1985 (8) TMI 152 - AT - Income Tax

Summary

Issues:
Assessment proceedings under section 263 of the Income-tax Act, 1961 for the assessment year 1977-78.

Analysis:
The appeal pertains to the assessment year 1977-78 and arises from the order of the Commissioner dated 29-3-1985 under section 263 of the Income-tax Act, 1961. The Commissioner found the ITO's order of filing the proceedings erroneous and prejudicial to the revenue due to non-compliance with section 143 provisions. The counsel for the assessee argued that the ITO's inaction did not constitute an order, thus the Commissioner lacked jurisdiction under section 263. The Commissioner, following a precedent, deemed the ITO's order sheet entry as valid and set it aside for fresh computation of total income. The assessee appealed against this decision.

The counsel reiterated that the ITO's order sheet entry could not be considered an assessment order as the assessment records were not reviewed. The departmental representative supported the Commissioner's decision. The Tribunal examined the ITO's order sheet entry, noting the absence of application of mind and the intent to provide grounds for section 263 action. The Tribunal disagreed with the Commissioner's reliance on the precedent, emphasizing the necessity for the ITO to apply his mind before filing proceedings. The Tribunal concluded that the ITO's order sheet entry did not constitute an order, rendering the Commissioner's exercise of jurisdiction under section 263 invalid. Consequently, the Tribunal quashed the Commissioner's order under section 263, allowing the assessee's appeal.

In summary, the Tribunal scrutinized the ITO's order sheet entry, emphasizing the requirement for the ITO to apply his mind before filing proceedings. The Tribunal found the ITO's action lacking in this regard, leading to the conclusion that the order sheet entry did not qualify as an order. Consequently, the Commissioner's exercise of jurisdiction under section 263 was deemed invalid, resulting in the quashing of the Commissioner's order and the allowance of the assessee's appeal.