Revisionary power of commissioners u/s.23(2) of W.T.Act, 1957. - Income Tax - 1198/CBDT

INSTRUCTION NO. 1198/CBDT Dated : August 5, 1978 Section(s) Referred: 263 of Income Tax Act , 24(2) of Gift Tax Act , 25(2) of Wealth Tax Act Statute: Wealth Tax Act, 1957 The Board recently have had occasion to examine the scope of the revisionary power of the commissioners u/s.23(2) of the W.T.Act, 1957. 2. The law as it stands gives a sort of finality to the valuation made by the valuation officer, in view of the provisions of sec.16A(6) of the W.T.Act. The question is : can the department retrieve the loss if, perchance the valuation made by the valuation officer is found to be prejudicial to revenue? It is obvious that the situation can be salvaged only if the Commissioner could exercise his revisionary powers u/s.25(2) of the W.T.Act. The point to be clarified this is whether such revisionary powers can be extended to an assessment order based on the report of the valuation officer furnished by him on a reference made to him by the Wealth-Tax Officer u/s.16 A of the W.T.Act. 3. The matter has been examined in consultation with the Ministry of law. The position may be summarised as under:- i) There is no bar to a Commissioner of Wealth-tax revising the order of assessment of a wealth-tax officer, even though it may be based upon the report of the valuation officer, which is binding upon the wealth-tax officer. Once the wealth-tax office passes an order, the report of the valuation officer is merged in it and becomes a part of the order. ii) If on scrutiny the Commissioner finds that the valuation report is based upon irrelevant principles or contains a palpable mistake, there is nothing in the act to preclude him from reviewing the order. To take an extreme example the valuation officer might have made an arithmetical mistake or assumed that a building built of cement was made of clay. He may have misread a section or overlooked a relevant court decision. Obviously, it cannot be said that in such cases the commissioner cannot exercise his power to revise the order as being prejudicial to revenue. iii. Whether there is an error in any particular case is a matter for the decision of the Commissioner in the light of the facts of the case.