2016 (9) TMI 29 - HC - Wealth-tax

Powers of Commissioner to revise orders of subordinate authorities - Held that - As twice at the instance of the assessee, Commissioner, in exercise of powers under sub section (1) of Section 25, had directed the Assessing Officer to carry out fresh valuation of the lands of the petitioner on the basis of the directions given by CWT (Appeals) in case of the assessee himself for the assessment year 1992-93. It was pursuant to such directions that the Assessing Officer had carried out fresh valuation. This order, the Commissioner desired to take in revision under sub section (2) of Section 25. Essentially therefore, his exercise of such powers would encroach on the earlier directions given by the Commissioner while disposing of assessee s revision petitions under sub section (1) of Section 25. Surely sub section (2) of Section 25 does not envisage any authority in the Commissioner to revise his own order passed under sub section (1) of Section 25.

Issues Involved:
1. Justification of ITAT's decision to quash the Commissioner of Wealth Tax's order under Section 25(2) of the Wealth Tax Act, 1957.
2. Whether the Commissioner of Wealth Tax's revision under Section 25(2) constitutes revising his own order under Section 25(1).
3. The power of the Commissioner of Wealth Tax to revise his own directions given under Section 25(1) using Section 25(2).
4. Whether the Commissioner of Wealth Tax's action in revising the AO's order can be considered as revising his own order under Section 25(1).
5. Whether the AO's order was erroneous and prejudicial to the interests of the revenue, thus justifying the Commissioner's revision under Section 25(2).

Detailed Analysis:

1. Justification of ITAT's Decision to Quash the Commissioner of Wealth Tax's Order:
The Revenue challenged the ITAT's decision to allow the assessee's appeal and quash the Commissioner of Wealth Tax's order under Section 25(2) of the Wealth Tax Act, 1957. The ITAT held that the Commissioner had no power to revise his own directions given under Section 25(1) of the Act using Section 25(2). The Tribunal observed that any order passed by the Commissioner under Section 25(2) should not reverse the order passed under Section 25(1).

2. Revising Own Order under Section 25(1) using Section 25(2):
The Tribunal found that the Commissioner of Wealth Tax’s attempt to revise the AO's order under Section 25(2) effectively amounted to revising his own order under Section 25(1). The Tribunal's observations suggested that once the Commissioner exercises his powers under Section 25(1), his jurisdiction to pass any further order under Section 25(2) would virtually come to an end.

3. Power of Commissioner to Revise his Own Directions:
The High Court analyzed Section 25 of the Wealth Tax Act, which provides the Commissioner with the power to revise orders. Section 25(1) allows the Commissioner to revise orders not prejudicial to the assessee, while Section 25(2) permits revision of orders that are erroneous and prejudicial to the interests of the revenue. The High Court noted that the spheres of operation of Sections 25(1) and 25(2) are different. The expression "without prejudice to the provisions contained in sub-section (1)" in Section 25(2) indicates that the powers under both subsections are distinct and can coexist.

4. Commissioner’s Action in Revising AO's Order:
The High Court noted that in this case, the Commissioner had twice directed the AO to recompute the wealth of the assessee based on directions given by CWT (Appeals) for the assessment year 1992-93. The AO complied and adopted a valuation of ?24.57 per sq.mtr. The Commissioner then sought to revise this order under Section 25(2), which the Tribunal found to be an overreach of his powers as it encroached on his own earlier directions under Section 25(1).

5. Erroneous and Prejudicial Order by AO:
The High Court examined whether the AO's order was erroneous and prejudicial to the interests of the revenue. The Commissioner had argued that the valuation of ?24.57 per sq.mtr was incorrect and that the AO should have considered higher rates based on market value and other factors. However, the High Court found that the Commissioner’s attempt to revise the AO's order under Section 25(2) was essentially an attempt to revise his own previous directions under Section 25(1), which is not permissible.

Conclusion:
The High Court dismissed the tax appeals, holding that the Commissioner of Wealth Tax could not use Section 25(2) to revise his own order passed under Section 25(1). The Tribunal's decision to quash the Commissioner's order was justified as the Commissioner had overstepped his jurisdiction by attempting to revise his own directions. The AO's order, based on the Commissioner's previous directions, could not be considered erroneous and prejudicial to the interests of the revenue in a manner that justified further revision under Section 25(2).

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