TMI Blog1994 (8) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... our consideration under section 256(1) of the Income-tax Act, 1961, arising out of the proceedings in respect of the assessment year 1970-71 : " Whether, on the facts and in the circumstances of the case, the Tribunal was right in upholding the action of the Commissioner of Income-tax in invoking the provisions of section 263 of the Income-tax Act, 1961, and in sustaining the order passed by him ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cerns for considerations other than that of business. This order of the Commissioner was challenged before the Appellate Tribunal. The Tribunal declined to interfere with the order of the Commissioner. The Tribunal in support of its conclusion held as follows : " On a careful consideration of the rival contentions, we have to hold that the increasingly large advances made by the assessee-firm to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business activity. As such we decline to interfere with the order under section 263. " We do not think that a question of law arises from the order of the Appellate Tribunal on the facts of this case. The Commissioner was perfectly competent to exercise his powers under section 263 whenever he found, prima facie, that there was need to enquire if the interest of the Revenue had suffered by an o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the case are such as to provoke an inquiry. It is incumbent on the Income-tax Officer to further investigate the facts stated in the return, when circumstances would make such an inquiry prudent and the word " erroneous " in section 263 includes the failure to make such an enquiry. The order becomes erroneous because such an inquiry has not been made and not because there is anything wrong wi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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