1989 (2) TMI 72 - HC - Income Tax

Summary

Issues Involved: Application u/s 256(2) of the Income-tax Act, 1961 questioning the jurisdiction of the Income-tax Appellate Tribunal under section 263 and cancellation of the Commissioner's order u/s 263.

Jurisdiction under Section 263:
The Tribunal based its decision on previous court rulings, but the court found that the Commissioner failed to meet the basic requirements for invoking section 263. The Commissioner did not specify the points for inquiry, provide reasons, or refer to any material showing the Income-tax Officer's order as erroneous or prejudicial to Revenue's interests. As such, the court rejected the application to submit a statement of case on the proposed questions of law.

Cancellation of Commissioner's Order under Section 263:
The Tribunal's decision to cancel the Commissioner's order under section 263 was justified due to the lack of jurisdiction established by the Commissioner. The Tribunal found that the Commissioner's invocation of section 263 was based on suspicion, conjectures, and surmises, without meeting the necessary legal criteria. The Tribunal's action in canceling the order was in line with the absence of proper justification for invoking section 263, as required by law and the circumstances of the case.

This judgment highlights the importance of meeting the legal requirements and providing sufficient justification when invoking sections of the Income-tax Act to ensure the proper exercise of jurisdiction and decision-making in tax matters.