Commissioner's revisional order holding the relief granted by the assessing officer under section 54 as erroneous, was not valid as assessee's contentions were not considered.
Where an order is sought to be disturbed, the respondent can support the order by relying on any ground which has been decided against him by such order. Therefore, the Commissioner was not justified in the present case.
1. This appeal by the assessee is directed against the order of the Commissioner passed under Section 263 of the Income-tax Act, 1961 ('the Act'), to withdraw the relief granted under Section 54 of the Act on the ground that the benefit of that section is not available to a HUF.It has been brought to our notice that the Karnataka High Court has held by order dated 2-8-1983 in IT Reference No. 234 of 1982 that the provisions of Section 54 do not apply to a HUF. But it is argued on behalf of the assessee that the status of the assessee in this case had been wrongly stated as HUF whereas it should be only 'individual' in which case the assessment granting relief under Section 54 was correct and need not have been revised under Section 263. We find that this point has been taken up before the Commissioner but he declined to go into on the ground that he was concerned with that aspect of the assessment which was prejudicial to the revenue and he need not traverse other parts of the order which may be against the assessee.
2. We are unable to accept this view of the matter because the entire assessment has to be looked into to see whether in substance it is prejudicial to the revenue. If one part of the order is erroneous and prejudicial to revenue and another part is also erroneous but prejudicial to the assessee, it is not possible to accept the claim of the revenue that only that part which is prejudicial to the revenue will be revised which would definitely lead to an unjust assessment.
The basic principle is that wherever an order is sought to be disturbed, the respondent can support the order by relying on any ground which has been decided against him by such an order. Moreover, in the ultimate analysis what is to be decided is whether tax has been properly assessed and if it can be shown by the assessee that the assessed tax is correct even though the process was erroneous, the Commissioner acting under Section 263 is bound to look into that aspect of the matter and decide the issue after being satisfied that even after correcting the mistake pointed out by the assessee, the assessment was prejudicial or not to the interest of the revenue. In the circumstances, we deem it fit to set aside the order of the Commissioner and restore the matter to his file for fresh disposal in accordance with law. The appeal is treated as allowed.