Case Law Details
Dilip Patel Vs PCIT (Central) (Gujarat High Court)
In , the Gujarat High Court quashed notices issued under Section 263 of the Income Tax Act, 1961, by which the Principal Commissioner sought to revise an assessment order passed under Section 153C read with Section 143(3) for AY 2019-20.
The case arose from a search conducted on 15.10.2019 in the case of “Land Broker & Financier Group,” during which an MoU relating to sale of land was found in the mobile phone of a broker, Mr. Dhaval Teli. The MoU reflected a proposed transaction value of Rs.39.32 crore for land situated at Survey No.329. However, the transaction mentioned in the MoU did not materialize due to title disputes. Subsequently, the land was sold on 12.04.2018 to different purchasers for Rs.12 crore as per the registered sale deed.
Based on the seized material, proceedings under Section 153C were initiated against the assessee. During assessment proceedings, the Assessing Officer referred the matter to the Departmental Valuation Officer (DVO), who valued the property at Rs.28.50 crore. Relying on the DVO’s report, the Assessing Officer concluded that the actual sale consideration was higher than the documented consideration and made additions of Rs.8.25 crore in the hands of the assessee.
The assessee challenged the subsequent Section 263 notices issued by the Principal Commissioner. The revisional authority alleged that the Assessing Officer had committed errors by relying on the DVO valuation instead of the MoU value of Rs.39.32 crore and by not initiating penalty proceedings under Section 271D for alleged violation of Section 269SS.
The assessee argued that the Assessing Officer had conducted a thorough inquiry, examined all relevant material, referred the matter to the DVO, and taken a plausible view. It was further contended that the MoU only reflected negotiations with a proposed purchaser and not the actual completed transaction. The assessee also argued that no new material had been brought on record by the revisional authority and that the Commissioner was merely attempting to substitute his own opinion for that of the Assessing Officer.
On the issue of penalty proceedings under Section 271D, the High Court held that the Assessing Officer had no jurisdiction to impose or initiate such penalty proceedings at the relevant time. The Court noted that under Section 271D(2), the power to impose penalty vested with the Joint Commissioner and that the Assessing Officer acquired such authority only from 01.04.2025 onwards. Since the assessment order had been passed on 19.06.2023, the allegation that the Assessing Officer failed to initiate proceedings under Section 271D was held to be erroneous and illegal.
With respect to valuation, the High Court observed that the Assessing Officer had not acted mechanically or perfunctorily. The officer was aware of the discrepancy between the MoU value and the registered sale deed value, examined the surrounding circumstances, considered the broker’s statement, and referred the matter to the DVO before arriving at a conclusion. The Court held that the Assessing Officer had adopted a “plausible view” based on the material available on record.
Relying on earlier judicial precedents, including Aryan Arcade Ltd. and JMC Projects (India) Ltd., the Court reiterated that revisional powers under Section 263 can only be exercised where the assessment order is both erroneous and prejudicial to the interests of the revenue. The Court emphasized that where the Assessing Officer has made proper inquiries and taken a plausible view, the Commissioner cannot invoke Section 263 merely because another view is possible.
The High Court also rejected the revenue’s objection regarding availability of an alternative remedy. It held that since the Section 263 notices were contrary to statutory provisions and legally unsustainable, the writ petitions were maintainable.
Accordingly, the Gujarat High Court quashed and set aside both impugned notices issued under Section 263 and allowed the writ petitions.
FULL TEXT OF THE JUDGMENT/ORDER OF GUJARAT HIGH COURT
1. The petitioner, by way of present petitions under Article 226 of the Constitution of India, challenges the notices dated 28.02.2026 issued by the respondent under Section 263 of the Income Tax Act, 1961 (herein after referred to as ‘the Act’) wherein the respondent has sought to revise completed assessment under Section 143(3) of the Act for the Assessment Year (AY) 2019-20.
