a) The CIT passed revisionary order under Section 263 against assessee (Amitabh Bachchan) on ground that requisite enquiries were not made by the Assessing Officer (AO) prior to finalization of the assessment.
b) Consequently, a show cause notice was served on the assessee detailing issues on which the assessment order was proposed to be revised and, thereafter, revisional order was passed under Section 263.
c) Assessee challenged the order of the CIT on ground that additions were made on basis of issues which were not mentioned in show cause notice.
d) The tribunal and the High Court held in favour of assessee. Aggrieved by the order of the High Court, revenue filed the instant appeal before the Supreme Court.
The Supreme Court held in favour of revenue as under-
1) CIT could exercise his revisionary power under section 263 if he found that order passed by the AO was erroneous and prejudicial to the interest of the Revenue. Once such satisfaction is reached, jurisdiction to exercise the power would be available subject to observance of the principles of natural justice which is implicit in the requirement of the said Section to give the assessee an opportunity of being heard.
2) Hence, what is contemplated under Section 263 is that an opportunity of hearing be afforded to the assessee. It is nowhere mentioned that a specific show cause notice be served on the assessee. Hence, revisionary order of the CIT couldn’t be set aside on ground that he had made addition on basis of issues which were not mentioned in show cause notice. 69 taxmann.com 170 (SC)