Law:

Section:

Section 263 of the Income-tax Act, 1961 - Revision - Of orders prejudicial to interests of revenue - Assessment year 1982-83 - Assessee filed a loss return for assessment year 1982-83 - Assessing Officer merely endorsed 'not assessable' on that return - Commissioner acting under section 263 revised that order on ground that unabsorbed investment allowance, unabsorbed depreciation and development rebate ought to have been scrutinized by Assessing Officer before accepting the return - Whether Commissioner was justified in invoking his power under section 263 - Held, yes CASES REFERRED TO Esthuri Aswathiah v. ITO [1961] 41 ITR 539 (SC) [Para 3], V.S. Sivalingam Chettiar v. CIT [1966] 62 ITR 678 (Mad.) [Para 3] andCIT v. M.P. Davis [1986] 162 ITR 251/ 27 Taxman 59 (Kar.) [Para 3]. J. Naresh Kumar for the Applicant. JUDGMENT R. Jayasimha Babu, J. - The question referred at the instance of the Revenue is- "Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the Commissioner of Income-tax was not correct in invoking the provisions of section 263 of the Income-tax Act, 1961 ?" 2. The assessee had filed a return for the assessment year 1982-83 showing a loss of Rs. 3,13,970. The Assessing Officer merely endorsed 'not assessable' on that return. That order was thereafter suo motu revised by the Commissioner under section 263 of the Income-tax Act, 1961, on the ground that unabsorbed investment allowance, unabsorbed depreciation as also unabsorbed development rebate ought to have been scrutinised by the Assessing Officer before accepting that return. That failure to carry out such scrutiny had not only rendered the assessment erroneous but also caused prejudice to the Revenue. The assessee appealed to the Tribunal against that order of the Commissioner. The Commissioner took the view that when the Assessing Officer ordered "not assessable" it would…

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