2. BRIEF FACTS:
2.1 Since facts and issue are common, Special Civil Application no.4314 is taken up as lead matter. The Petitioner filed return of income for AY 2019-20 on 03.10.2019 reporting total income at Rs.2,36,22,720/-.
2.2 A search and seizure action under Section 132 of the Act was carried out on 15.10.2019 in the case of “Land Broker & Financier Group” and one of the searched party was Mr. Dhaval Teli. From the mobile phone of Shri Teli, images of one Memorandum of Understanding (for short ‘MoU’) was found and seized. The said MoU was between the Dilip Atmaram Patel, Ashok Atmaram Patel (proposed Sellers) and Dhiren R Bharwad (proposed purchaser) for sale of land at Survey No.329 for Rs.39.32 crores. On being asked, Mr.Teli explained that although he was the broker for the said transaction but it eventually did not go through due to Title Disputes. The Officer thereafter investigated the data in public domain and gathered information that the said land at Survey No.329 is eventually sold to the Sandhya Maulik Patel and Maulik Jayantibhai Patel for Rs.12 crores on 12.04.2018. Satisfaction note, noting the said facts, was recorded to initiate proceedings under Section 153C of the Act.
2.3 The Assessing Officer, thereafter, issued notice under Section 153C of the Act to the petitioner, on 13.10.2021, to carry out assessment. In the said Assessment Proceedings, the Assessing Officer referred the matter to Departmental Valuation Officer (for short ‘DVO’) to determine the market Price of the land sold. As per the letter of DVO dated 08.05.2023, the value of the land was determined at Rs.28.50 crores. Therefore, the Assessing officer held that the sale consideration for the sale of land was Rs.28.50 crores and not Rs.12 crores as per the registered sale deed. The Assessing Officer passed assessment order under Section 153C dated 19.06.2023. The petitioner has filed appeal against the assessment order, and the said appeal is pending. The respondent has, thereafter, issued the impugned notice under Section 263 of the Act, on 28.02.2026. The petitioner, vide letter dated 05.03.2026, sought for adjournment. One more notice under Section 263 of the Act, dated 10.03.2026, is issued by the respondent.
3. SUBMISSIONS ON BEHALF OF THE ASSESSEE :
3.1 Mr. B.S.Soparkar, learned advocate appearing for the petitioner submitted that the impugned notice is also ex facie without jurisdiction in as much as the very assessment under Section 153C of the Act was undertaken due to satisfaction being recorded based upon purported incriminating material found in the search. Once the Assessing Officer has undertaken the complete exercise of assessment of income taking into consideration the entire material available before him then it is not open for the respondent to peruse the very same material to revise the assessment under Section 263 of the Act. It is therefore submitted that the Assessing Officer has made thorough inquiry into the facts of the case and took a plausible decision to such facts. It is therefore submitted that there is no error as such in the order that can be prejudicial to the interest of the revenue and hence, the notice under Section 263 of the Act is bad and illegal at very threshold. It is further submitted that the respondent has also not brought any new facts that were not available before the Assessing Officer. There is not even a whisper on failure on the part of the Assessing Officer to carry out sufficient inquiry in the matter. The impugned notice on the face of it notes that the respondent has examined the available case records and details. It is submitted that the respondent has sought to substitute his opinion in law against the opinion of the Assessing Officer without there being any error in the opinion of the Assessing Officer. It is submitted that such review of order of the Assessing Officer is not permissible. The learned advocate for the petitioner has placed reliance on the following decisions:
a. Aryan arcade Ltd. vs.Commissioner of Income-tax I, [2017] 84 com 293 (Gujarat)
b. JMC Projects (India) Limited vs. Principal Commissioner of Income-tax (Central), [2016] 67 taxmann.com 258 (Gujarat)
c. Abhijit Bhandari vs. Principal Commissioner of Income-tax-5, Chennai, [2017] 396 ITR 499 (Madras)
3.2 It is further submitted by learned advocate Mr. Soparkar that the respondent has issued the impugned notice on the ground that the Assessing Officer completed the assessment under Section 143(3) of the Act alleging three errors as below:
a. The Action of the Assessing Officer in completing the Assessment on the basis of the Valuation Report by DVO, ignoring the incriminating material found during search was not correct.
