1997 (4) TMI 35 - HC - Income Tax

Summary

Issues involved:
The judgment addresses questions referred by the Income-tax Appellate Tribunal regarding the jurisdiction of the Commissioner under section 263 of the Income-tax Act, 1961 for the assessment year 1970-71.

Assessment Errors Identified:
The Commissioner identified errors in the assessment order, including incorrect allowances and discrepancies in calculations, leading to the conclusion that the order was erroneous and prejudicial to the Revenue's interests.

Opportunity of Being Heard:
The Commissioner issued an order under section 263 without providing the assessee with an opportunity to be heard, leading to the question of whether such omission rendered the order a nullity.

Legal Interpretation:
The judgment clarifies that while the Commissioner is not required to provide an opportunity of being heard as a condition precedent to assuming jurisdiction under section 263, such an opportunity is necessary before making an enforceable order.

Precedent and Decision:
Citing a Supreme Court case, the judgment emphasizes that breach of natural justice principles may impact the legality of an order but does not affect the Commissioner's jurisdiction. The Tribunal's decision to set aside the order under section 263 and remit the case for a new order with a hearing was upheld.

Conclusion:
In line with the Supreme Court precedent, the High Court answered all questions in favor of the Revenue, affirming that the Commissioner's jurisdiction under section 263 does not hinge on providing an opportunity of being heard before assuming jurisdiction.