contentions in this second appeal are that order dated 24-3-1986 passed by learned Commissioner of Income-tax, Delhi-II, New Delhi under sec. 263 of Income-tax Act, 1961 in respect of assessment year 1975-76 be struck down as illegal, erroneous and against facts. 2. return of income was filed by appellant on 18th March, 1976 declaring income of Rs. 19,360 from salary and property. ITO vide his order dated 17th December, 1977 completed assessment at Rs. 22,670 under sec. 143(3). copy of assessment order has been filed. 3. Subsequently it came to notice of department that appellant's wife Smt. Piar Kaur was in possession of jewellery which she had declared in her wealth-tax returns filed in respect of assessment years 1975-76 and 1976-77 on 10th of March, 1976 and 19th of August, 1976. Though she claimed jewellery to be her personal property and in her possession ever since her marriage before partition of India in 1947, Department took view that in absence of definite source of income it could be property of appellant. 4. assessment was accordingly sought to be re-opened under sec. 147(a) by issuing notice dated 20th March, 1980 under sec. 148 of Act. learned IAC(Asst.) Range-VI, New Delhi, who had Jurisdiction over case after giving number of hearings, dropped proceedings on 27th of February, 1984 by recording as follows: " I have seen W.T. records of Smt. Piar Kaur for assessment year 1975-76. WTO in that year did not make any protective assessment for jewelleries. I am also satisfied with explanation offered in this behalf. There is no evidence with Department to suggest that these jewelleries were acquired by assessee and his wife held them "benami". Looking to prevailing orders of society, amount involved, I accept assessee's version. Proceedings initiated u/s 147 of Act are dropped. " 5. Later on, CIT, Delhi-II, New Delhi opined that dropping of proceedings by IAC(Asst.) was erroneous and prejudicial to interests of Revenue and proceeded to take action under sec. 263 of Act, and after giving hearing on 24th March, 1986 for first time, cancelled IAC(Asst.) order of dropping of reassessment proceedings vide order passed on 24th March, 1986 itself. In written objections filed assessee contested very proceedings under sec. 263 on various counts. Vide objection No. 3 it was in terms stated that under sec. 263 of Act as it existed prior to its amendment by Taxation Laws (Amendment) Act, 1984 w.e.f. 1-10-1984, no order made under sec. 148/147 could be revised by Commissioner under sec. 263, in view of prohibition contained under sub-section (2) of sec. 263, which stipulated that no order shall be made under sub-section (1) to revise order of re-assessment made under sec. 147 of Act. On merits assessee resisted proceedings under sec. 263 of Act and paragraphs 8 and 9 of reply submitted on 24th March, 1986 before Commissioner, I like to bring in focus as follows:--- " 8. When matter came up before IAC (Asst.) in proceedings u/s 148, I explained to IAC(Asst.) that jewellery was given to my wife by her in-laws and parents at time of marriage. affidavit from my wife's brother Shri Ram Singh as well as from own brother Shri Santokh Singh were filed before IAC(Asst.). Copies of explanation filed before IAC(Asst.) on 7- 1-1984 and 11-2-1984 as also copies of affidavit of Shri Ram Singh and Shri Santokh Singh are enclosed. After considering explanation and affidavits furnished by me and going through items declared by my late wife in her wealth-tax return, learned IAC(Asst.) was satisfied that jewellery did not belong to me and that keeping in view status of two families, customs in societies to which we belong and fact that my marriage took place in 1939, jewellery in possession of my wife was reasonable. In view of this, IAC(Asst.) dropped proceedings u/s 147(a) as he formed opinion that there was no escapement of income in my case. 9. From above facts, you will kindly appreciate that there is no question of escapement of any income. It is matter of common knowledge and is customary in families to which I belong that ladies at time of marriage n d thereafter on certain occasions like birth of son, birthdays etc., get jewellery. jewellery at rates of 1939 would be of very small value. At that time gold was about Rs. 20 to 25 per tola. However, for year in respect of time gold was about Rs. 20 to 25 per tola. However, for year in respect of which wealth-tax return was filed, i.e., assessment year 1975-76, gold rate was as high as Rs. 500 (approx.) per tola and that is why value of jewellery declared in return came to Rs. 98,682. IAC(Asst.) has, after considering facts and applying his mind to case, dropped proceedings on 27-2-1984. " 6. For appellant Shri Joginder Singh, Advocate appeared and argued and I was assisted by Shri R.S. Adlakha for Revenue. 7. Whereas for assessee Commissioner's order was contested on several counts, learned Departmental Representative submitted that in view of amended provision w.e.f. 1-10-1984 Commissioner had necessary powers to vacate order of 27th February, 1984, which according to him, could only be termed as order of re-assessment. 