b. In the case of the purchaser, the assessing officer issued notices under Section 153C of the Act based upon the amount mentioned in the MoU i.e. Rs.39.32 crores. Thus, two divergent views have been taken by the then assessing officer of the same transaction pertaining to the same property between the buyers and the sellers.
c. The Assessing Officer did not record the satisfaction in respect of the penalty proceedings under Section 271D of the Act.
3.3 It is further submitted by learned advocate Mr. Soparkar that the respondent has erred in assuming jurisdiction in as much as the order of the Assessing Officer is not erroneous in so far as it is prejudicial to the interest of revenue.
a) In relation to first issue, it is submitted that as a matter of fact there is no incriminating material found at the time of search that would indicate that the ultimate transaction that took place between the petitioner and the buyer was at any price different than the registered sale deed. It is submitted that all the incriminating material shows is the negotiation between the petitioner and the proposed buyer with who the transaction was not succeed to be entered into. It is therefore submitted that the attempt of the respondent to take the amount mentioned in the MoU i.e. Rs.39.32 crores is without any basis.
b) In relation to second issue, it is submitted that the reliance on the notice issued in case of buyer by the respondent is completely baseless on two reasons.
i. First reason is that the satisfaction note in the case of buyer as well as the petitioner (as reproduced in the assessment order at Paragraph Nos. 5 to 5.9), both show the satisfaction recorded for the full amount of Rs.39.32 crores only. It was only during the assessment, the Assessing Officer has called for the report of the DVO to take the amount of Rs. 28.50 crores. Therefore, it is incorrect to hold that the Assessing Officer has erred in not taking the amount of Rs.39.32 crores.
ii. Secondly, in case of the buyers, the assessment was never undertaken. The buyers had challenged the notices under Section 153C of the Act before this Court and vide order dated 24.11.2025, this Court was pleased to allow the petition and hold that the very proceedings under Section 153C of the Act were bad and illegal.
iii) Thirdly, the Assessing Officer has no jurisdiction under the provisions of section 271D of the Act to initiate proceedings.
3.4 It is, therefore, submitted that there is no error in the Assessment Order passed by the then Assessing Officer. It is submitted that on issues that are now sought to be raised by the respondent were correctly examined by the then Assessing Officer and inference drawn while passing assessment order under Section 143(3) of the Act cannot be taken into revision under Section 263 of the Act. It is therefore submitted that the impugned assessment order not being erroneous, the assumption of jurisdiction by the respondent is bad and illegal. It is therefore submitted that there is no error in the Assessment Order passed by the then Assessing Officer. It is submitted that on issues that are now sought to be raised by the respondent were correctly examined by the then Assessing Officer and inference drawn while passing assessment order under Section 143(3) of the Act cannot be taken into revision under Section 263 of the Act. It is therefore submitted that the impugned assessment order not being erroneous, the assumption of jurisdiction by the respondent is bad and illegal.
4. SUBMISSIONS ON BEHALF OF REVENUE:
4.1 Learned Senior Standing Counsel Mr. Varun Patel, at the outset, has submitted that since the draft order under Section 263 of the Act is already passed, the same may be allowed to be finalised. It is submitted that the respondent Principal Commissioner of Income-tax, on the analysis of the order passed by the Assessing Officer, realised that his approach of completing the assessment on the Valuation Report prepared by DVO was inappropriate and hence, the notice under Section 263 of the Act was issued on 28.02.2026. It is submitted that the Assessing Officer has ignored the incriminating material found during the search, which reflected the amount of Rs.39.32 crores mentioned in the MoU and hence, the Assessing Officer could have proceeded on preparing the Assessment Order on the basis of such amount instead of directing the DVO to carry out the valuation of the land in question. It is submitted that the DVO assessed the value of the land at Rs.28.50 crores ignoring the incriminating material mentioning about the value of the land at Rs.39.32 crores. Thus, it is submitted that since the interest of the revenue was jeopardised, the Assessment proceedings were undertaken under revision by exercising power under Section 263 of the Act.
