The main legal point established in the judgment is the exclusive jurisdiction of the Commissioner under Section 263(1) of the Income-tax Act to revise the order of the Income-tax Officer if he considers it to be erroneous and prejudicial to the interests of the Revenue.

J.V.Gupta, J.

1. These two references Nos. 66 and 67 of 1975, arising out of an order of the Income-tax Appellate Tribunal, Chandigarh Bench (hereinafter called " the Tribunal"), dated September 3, 1974, have been made under Section 256(1) of the I.T. Act, 1961, at the instance of both the parties, that is, the assessee as well as the Revenue. The Tribunal has referred the following questions of law for the opinion of this court, vide its order dated June 17, 1975 :

"(i) Whether, on the facts and circumstances of the case, the Appellate Tribunal was justified in law in setting aside the order of the Additional Commissioner instead of remitting the case to him for a fresh decision on the matter by him ?

(ii) Whether, on the facts and circumstances of the case, the Tribunal was right in law in holding that the action of the Income-tax Officer in recording the impugned certificate of registration could not be said to be erroneous on account of distribution of loss by the assessee-firm in a ratio different from the one indicated in the instrument of partnership dated October 25, 1964 ?

(iii) Whether, on the facts and circumstances of the case, the Tribunal was right in law in holding that in the instant case, there could be no exercise of jurisdiction under Section 263 as there was no order by the Income-tax Officer within the meaning of the section ?

(iv) Whether, on the facts and circumstances of the case, the Tribunal was not competent to take into consideration the fact of increase in the number of adult partners from 10 to 11, even though the Additional Commissioner had not in fact relied on the said change in holding the Income-tax Officers order to be erroneous ?"

2. Subsequently, this court, vide order dated July 19, 1980, in Income-tax Cases Nos. 43 and 44 of 1976 [CIT v. Jagadhri Electric Supply & Industrial Co. (see p. 504 infra)], directed the deletion of the above question No. (i) as framed and further directed the Tribunal to submit a supplementary statement of the case. Consequently, the Tribunal, vide its order dated September 19, 1980, has referred the following supplementary questions of law for the opinion of this court :

"1. Whether, on the facts and in the circumstances of the case, considering that the assessee had submitted his detailed written objections and had also been given personal hearing through its partner and the express provisions of Section 263(1) of the Income-tax Act, the Appellate Tribunal was right in law in holding that the principles of natural justice had been violated by the Additional Commissioner of Income-tax in not granting an adjournment of the hearing ?

2. If the answer to question No. 1 is in the affirmative, whether on the facts and in the circumstances of the case, the Appellate Tribunal was justified in law in not remanding the case to the Commissioner for deciding the matter afresh after giving the assessee sufficient opportunity of being heard and/or with such other directions as it thought fit to give ?"

3. The brief facts, giving rise to these references, are these. The assessee-firm was constituted as per a partnership instrument dated October 25, 1964. At that time, there were 10 adult partners and four minors admitted to the benefits of the partnership. Out of the said four minors, one, namely, Ghansham Gupta, attained majority on April 25, 1965, that is, during the relevant previous year and he did not, by October 25, 1965, give any public notice of termination of his connection with the partnership as contemplated under Section 30(5) of the Indian Partnership Act, 1932 . Clause (6) of the partnership deed, inter alia, provided for the ten adult partners respective shares in the firms profits and for the four minors shares in the firms profits. The said clause further provided that, in the event of loss, the same was to be apportioned among the ten adult partners in the light of their respective shares.

4. For the assessment year 1966-67, the assessee-firm filed