Law:

Section:

Section 263 of the Income-tax Act, 1961, - Revision - Of orders prejudicial to interests of revenue - Assessment year 1975-76 - Assessee was partner in a firm with a share of 50 per cent - Assessee claimed that one-third of income received towards aforesaid share alone be assessed in his hands and balance share of two-thirds be assessed equally between his wife and minor son - ITO following decision of High Court for earlier years on identical issue of assessee, allowed assessee's claim and completed assessment -Whether merely because aforesaid decision of High Court was subject matter of a further appeal before Supreme Court, it would be incorrect to say that order of ITO was erroneous and, therefore, Commissioner had no jurisdiction to initiate proceedings under section 263 - Held, yes FACTS The assessee was a partner in a firm with a share of 50 per cent. For the assessment year 1975-76, the assessee claimed that one-third of the income received towards the aforesaid share alone could be assessed in his hands and the remaining two-thirds was to be distributed equally between his wife and minor son by virtue of an overriding charge created by a memo of partial partition. Following the decision of the High Court for the assessment years 1966-67 to 1974-75 in the case of this very assessee on the identical issue, an appeal by revenue was pending before the Supreme Court. The ITO allowed the assessee's claim and completed the assessment. Thereafter, the Commissioner initiated proceedings under section 263 on the ground that the entire income of aforesaid share in the firm was assessable in hands of the assessee. HELD In the instant case, a dispute identical to the one mentioned in the show-cause notice issued had arisen with respect to assessment years 1966-67 to 1974-75. The matter was finally brought up to this Court by way of reference and it was decided that the income accruing to the wife and the minor son of the assessee could not be clubbed with or included in the income of the assessee. It was true that the aforesaid decision was subject matter of an appeal pending before the Supreme Court, but it could not be said on that account that the assessment…

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