to interests of Revenue---Notice by telegram not a substitute for notice by post---Order was passed by Commissioner without giving opportunity of hearing to assessee--¬Order invalid---Indian Income Tax Act, 1961, Ss.263 & 282. For the assessment year 1985-86, the Commissioner initiated proceedings under section 263 of the Income Tax Act, 1961,, as he considered the assessment order erroneous and prejudicial to the interests of the Revenue. The Commissioner of Income-tax sent a telegraphic notice to the assessee for making appearance to show cause, as to why the assessment order should not be cancelled. The assessee acknowledged receipt of the telegram and requested for an adjournment by telegram, which was refused. Thereafter the Commissioner of Income-tax passed an order under section 263 of the Act. On appeal, the Tribunal allowed the appeal of the assessee and cancelled the order under section 263 on the ground that the order was passed by the Commissioner without giving an opportunity of being heard. The Tribunal rejected the Departments contention that the issue of show-cause notice was a mere procedural requirement and any infirmity therein did not affect the jurisdiction of the Commissioner under section 263. The Tribunal observed that no notice could be regarded as a valid notice unless it bore the signature of the concerned officer and also the seal of the office. On a reference: Held, (i) that under section 263 notice has to be sent to the assessee and the notice should contain reasons as to how the order is prejudicial to the Revenue. According to section 282 of the Income-tax Act, a notice or requisition under the Act has to be, served on the person either by post or as if it were a summons issued by the Court under the…

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