Proceedings were initiated under section 263 of the Act based on a proposal given by the assessing officer and not at the behest of the PCIT. High Court observed that before exercise of power under section 263 of the Act, the PCIT had to apply his mind to the issue, record reasons as to how the assessment order is erroneous and prejudicial to the interests of revenue and then issue a show-cause notice to the assessee. High Court observed that there was nothing on record to show that such an exercise was done by the PCIT. Consequently, High Court quashed the order passed under section 263 of the Act. High Court further observed that the revenue in its appeal before the High Court did not challenge the Tribunal’s decision holding that PCIT had not validly exercised the powers under section 263 of the Act but the appeal was filed merely on the decision given by the Tribunal on the merits of the case which according to the High Court was not permissible.(AY 2014-15)