Law: Income Tax Act, 1922

Section: 23(3),26A,26A(5)

Income-tax Act, 1922 -Sections 23(3), 26A(5), 34A - Power of Inspecting Assistant Commissioner to revise Income-tax Officer's order -Registration allowed by Income-tax Officer notwithstanding that conditions laid down in Sec. 26A(5) were not fulfilled -Whether order both erroneous and prejudicial to the interest of revenue -Held yes -Order of registration and consequently order of assessment vacated by Inspecting Assistant Commissioner -Whether valid in law -Held yes - Renewal of registration under section 26A -Requisite conditions to assume jurisdiction under section 34A: (i) that on scrutiny of records Inspecting Assistant Commissioner per se finds some error in order of Income-tax Officer and (ii) error must be prejudicial to interests of revenue -Income-tax Officer granting renewal of registration stating "application is in time and is found to be in order on scrutiny" -Actually application suffering from patent illegalities and not in order as requisite conditions of registration under section 26A(5) not fulfilled -Held, in circumstances, order of Income-tax Officer was per se erroneous and prejudicial to interests of revenue -Inspecting Assistant Commissioner had jurisdiction under section 34A to cancel order under section 26 as well as under section 23(3) passed by Income-tax Officer -- Corresponding Sections: Income-tax Ordinance, 1979 -Sections 66A, 68(2) -- ORDER {The order was passed by M.T. SIDDIQUI, President}.---We propose to dispose of these two appeals by the same order in view of identical nature of objections. 2. The appellant in this case is a firm carrying on the busienss of boring and drilling tubewells. The assessments under Section 23(3) for the two years under consideration were finalised on 25-3-1971 and 19-7-1971. Renewals of registration unde Section 26A for these two years were allowed on the same respective dates. It appears that subseqeuntly the Inspecting Assistant Commissioner acting under Section 34A of the Act vacated the orders of the Income-tax Officer, passed under Section 26A for both the years, as it came to his notice that the orders under Section 26A were erroneously passed by the Income-tax Officer and that the renewals…

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