1 A.F.R. Court No. 4 Case : INCOME TAX APPEAL No. 176 of 2010 Appellant : Commissioner Of Income Tax, Kanpur Respondent : Shri Jheendu Ram, Kalpi Road Kanpur Counsel for Appellant : Manu Ghildiyal S.C. Counsel for Respondent : Vikram Bhalla Hon'ble Abhinava Upadhya, J. Hon'ble Ashok Kumar, J. (Per: Hon'ble Ashok Kumar, J.) 1. This is Income Tax Appeal filed by Commissioner of Income Tax I, Kanpur under Section 260A of Income Tax Act, 1961 (hereinafter referred as 'The Act'). 2. We have heard Sri Manu Ghildiyal, learned counsel for Department. No one is present on behalf of assessee. 3. present appeal has been filed against order and judgment dated 18.11.2009 passed by Income Tax Appellate Tribunal in ITA No. 522/Lucknow/2009 for assessment year 2006 07 by which ITAT has set aside order under Section 263 of Act passed by CIT 1, Kanpur. 4. While deciding appeal of ITAT has held that order of CIT I, Kanpur was void ab initio, and therefore, deserves to be set aside. 5. brief facts of case are that assessee is engaged in transport business on own account and also on commission basis. present assessment year involved in present appeal is assessment year 2006 07. For assessment year 2006 07 assessment was completed under Section 143(3) of Act on total income of Rs. 2,28,910/ . 2 6. accounts of assessee has been audited and during course of audit, auditor has inserted note which is quoted hereinbelow: In Financial Year 2004 05 Firm has shown its total receipt from party but in current year 2005 06 it has shown its income as commission received Rs.4,18,707.70 on total payment received Rs.1,60,56,923/ . As explained by assessee that Firm earn only commission on truck playing on behalf of other party. 7. In view of aforesaid, auditor's note proceedings under Section 263 of Act has been initiated. It is found that order aforesaid was erroneous in so far as it was prejudicial to interest of revenue. 8. glaring feature of present case are that though notice under Section 263 of Act has been issued on 05.06.2009 but instead of issuance of notice by Commissioner of Income Tax, it has been admittedly issued by Income Tax Officer (Technical), Kanpur. reply has been submitted to notice and thereafter order has been passed under Section 263 of Act by Commissioner of Income Tax I, Kanpur dated 13.07.2009. Commissioner of Income Tax I, Kanpur has held that in present case order passed by assessing officer is erroneous and prejudicial to interest of revenue, therefore, same is liable to be set aside. matter has been restored to assessing authority by CIT with following directions vide order dated 13.07.2009: Considering above mentioned facts, circumstances and settled legal position, I hold that assessment order passed by Income Tax Officer 3(2), Kanpur on 15.09.2008 in present case is erroneous and prejudicial to interests of Revenue. assessment order passed by Income Tax Officer 3(2), Kanpur on 15.09.2008 is set aside. case is restored to Assessing Officer with directions to make fresh 3 assessment in accordance with law after making necessary enquiries on all points mentioned herein above after allowing assessee opportunity of being heard. 9. Aggrieved by order passed under Section 263, appeal has been preferred by assessee before ITAT which has been decided by ITAT vide impugned order dated 18.11.2009. Before ITAT assessee has challenged order passed under Section 263 and has submitted that said order is without jurisdiction, therefore, same be set aside. 10. In reply to submission and pleading of assessee, departmental representative appeared before ITAT and has submitted that admittedly Income Tax Officer (Technical) has initiated proceedings under Section 263 but same was initiated on behalf of Commissioner of Income Tax, therefore, show cause notice issued by Income Tax Officer (Technical) was on behalf of Commissioner of Income Tax and satisfaction recorded in ordersheet dated 05.06.2009 by Income Tax Officer (Technical) is also be read as satisfaction of CIT. 11. Section 263 of Act provides revision of orders prejudicial to revenue. Sub section 1 of Section 263 is necessary to be looked into for purpose of determination of power vested with authority concerned to revise order prejudicial to revenue. For ready reference provision of Section 263(1) of Act is quoted hereinbelow; 263(1) [Principal Commissioner or] Commissioner may call for and examine record of any proceeding under this Act, and if he considers that any order passed therein by [Assessing] 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 inquiry 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 4 12. This provision clearly indicates that power vested to revise order prejudicial to revenue is solely and extensively vested with Principal Commissioner or Commissioner of Income Tax who may call for and examine record of any proceeding under provision of Income Tax Act and while doing so if Principal Commissioner or Commissioner found that order passed by assessing officer is erroneous, in so far as it is prejudicial to interest of revenue he may, after giving assessee opportunity...... made such inquiry....., pass such order thereon as circumstance of case justify.... 13. In instant case, Tribunal has found that it is only satisfaction of Principal Commissioner/Commissioner of Income Tax himself that too after applying his mind and after examining record of any proceeding. It is required to record his satisfaction proceedings under Section 263 can validly be initiated. But in instant case in order of Commissioner of Income Tax, it is noticed that nowhere Commissioner of Income Tax has recorded his satisfaction, rather satisfaction was of Income Tax Officer (Technical) who is not competent to revise order under Section 263 of Act. Admittedly, show cause notice has been issued by ITO(Technical) which also establishes that without examining assessment order passed by assessing officer, show cause notice has been issued. Furthermore, nothing was brought on record to substantiate that order passed by assessing officer is erroneous or prejudicial to interest of revenue. 14. In view of aforesaid and considering facts and circumstances of case, we find that in instant case neither Commissioner of Income Tax has applied his mind nor he has brought on record that assessment order was erroneous or 5 prejudicial to interest of revenue. 15. Admittedly, original order has been passed under Section 143(3) of Act was order passed by assessing authority who is not below in rank of Income Tax Officer (Technical), who has initiated proceedings under Section 263 in instant case. order cannot be revised by equally situated or equally ranked authority or by any authority who is not authorised under law. In instant case authorised authority is none else but Commissioner of Income Tax or Principal Commissioner of Income Tax. 16. In view of aforesaid facts, we have no option but to dismiss appeal filed by department, therefore, order impugned passed by Income Tax Appellate Tribunal is affirmed. 17. appeal is dismissed. Order Date : 10.10.2017 A.Kr.* [Ashok Kumar, J.] [Abhinava Upadhya, J.] CommissionerofIncome-tax,Kanpur v. JheenduRam