4.2 It is submitted that the Assessing Officer has also erred in not recording his satisfaction in respect of the penalty proceedings under Section 271D of the Act, which are attracted in the present case and since he failed to initiate any proceedings relating to the violation of the provision of Section 269SS of the Act, the revision proceedings under Section 263 of the Act are initiated by the respondent. It is submitted that, at this stage, the petitioner has an alternative remedy of responding to the aforesaid notices and hence, the writ petition may not be entertained.
ANALYSIS AND OPINION:
5. We have heard learned advocate Mr. B.S. Soparkar for the petitioner and learned Senior Standing Counsel Mr. Varun Patel for the respondent at length. The facts which are established from the record are that a search in case of “Land Broker & Financier Group” was carried on 15.10.2019 at the premises of Mr. Dhaval Arvin Teli. An MoU dated 01.03.2016 entered between the petitioner Assessee and one Shri Ashokbhai Atmaram Patel and Shri Dhirenbhai Rambhai Bharwad for sale of land situated at Makarba at the rate of Rs.25,000/- per square yard for total consideration of Rs.39,32,25,000/-, was seized. However, ultimately the land was sold by the assessee to one Ms. Sandhya Maulik Patel and Shri Maulik J. Patel, on 12.04.2018, at the documented price of Rs.12 crores only.
5.1 The petitioner had filed return at Rs. 2.36 crores on 26.10.2019 and based on the search and MoU, he was issued notice under Section 153C of the Act on 13.10.2021. The Assessment Order was passed on 19.06.2023, assessing the income at Rs.9.84 crores making addition of Rs.8.25 crores. During the Assessment proceedings, the Assessing Officer called for the fair market value of the property in question and accordingly, the DVO prepared his return valuing the property at Rs.28.50 crores. The petitioner has filed the appeal before Commissioner of Income-tax (Appeal) on 13.07.2023, which is pending.
5.2 A notice under Section 263 of the Act was issued by the respondent seeking revision of the Assessment Order, which has been challenged by the petitioner. He has filed the objection on 27.03.2026 and thereafter, a Draft Assessment Order has been passed on 28.03.2026 pursuant to the order passed by us, directing the petitioner to fully cooperate with the same. The same has been tendered to this Court and was taken on record by order dated 21.04.2026.
5.3 The issue which falls for deliberation before this Court is as to whether, at this stage, this Court can set aside the notice issued by the respondent initiating the revisional proceedings on the order passed by the Assessing Officer.
5.4 The respondent, while exercising the power under Section 263 of the Act, has sought revision of the order passed by the Assessing Officer dated 19.06.2023 primarily on two grounds:
i) that the Assessing Officer has erred in using the Valuation Report by the DVO, assessing the value of the land at Rs.28.50 crores, ignoring the incriminating material found during the search i.e. MoU mentioning the value of the land at Rs.39.32 crores; and
ii) that the Assessing Officer has erred in not recording his satisfaction in respect of the proceedings under Section 271D of the Act and he did not initiate such proceedings in the Assessment Order since the Assessee has violated the provisions of Section 269SS of the Act by accepting cash. Thus, it is recorded in the show-cause notice dated 28.02.2026 that “penalty proceedings under Section 271D of the Act should have been initiated by the Assessing Officer, however, he failed to do so.”
