Law:

Section:

Section 263, read with section 144 of the Income-tax Act, 1961 - Revision - Of orders prejudicial to interest of revenue - Assessment year 1983-84 - Whether section 263 is not limited to exercising revisional powers qua order of assessment only; it would take within its sweep even orders wherein either proceedings are dropped or proceedings are filed - Held, yes - For relevant year, assessee-company paid advance tax - It, however, did not file its return of income even after seeking extension of time - Thereafter, Assessing Officer made entry in order sheet "assessee untraceable, proceedings dropped" - Subsequently, under section 263, Commissioner set aside order of Assessing Officer on ground that it was erroneous and prejudicial to interest of revenue - Whether action of Assessing Officer in not making a best assessment under section 144(a), despite failure of assessee to file a return of income upon being served with a notice under section 139(2), was itself an action which was erroneous in law - Held, yes - Whether fact of assessee having paid advance tax itself indicated that it was having positive income in year under consideration and believed such a state of affairs to exist, therefore also, action of Assessing Officer in dropping proceedings resulted in causing prejudice to interest of revenue - Held, yes - Whether therefore, Commissioner was perfectly justified in taking action under section 263 - Held, yes FACTS For the relevant year, the assessee-company did not file the return under section 139(1) within prescribed time. On being served with a notice under section 139(2), the assessee sought extension of time for filing the return. However, nothing happened thereafter, and thus, the Assessing Officer made the following entry in the order sheet "the assessee-company untraceable, proceedings dropped". Subsequently, the Commissioner, exercising his power under section 263, set aside the order of the Assessing Officer, dropping the assessment proceedings and directed him to make a fresh assessment. On appeal, the Tribunal confirmed the order of the Commissioner. In reference, the assessee contended that there was no order made by the Assessing Officer,…

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