O. Chinnappa Reddy, J.
1. The Commissioner of Income-tax noticed that the assessment of the assessee for the year 1968-69 'was erroneous and prejudicial to the interests of the revenue inasmuch as he did not disallow the interest attributable to that part of the capital borrowed by the firm, which was not utilised for the purposes of the firm's business and advanced indirectly to two partners, Sarvashri Jugal Kishore and Roshan Lal, as investment in the properties'. The Commissioner of Income-tax issued a notice to the two partners. A detailed written statement raising objections was filed before the Commissioner. Without dealing with the objections raised before him, the Commissioner held that the order of the Income-tax Officer was erroneous and prejudicial to the interests of the revenue and directed the Income-tax Officer to reframe the assessment after giving the assessee necessary opportunity to adduce evidence to prove the points raised by the assessee. The assessee preferred an appeal to the Income-tax Appellate Tribunal. The Tribunal took the view that the Commissioner had failed to indicate the material or the nature of the evidence before him on the basis of which he came to the conclusion that the order of the Income-tax Officer was erroneous and prejudicial to the interests of the revenues. The Tribunal also observed that the Commissioner had not given any reasons to justify his satisfaction that the order passed by the Income-tax Officer was prejudicial to the interests of the revenue. At the instance of the revenue, the following question has been referred to us for our opinion :
'Whether, on the facts and in the circumstances of the case, the Tribunal was right in setting aside the order passed by the Commissioner of Income-tax under Section 263 of the Income-tax Act, 1961.'
2. A perusal of the order of the Commissioner of Income-tax clearly shows that the criticism of the Tribunal is well-founded. There is no indication in the order of the Commissioner as to the basis on which he came to the prima facie conclusion that the capital borrowed by the firm was utilised for purposes other than that of the firm's business. When the assessee filed a detailed written statement before him, the Commissioner did not deal with any of the points raised in the statement. He thought that the best course in the circumstances was to remand the matter to the Income-tax Officer for consideration of the points raised in the assessee's written statement. That certainly was not the proper course to be adopted by him. It was necessary for the Commissioner to state in what manner he considered that the order of the Income-tax Officer was erroneous and prejudicial to the interests of the revenue and what the basis was for such a conclusion. After indicating his reasons for such a conclusion, it would certainly have been open to him to remand the matter to the Income-tax Officer for such other investigation or enquiry as might be necessary. But that was not the course which the Commissioner pursued. The Tribunal was, therefore, justified in setting aside the order of the Income-tax Commissioner. The learned counsl for the revenue urged that, while setting aside the order of the Commissioner, the Tribunal had purported to restore the order passed by the Income-tax Officer and this meant that the Commissioner was precluded from taking up the matter again. We do not want to express any opinion on this question, since our jurisdiction is confined only to answering the question referred to us. The question referred to us is answered in the affirmative. There will be no order as to costs.