5.5 With regard to the observations recorded by the Commissioner in the impugned notice regarding failure of the Assessing Officer to initiate proceedings in the Assessment Order in view of the violation of provision of Section 269SS of the Act is concerned, we find that the Assessing Officer had no jurisdiction to initiate the proceedings against the petitioner in view of the provision of Section 271D of the Act, which mentions about the imposition of penalty for failure to comply with the provision of Section 269SS of the Act. The same reads as under:
“Penalty for failure to comply with the provisions of Section 269SS:
271D. [(1)] If a person takes or accepts any loan or deposit [or specified sum] in contravention of the provisions of Section 269SS, he shall be liable to pay, by way of penalty, a sum equal to the amount of the loan or deposit [or specified sum] so taken or accepted.
(2) Any penalty imposable under sub-section (1) shall be imposed by the Joint Commissioner.”
Provided that any penalty under sub-section(1) , on or after 1st day of April, 2025, shall be imposed by the Assessing Officer.”
5.6 A perusal of the provision of Section 271D of the Act reveals that the Assessing Officer is authorized or has the jurisdiction to impose the penalty only on or after 1 st Day of April, 2025 and hence, when the Assessment Order was passed on 19.06.2023, the Assessing Officer could not have passed any order or to even initiate proceedings against the assessee for violation of provision of Section 269SS of the Act and thereby imposing the penalty under Section 271D of the Act. Thus, the respondent has manifestly erred in not examining the provision of Section 269SS read with Section 271D of the Act and, hence, the issuance of the notice for alleged inaction of the Assessing Officer to initiate and impose the penalty under Section 271D of the Act is erroneous and illegal. Hence, the revision proceedings under Section 263 of the Act become vulnerable.
5.7 So far as other aspect of which the respondent was impressed in invoking the power under Section 263 of the Act, is relating to the approach of the Assessing Officer for palcing reliance on the Valuation Report by the DVO in assessing the value of land at Rs.28.50 crores, thereby ignoring the value of the land at Rs.39.32 crores as mentioned in the MoU, is concerned, we find that the respondent has also committed error in invoking his revisional powers. We may mention, at this stage, that the MoU, which was recovered during the search proceedings, mentions the name of a person being Shri Dhirenbhai Rambhai Bharwad. It is true that the land deed with Shri Dhirenbhai Rambhai Bharwad ultimately did not fructify. Ultimately it was sold to one Ms. Sandhya Maulik Patel after a period of 2 years. We may, at this stage, incorporate the observations of the Assessing Officer, which are as under:
“5.14 In the light of aforesaid discussions, considering the circumstantial evidence available on record, sworn statement of Shri Dhaval A Teli, judicial pronouncements discussed above and bearing in mind the DVO’s report, it is abundantly clear that the assessee along with other co-owner has sold the underlying land parcel bearing survey no. 329 situated at Makarba at least for a consideration of Rs.28,50,00,000/-as determined by DVO as against the documented price of Rs. 12,00,00,000/- and the differential sum of Rs. 16,50,00,000/- being over and above the documented price has been received by the sellers including the assessee as ‘on-money’ in cash which partakes the character of ‘on-money’ which has not been offered for taxation. Since the share of the assessee in the underlying land parcel is 50%, therefore the proportionate on-money received by the assessee in cash against the sale of the underlying land parcel is computed at Rs.8,25,00,000/- (50%of Rs. 16,50,00,000/-) which warrants taxation in the hands of the assessee.”
6. We do not find that that the Assessing Officer has perfunctorily referred the valuation of the land to DVO who has considered the entire material on record, which include circumstantial evidence, sworn statement of Shri Dhaval A. Teli and the DVO’s report. The Assessing Officer was conscious of the fact that the value of the land shown in the MoU was Rs.39.32 crores whereas the sale deed dated 12.04.2018 with one Ms. Sandhya Patel and Maulik Patel mentions about the valuation of the land as Rs. 12 crores. It is not the case of the respondent that Assessing Officer has blindly put faith on the statement of the petitioner made before the Assessing Officer. On the contrary, by examining the facts and on the comparison of value of land from MoU and the sale-deed, the Assessing Officer called for the report from the DVO who ultimately valued the land at Rs.28.50 crores and thereby, the Assessing Officer made an addition of Rs.8.25 crores at the ends of the petitioner and one Shri Ashok Patel.
