Law:

Section:

Section 263, read with section 186, of the Income-tax Act, 1961 - Revision - Of orders prejudicial to interests of revenue - Assessment year 1968-69 - Assessee-firm was constituted under a partnership deed dated 18-3-1963 with two partners, and two minors were admitted to benefits of partnership - It was granted registration up to assessment year 1968-69 - Subsequently, ITO discovered that two minors had attained majority during financial year ending on 31-3-1964 but this fact was not intimated by assessee to him and no action was taken by it to execute a fresh partnership deed - ITO cancelled registration of assessee under section 186 for assessment years 1965-66 to 1967-68 and approached Commissioner for cancellation of registration for assessment year 1968-69 - Thereupon Commissioner acting under section 263 set aside order granting registration for assessment year 1968-69 and sent matter to ITO for making fresh assessment - Whether Commissioner was not justified as he had initiated proceedings under section 263 without applying his mind and without properly considering all facts and circumstances of case - Held, yes FACTS The assessee-firm was constituted under a partnership deed dated 18-3-1963 with two partners, and two minors were admitted to the benefits of the partnership. It was granted registration up to the assessment year 1968-69. Subsequently, the ITO came to know that the two minors had attained majority during the financial year ending on 31-3-1964, but this fact was not intimated by the assessee to him and no action was taken by it to execute a fresh partnership deed. The ITO cancelled the registration of the assessee under section 186 for the assessment years 1965-66 to 1967-68 and approached the Commissioner for cancellation of registration for the assessment year 1968-69. Thereupon, the Commissioner, acting under section 263, set aside the order granting registration for the assessment year 1968-69 and sent the matter back to the ITO for making fresh assessment according to law. On appeal, the Tribunal set aside the order of the Commissioner, holding (i) that the Commissioner had initiated the proceedings under section 263 without applying…

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