Issues Involved: The validity of setting aside the Income-tax Officer's order u/s 263 of the Income-tax Act and directing a fresh assessment.
Summary: The assessee received a refund of excise duty during the relevant year but claimed it should not be included in income due to pending claims by a third party. The Income-tax Officer accepted this claim, but the Commissioner found the assessment order erroneous and prejudicial to revenue as proper enquiries were not made. The Commissioner set aside the assessment for a fresh one. The Tribunal upheld the Commissioner's decision, leading to an appeal by the assessee.
Commissioner's Decision: The Commissioner held that the Income-tax Officer's order was erroneous and prejudicial to revenue as proper enquiries were not conducted before accepting the claim. The mere existence of pending claims by a third party did not justify excluding the amount from the assessee's income. The Commissioner's decision to set aside the assessment was deemed appropriate and legal.
Court's Analysis: The court found no error in the Commissioner's decision, stating that the Income-tax Officer's order was indeed prejudicial to revenue. The court referenced previous cases to support the Commissioner's authority u/s 263 to set aside an assessment for further enquiry if necessary and if the original order is detrimental to revenue.
Conclusion: The court answered the question in favor of the Revenue and against the assessee, upholding the Commissioner's decision to set aside the Income-tax Officer's order and direct a fresh assessment. No costs were awarded in this matter.
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