7. We may now refer to the decision of this Court in case of Aryan Arcade Ltd. (supra) wherein the Co-ordinate Bench after examining the scope of provision of Section 263 of the Act in context of the show-cause notice issued by the Commissioner has held thus:
“10. The Division Bench of this Court in case of Rayon Silk Mills v. Commissioner of Income-tax reported in (1996) 221 ITR 155 was examining the challenge of the assessee to an order by the Commissioner in which in exercise of revisional powers, he had directed the Income Tax officer to hold certain inquiry on an issue which according to the Commissioner, the Income Tax officer had not examined. The assessee argued that merely because the order of assessment does not discuss the issue at length, would not mean that no inquiry was made. The Court accepted the contention and held that the Assessing Officer having made the inquiry but without detail reference in order, the Commissioner was not correct in directing fresh inquiry. It was however, clarified that the Court did not mean to lay down the law that whenever an inquiry into any aspect of the assessment has been made, that cannot be the subject matter of proceedings under section 263 of the Act. Even in such a case, if the Commissioner is of the opinion that the Income Tax officer has passed an order which is erroneous and prejudicial to the interest of the Revenue, he can certainly have recourse to powers under section 263 of the Act.
11. In case of CIT v. Nirma Chemicals Works (P.) Ltd. reported in (2009) 309 ITR 67 (Guj), the Division Bench had observed as under:
“22. The contention on behalf of the revenue that the assessment order does not reflect any application of mind as to eligibility or otherwise u/s. 80I of the Act requires to be noted to be rejected. An assessment order cannot incorporate reasons for making/granting a claim of deduction. If it does so, an assessment order would cease to be an order and become an epic tome. The reasons are not far to seek. Firstly, it would cast an almost impossible burden on the Assessing Officer, considering the workload that he carries and the period of limitation within which an order is required to be made; and, Secondly, the order is an appealable order. An appeal lies, would be filed, only against disallowances which an assessee feels aggrieved with.”
12. Thus when the Assessing Officer had made proper inquiry and taken a definite view, it would be open for the Commissioner to exercise revisional powers only if it is found that the order is erroneous and prejudicial to the interest of the Revenue. If the view adopted by the Assessing Officer is a plausible view, the Commissioner would not substitute his opinion with that of Assessing Officer. In case of Malabar Industrial Co. Ltd. v. Commissioner of Income Tax reported in (2000) 243 ITR 83, the Supreme Court observed as under :
“A bare reading of this provision makes it clear that the prerequisite to the exercise of jurisdiction by the Commissioner suo motu under it, is that the order of the Income-tax Officer is erroneous in so far as it is prejudicial to the interests of the Revenue. The Commissioner has to be satisfied of twin conditions namely (i) the order of the Assessing Officer sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the Revenue. If one of them is absent – if the order of the Income Tax Officer is erroneous but is not prejudicial to the Revenue or if it is not erroneous but is prejudicial to the Revenue recourse cannot be had to section 263(1) of the Act.
There can be no doubt that the provision cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer, it is only when an order is erroneous that the section will be attracted. An incorrect assumption of facts or an incorrect application of law will satisfy the requirement of order being erroneous. In the same category fall orders passed without applying the principles of natural justice or without application of mind.
The phrase “prejudicial to the interests of the Revenue” is not an expression of art and is not defined in the Act. Understood in its ordinary meaning it is of wide import and is not confined to loss of tax.”
