COMMISSIONER OF INCOME TAX Vs. SHRIRAM DEVELOPMENT CO

JUDGEMENT

(1.) BY this reference under Section 256(1) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), the Income-tax Appellate Tribunal, Indore Bench, has referred the following question of law to this court for its opinion :

(2.) THE material facts giving rise to this reference, briefly, are as follows:

(3.) HAVING given our anxious consideration to the matter, we have come to the conclusion that by its decision in H.H. Maharaja Yashwant Rao Pawar's case [1981] 127 ITR 650 (MP), the High Court did not bring into existence any new fact. It merely expounded the provisions of law which were already in existence when the Income-tax Officer had passed the order of assessment in this case. The Tribunal, in our opinion, erred in holding that the fact that the judgment in Maharaja Yashwant Rao Pawar's case [1981] 127 ITR 650 (HP) was not in existence on the date when the order of assessment was passed by the Income-tax Officer was decisive of the matter. The Tribunal failed to appreciate that the Commissioner of Income-tax had jurisdiction to pass an order under Section 263 of the Act if he considered that any order passed by the Income-tax Officer in any case was erroneous in so far, as it was prejudicial to the interests of the Revenue. It is not disputed in the instant case, that the order of assessment passed by the Income-tax Officer was prejudicial to the interests of the Revenue. The Commissioner of Income-tax was right in considering that in the light of the decision in Maharaja Yashwant Rao Pawar's case [1981] 127 ITR 650 (MP), the order of assessment passed by the Income-tax Officer was erroneous. The Tribunal was, therefore, not justified in holding that the order of the Income-tax Officer was not erroneous and that the Commissioner of Income-tax had no jurisdiction to pass an order under Section 263 of the Act.