2001 (11) TMI 47 - HC - Income Tax

Summary

Issues involved:
The issue involves the correctness of the Tribunal's decision in upholding the Commissioner's order u/s 263 of the Income-tax Act, setting aside the assessment order for the assessment year 1982-83 due to the assessee's suppression of the true value of the property sold, which prejudiced the Revenue.

Details of the Judgment:

The Tribunal was justified in upholding the Commissioner's order as the assessee's conduct led to an incorrect assessment order causing prejudice to the Revenue. The Commissioner's power u/s 263 allows for revising orders prejudicial to the Revenue, with the discretion to enhance, modify, or cancel the assessment and direct a fresh assessment after giving the assessee an opportunity to be heard.

The substantial prejudice to the Revenue was evident when the true value of the property sold by the assessee was found to be much higher than reported, discovered during a raid on the purchaser's premises. Therefore, the assessment needed to be redone entirely, and the Commissioner had the discretion to set aside the assessment in whole or in part, which was not arbitrary in this case.

The assessee was not prejudiced by the Commissioner's order as they have appellate and other remedies available against the subsequent assessment order made after the revision u/s 263 of the Income-tax Act.

The error in this case was not minor but substantial, involving incorrect reporting of capital gain, justifying the Commissioner's decision to set aside the assessment order. The difference in the reported amount and the actual amount was significant, amounting to several lakhs of rupees.

There is no justification for limiting the Commissioner's discretion u/s 263 or restricting the nature of orders he can make. The Commissioner's powers are clearly defined in the section itself, and observations from other cases should not curtail his authority. The question was answered in favor of the Revenue and against the assessee.