| Citation(s) |
|---|
| 2001 SLG 167 2001 SLD 167 2001 PTD 1106 (2000) 243 ITR 83 (2001) 83 TAX 193 |
Supreme Court of India
C.A. No. 3646 of 1993, decision dated: 10th February 2000. (Appeal by special leave from the judgment and order, dated October 22, 1991 of the Kerala High Court in C.M.P. No. 4215 in I.T.R. No. 15 of 1990)
D.P. WADHWA, JUSTICE SYED SHAH MOHAMMED QUADRI, JUSTICE
H.N. Salve, Senior Advocate (Sudhir Gopi, Roy Abraham, M.M. Kashap and Dilip Pillai, Advocates with him) for Appellant. Anoop G. Choudhry, Senior Advocate (A.V. Rangam, B.A. Ranganathan and Shail Kumar Dwivedi, Advocates with him) for
Respondent.
C.A. No. 3646 of 1993, decision dated: 10th February 2000. (Appeal by special leave from the judgment and order, dated October 22, 1991 of the Kerala High Court in C.M.P. No. 4215 in I.T.R. No. 15 of 1990)
D.P. WADHWA, JUSTICE SYED SHAH MOHAMMED QUADRI, JUSTICE
H.N. Salve, Senior Advocate (Sudhir Gopi, Roy Abraham, M.M. Kashap and Dilip Pillai, Advocates with him) for Appellant. Anoop G. Choudhry, Senior Advocate (A.V. Rangam, B.A. Ranganathan and Shail Kumar Dwivedi, Advocates with him) for
Respondent.
MALABAR INDUSTRIAL CO. LTD.
VS
. COMMISSIONER OF INCOME TAX
Law: Income Tax Act, 1961
Section: 263,56
(a) Income-tax----Revision---Condition precedent---Order which is erroneous and prejudicial to Revenue---Meaning of "prejudicial to Revenue" ---Phrase "prejudicial to Revenue" must be read in conjunction with an erroneous order---Indian Income Tax Act, 1961, S.263. A bare reading of section 263 of the income Tax Act, 1961, makes it clear that the prerequisite for the exercise of jurisdiction by the Commissioner suo motu under it, is that the order of the Income-tax Officer is erroneous in so far as it is prejudicial to the interests of the Revenue. The Commissioner has to be satisfied of twin conditions, namely, (i) the order of the Assessing Officer sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the Revenue. If one of them is absent---if the order of the Income-tax Officer is erroneous but is not prejudicial to the Revenue or if it is not erroneous but is prejudicial to the Revenue---Recourse cannot be had to section 263(1) of the Act. The provision cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer, it is only when an order is erroneous that the section will be attracted. An incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being erroneous. In the same category fall orders passed without applying the principles of natural justice or without application of mind. The phrase "prejudicial to the interests of the Revenue" is not an expression of art and is not defined in the Act. Understood in its ordinary meaning it is of wide import and is not confined to loss of tax. The scheme of the Act is to levy and collect tax in accordance with the provisions of the Act and this task is entrusted to the Revenue. If due to an erroneous order of the Income-tax Officer, the Revenue is losing tax lawfully payable by a person, it will certainly be prejudicial, to the interests of the Revenue. The phrase "prejudicial to the interests of the Revenue" has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of revenue as a consequence of an order of the Assessing Officer, cannot be treated as…
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