8. There are several aspects which should be noticed in present case primary being of limitation. To understand controversy it is necessary to bring in focus relevant portion of sec. 263 as it existed before its amendment w.e.f. 1-10-1984:--- " 263. Revision of orders prejudicial to revenue.---(1) Commissioner may call for and examine record of any proceeding under this Act, and if he considers that any order passed therein by income-tax Officer is erroneous in so far as it is prejudicial to interests of revenue, he may, after giving assessee opportunity of being heard and after making or causing to be made such enquiry as he deems necessary, pass such order thereon as circumstances of case justify, including order enhancing or modifying assessment or cancelling assessment and directing fresh assessment. (2) No order shall be made under sub-section (1)---- (a) to revise order of re-assessment made under sec. 147, or (b) after expiry of two years from date of order sought to be revised. (3) Notwithstanding anything contained in sub-sec. (2) order in revision under this section may be passed at any time in case of order which has been passed in consequence of, or to give effect to, any finding or direction contained in order of Appellate Tribunal, High Court or Supreme Court. " In amendment though sub-section (1) of section 263 remains unchanged Explanation is attached to it which provides that for purpose of sub-section (1), order passed by Income-tax Officer shall include--- " (a) order of assessment made on basis of directions issued by Inspecting Asstt. Commissioner under sec. 144-A or sec. 144-B; and (b) order made by Inspecting Asstt. Commissioner in exercise of powers or in performance of functions of Income-tax Officer conferred on, or assigned to him, under clause (a) of sub-section (1) of section 125 or under sub-sec. (1) of section 125A. " Sub-section (2) has been amended and may also be brought in focus as below:---- " (2) No order shall be made under sub-section (1) after expiry of two years from end of financial year in which order sought to be revised was passed. " Sub-section (3) also remains unchanged. 9. In view of above provisions and stated facts, first question which arises is that which order is sought to be revised by Commissioner in first place. Commissioner's directions contained in para 3 of his order in such context assume importance and are, therefore, reproduced below:--- " 3. In these circumstances I consider that order of IAC (Asst.) dated 27-2-1984 dropping proceedings under sec. 147 was erroneous and is obviously prejudicial to revenue, hence order is cancelled. ITO is directed to make fresh asst. for this year after making proper inquiries regarding acquisition of gold ornaments. " 10. From above, it is clear that learned Commissioner did not even record positive finding that it was straight case of under-assessment. All he said was that few facts were not taken notice of by IAC (Asst.) before dropping proceedings under sec. 147(a) of Act. But then that in itself could not give jurisdiction under sec. 263 which hinges on two all important factors both of which must co-exist. That order passed must not be only erroneous but also prejudicial to interests of Revenue. In present case even prima facie case is not made out that what IAC (Asst.) accepted was not correct. 11. In any case IAC (Asst.) order of 27th Feb., 1984 cannot be termed s order of reassessment and lifting same could at best revive proceedings initiated u/s. 147(a) if these could be processed. But in present case limitation for completion having expired, that also could not be done under garb of sec. 263. 12. Independent of above and assuming that IAC (Asst.) order of 27th February, 1984 could be termed as re-assessment and therefore, within ambit of review proceedings under sec. 263, CIT could at best pass order himself even after amendment by 31-3-1986, but direction of enquiries for making re-assessment was certainly beyond scope of sec. 263 considering safeguards of limitations of section. 13. Again, order of 27th February, 1984 if it is termed as order in pursuance to proceedings u/s. 147(a) could not be revised in view of complete prohibition contained in clause (a) of sub-section (2) of sec. 263, as it existed before 1-10-1984 because assessee got vested right on 27-2-1984 of immunity of proceedings under sec. 263 of Act. 14. If intention and tenor of CIT's order was to seek revision of order of assessment of 17th December, 1977, it certainly could not even be attempted in March, 1986. 15. I have dealt with various facets above and order brought in appeal is considered bad on various counts, independent of each other because of incurable legal infirmities. 16. In case before me I am of considered view that learned IAC (Asst.) dropped proceedings u/s 147(a) of Act after accepting plausible explanation and his order, therefore, was not erroneous, much less prejudicial to interests of revenue. 17. In result, CIT's order is cancelled and appeal allowed on several counts independent of each other, as detailed above. *** HARNAM SINGH v. INCOME TAX OFFICER