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TMI Blog1994 (4) TMI 39X X X X Extracts X X X X X X X X Extracts X X X X ..... rrect in quashing the order of the Commissioner of Income-tax passed under section 263, particularly when the assessee was not given sufficient opportunity of being heard? (ii) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was correct in holding that the Commissioner of Income-tax lacks initial jurisdiction, particularly when the conclusion made by the Commissioner of Income-tax in the order under section 263 was on the basis of the information furnished in response to the initial notice?" The Tribunal found the following facts. The assessee, an individual, was carrying on a business called Messrs. Detective Devices and Equipment Company. On December 31, 1981, this business was closed and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arise from the transaction. Thereafter, the Commissioner passed an order on March 30, 1988, drawing an inference that giving cylinders to the customers was nothing but "hire" and the difference between the "cost price" and "deposit receipts" should be brought to tax as "hire charges". Accordingly, the Commissioner held that completion of the assessment overlooking this point was erroneous and prejudicial to the interests of the Revenue. He, therefore, set aside the assessment order and directed the Income-tax Officer to redo the assessment after giving adequate opportunity to the assessee. The assessee carried the matter in appeal to the Appellate Tribunal. The Tribunal found that while the notice under section 263 related to the assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that in the circumstances, the finding of the Tribunal that the assessee was not afforded with an opportunity was itself erroneous in law and had to be referred to this court for adjudication. A perusal of the provisions of section 263 of the Income-tax Act shows that the Commissioner may, if he considers that any order passed therein by the Assessing Officer is erroneous in so far as it is prejudicial to the interests of the Revenue, pass such orders thereon after giving opportunity of being heard. The necessary implication in the expression "after giving opportunity of being heard" relates to the point on which the Commissioner considers the order to be erroneous and prejudicial to the interests of the Revenue. In other words, it is ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erial had not been supplied to the assessee would not affect the very basic issue that the assessment was made without adequate investigation, which was the error sought to be revised. With reference to that basic issue, the assessee had an opportunity even before the Commissioner and the Supreme Court pointed out that the assessee had not in any way suffered because of the failure to indicate the additional facts. Relying on the observations of the Supreme Court, learned counsel for the Revenue pointed out that in the present case also, the assessee will have full opportunity of showing to the Income-tax Officer whether he had jurisdiction or not and whether the income assessed in the assessment orders which were originally passed was corr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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