Law: Income Tax Ordinance, 1979

Section: 66,66A,59A(1),66A

(a) Income-tax Ordinance (XXXI of 1979)---S. 66-A-- Interpretation, application and scope of S.66-A-- Powers of Inspecting Assistant Commissioner-- Extent--Expression 'prejudicial to the interest of the revenue'-- Interpretation-- Words 'consider' and 'satisfaction' --Connotation-- Discretion, exercise of. Under section 66-A of income-tax Ordinance, 1979, the Inspecting Assistant Commissioner has been empowered to call for and examine the record of any proceedings under the Ordinance and if he is of the opinion that the Income-tax Officer has passed erroneous order prejudicially affecting the interest of revenue he may after show-cause notice to the assessee order for such inquiry as he may deem fit or may pass such order as may be necessary. He is also empowered to cancel, enhance or modify the assessment or direct for a fresh assessment. These are vast powers conferred on the Inspecting Assistant Commissioner for interfering with the assessment framed by the Income-tax Officer. The limitations placed under law are that the order should have been passed by the Income-tax Officer and ought to be 'erroneous adversely affecting the interest of revenue. All erroneous orders of the Income-tax Officer cannot be made subject­ matter of section 66-A unless the error has the effect of causing loss to the revenue. In a case where Appellate Assistant Commissioner of Income-tax has passed an order disposing of an appeal against the assessment order of Income-tax Officer, the Inspecting Assistant Commissioner is not competent to pass order under section 66-A because the original assessment order is merged in the appellate order whether it -confirms order or sets it aside. But if the order of Income-tax officer is under [5] which is still pending the power under section -A can be inverted because till such time the appeal is not decided the order of Income Tax Officer must be regarded as substantive and effective in section 66-A, the key words are 'prejudicial to the interest of the revenue'. The words 'prejudicial to the interest of the revenue' have not been defined, but it must mean that the order or assessment challen whereof are such as are not in accordance with law,…

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