- (1.) THE assessee filed a return for the assessment year 1973-74 declaring an income of Rs. 37,310. By order dated March 30, 1976, the Income-tax Officer determined the income of the assessee at Rs. 1,42,670.
(2.) WHEN the aforesaid order came to the notice of the Commissioner of Income-tax, he issued a notice under Section 263 of the Income-tax Act, 1961 (for short "the Act"), to the assessee indicating that since the Income-tax Officer has made an addition of more than Rs. one lakh to the declared income, he had to send the draft assessment order to the assessee inviting objections, if any, to the proposed addition as required under Section 144b of the Act and since he did not comply with the aforesaid provision, the order was erroneous and prejudicial to the interests of the Revenue. The assessee appeared before the Commissioner and pleaded that the provisions of Section 263 of the Act could be invoked only where a valid assessment order had been passed and when it was shown to be erroneous and prejudicial to the interests of the Revenue, and since the order was without jurisdiction, the Commissioner could not invoke the jurisdiction under Section 263 of the Act. The Commissioner was also informed by the assessee that it had filed an appeal against the order of the Income-tax Officer. The Commissioner proceeded to decide the matter after rejecting the arguments raised on behalf of the assessee. He came to the conclusion that the Income-tax Officer did not comply with the provisions of Section 144b of the Act and thus the order was erroneous and prejudicial to the interests of the Revenue. As a result, the order of the Income-tax Officer was set aside and the matter was remanded to him to make fresh assessment in accordance with the provisions of the Act. Since the order of the Income-tax Officer was set aside, the appeal filed by the assessee against the order of the Income-tax Officer was dismissed as the order of the Income-tax Officer was no longer in existence.
(3.) AGAINST the aforesaid order, the assessee took the matter in appeal before the Tribunal and by order dated April 30, 1979, the appeal was allowed with the following observations : "since he has not shown what prejudice was caused or was likely to be caused to the Revenue by the Income-tax Officer's order if allowed to stand, we must strike down the Commissioner's order as bad in law. ";