8. Thus, it is settled precedent that though the Commissioner can certainly invoke the powers under Section 263 of the Act, if he or she is of the opinion that the Assessing Officer has passed an order which is erroneous and prejudicial to the interest of the revenue, however such powers are to be exercised sparingly in those case where the Assessing Officer had perfunctorily made the inquiry bereft of any discussion and in case though the inquiry is made, the view taken by the Assessing Officer is erroneous, however, in case it is found that the view adopted by the Assessing Officer is a plausible view taken after considering the relevant material on record, the Commissioner would not substitute his opinion with that of the Assessing Officer. In the present case, it cannot be said that the view expressed by the Assessing Officer by referring the valuation of land to DVO and thereby considering the valuation of land on the Valuation Report of the DVO, and making the additions is erroneous. We find that the Assessing Officer has taken a plausible view looking to the facts which were before him and hence, in such circumstances, the Commissioner ought not have to invoke the power under Section 263 of the Act. A similar view has been reiterated by the Coordinate Bench of this Court in case of JMC Projects (India) Ltd. (supra), which is as under:
“10. In the case of CIT v. Jawahar Bhattacharjee, reported in (2012) 341 ITR 434, Full Bench of Gauhati High Court held that not holding such inquiry as is normal and not applying the mind to relevant material in making an assessment would be an erroneous assessment.
11. In the case of ITO vs. DG Housing Projects Ltd., (2012) 343 ITR 329, Division Bench of Delhi High Court held that, a finding that the order is erroneous is a condition or requirement which must be satisfied for exercise of jurisdiction under section 263 of the Act. The matter cannot be remanded for a fresh decision to the the assessing officer to conduct further inquiries without a finding that the order is erroneous.
12. As noted, Division Bench of this Court in case of Smt.Minalben S. Parikh (supra) held and observed that, if income in question has been taxed and legitimate revenue due in respect of that income had been realized, though as a result of order having been made in that respect, the Commissioner cannot exercise powers for revising the order under section 263 of the Act merely on the basis that the order under consideration is erroneous.
13. In view of such legal position, we are afraid, the Commissioner could not have issued the impugned notice seeking to revise the order of assessment on the premise that the assessing officer did not apply the correct parameters and though taxed the same income, by applying wrong methodology. We may recall, in the impugned order the Commissioner expressed prima facie opinion that the entire expenditure of Rs.105.36 crore was liable to be disallowed and added to the total income of the assessee. The assesssing officer, instead of making specific addition, rejected the books of accounts by invoking section 145 (3) of the Act and estimated the G.P. for different years.
14. As noted, when tax additions were made which resulted into orders of assessment being framed levying tax on the same income, the orders of assessment cannot be stated to be prejudicial to the interests of the revenue. To the factual aspect, even the Revenue is unable to raise any contest. The apprehension of the revenue appears to be that if the logic adopted by the assessing officer is not accepted in appeal, the entire additions would be deleted. Under the circumstances, if the correct methodology, as suggested by the Commissioner in the impugned notice, is adopted, the additions would stand the test of law. In other words, the Commissioner desires that the order of assessment should be better written and flaws, if any, be ironed out. In our opinion, powers under section 263 of the Act are not meant for improving an order of assessment. As long as the income is assessed and tax as per the law levied, the order cannot be stated to be prejudicial to the interests of the revenue and, therefore, not revisable.”
8. It is trite that the existence of an alternative remedy, as is articulated time and again by the Court, is not an absolute bar, as declared by the Supreme Court in numerous decisions. It is settled legal precedent that the writ Court has jurisdiction to entertain a petition, even involving disputed questions of fact, notwithstanding the fact that they arise out of any contractual obligation. Hence, since the show-cause notice issued under the provisions of Section 263 of the Act by the respondent is illegal and does not reconcile with the statutory provisions, the writ petition assailing the same is maintainable. The petitioner cannot be relegated to an alternative remedy.
9. Thus, in view of the settled legal precedent, both the impugned show-cause notices are required to be quashed and set aside, and accordingly, the same are hereby quashed and set aside. Thus, the writ petitions succeed.
Author Bio
