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TMI Blog2000 (2) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... the following two questions, referred to it at the instance of the appellant, in the affirmative, that is against the appellant and in favour of the Revenue : "(1) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that there was evidence before the Commissioner of Income-tax that the assessment order was erroneous and prejudicial to the interests of the Revenue ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that Rs. 3,66,649 was a taxable receipt for the assessment year 1983-84 ?" The facts giving rise to these questions may be noticed here. The case relates to the assessment year 1983-84 for which the accounting period of the appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der the head "Income from other sources". After the appellant filed its reply the Commissioner, by order dated February 8/9, 1988, concluded that the said amount was unconnected with any agricultural operation activity and was liable to be taxed under the head "Income from other sources". Dissatisfied with the order of the Commissioner, the appellant filed an appeal before the Income-tax Appellate Tribunal, which was dismissed on August 5, 1988. On the application of the appellant under section 256(1) of the Act, the aforementioned questions were referred to the High Court of Kerala at Ernakulam. Mr. Roy Abraham, learned counsel for the appellant, urged the very same two contentions which were argued before the High Court, namely, (i) that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment. Explanation---. . ." A bare reading of this provision makes it clear that the prerequisite to 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evenue." The High Court held (page 138) : "In this context, it must be regarded as involving a conception of acts or orders which are subversive of the administration of revenue. There must be some grievous error in the order passed by the Income-tax Officer, which might set a bad trend or pattern for similar assessments, which on a broad reckoning, the Commissioner might think to be prejudicial to the interests of Revenue administration." In our view, this interpretation is too narrow to merit acceptance. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e board of the appellant-company was not placed before the Assessing Officer. Thus, there was no material to support the claim of the appellant that the said amount represented compensation for loss of agricultural income. He accepted the entry in the statement of the account filed by the appellant in the absence of any supporting material and without making any inquiry. On these facts the conclusion that the order of the Income-tax Officer was erroneous is irresistible. We are, therefore, of the opinion that the High Court has rightly held that the exercise of the jurisdiction by the Commissioner under section 263(1) was justified. The second contention has to be rejected in view of the finding of fact recorded by the High Court. It was n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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