Section 16 1 of the Act reads as follows The Commissioner may call for and examine the record of any proceeding under this Act, and if he companysiders that any order passed therein by the Income tax Officer is erroneous in so far as it is prejudicial to the interests of the Revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment.
The question raised by the Revenue reads as follows Whether, on the facts and in the circumstances of the case, the Tribunal was right in cancelling the order of the Commissioner passed under Section 16 1 of the Surtax Act, 1964, as without jurisdiction ?.
This appeal is preferred against the judgment of the Bombay High Court dismissing an application filed by the Revenue under Sub section 2 of Section 18 of the Companies Profits Surtax Act, 1964.
The Revenue says that this section companyresponds to Section 263 of the Income tax Act, 1961, before it was amended by the Finance Act, 1988, and the Finance Act, 1989.
The assessment year companycerned is 1972 73, the previous year being the calendar year 1971.
At that stage, the Commissioner invoked his power under Section 16 1 of the Act and revised the order of the Income tax Officer.
The Income tax Officer added the amount representing bonus shares to the, capital base of the companypany and made an assessment under the Act.
5,53,041 was utilised out of the general reserve for issuing bonus shares.
Against this order, the assessee filed an appeal before the Income tax Appellate Tribunal.
Assistant Commissioner, the Commissioner had numberjurisdiction to revise that order.
The Revenue sought to question the said view of the Tribunal by obtaining a reference.
An appeal was preferred by the assessee against the assessment order on some other points.
He deleted the said amount representing the bonus shares from out of the capital.
The case of the Revenue is this on the first day of the previous year, the assessee had a certain amount of general reserve.
The appeal was disposed of.
During the said previous year, an amount of Rs.
