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TMI Blog2004 (2) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer, Special Circle "C" Ward, Kanpur. In the said return the family duly disclosed the value of the interest in the said partnership firms. By an order of assessment dated March 27, 2002, under section 16(3) of the Wealth-tax Act, the assessment was made and in the said assessment, the value of the said family's interest in the said firms was enhanced taking the credit balances in the capital and current accounts of the family with the said firms respectively. Being aggrieved the appeal was preferred which was partly allowed by the Commissioner of Wealth-tax (Appeals) concerned by his order dated November 22, 1982. The petitioner preferred a further appeal before the Tribunal. The petitioner was served with a notice dated March 14/15, 1984, issued by the Commissioner of Income-tax (C-III) under section 25(2) of the said Act alleging that it had come to his notice that the order of assessment dated March 27, 1982, under section 16(3) of the Act for the said assessment year 1977-78 assessing the net wealth at Rs. 19,36,100 was prejudicial to the interests of the Revenue and that on a scrutiny of the assessment records, it was found that the net wealth assessed including therein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a proceeding under section 25(2) of the Act before considering the main contention on the merits. In our consideration the language of the statute appears to be relevant and the provisions contained in section 25 is set out hereunder: 25. "Powers of Commissioner to revise orders of subordinate authorities.- (1) The Commissioner may, either of his own motion or on application made by an assessee in this behalf, call for the record of any proceeding under this Act in which an order has been passed by any authority subordinate to him, and may make such inquiry, or cause such inquiry to be made, and, subject to the provisions of this Act, pass such order thereon, not being an order prejudicial to the assessee, as the Commissioner thinks fit: Provided that the Commissioner shall not revise any order under this sub-section in any case- (a) where an appeal against the order lies to the Appellate Assistant Commissioner or to the Commissioner (Appeals) or to the Appellate Tribunal, the time within which such appeal can be made has not expired or in the case of an appeal to the Commissioner (Appeals) or to the Appellate Tribunal the assessee has not waived his right of appeal; (b) w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hall be excluded." Therefore, the language of sub-section (2) of section 25 shows that the revisional power can be exercised by the Commissioner, if he considers that any order passed by the Wealth-tax Officer "is erroneous in so far as it is prejudicial to the interests of the Revenue". The requirement of the said section is that in case such opinion is formed the assessee will be entitled to an opportunity of being heard and the authority will make necessary enquiry whereafter an order can be passed under the said provisions of law. It appears that section 263 of the Income-tax Act is also in the same language whereunder power of revision has been provided. Requirements for exercise of power of revision under section 263 have been considered by the apex court in the case of Malabar Industrial Co. Ltd. [2000] 243 ITR 83. The relevant portion of the said judgment is as follows: "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 prejudicial to the interests of the Revenue. For example, when an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew expressed earlier that the net wealth of the firm has to be calculated not in accordance with the Act or Rules, but on the principles of commercial accountancy, the belief which the Wealth-tax Officer entertained that the net wealth has escaped assessment was based on no relevant material and was arbitrary, as the shares had been correctly valued and the earlier order determining the valuation of the assessee's interest in the firm was correct. The notice as such has to be quashed." The Division Bench of this court while considering a similar question in the case of CWT v. Surendra Paul reported in [1987] 168 ITR 208 held as follows: "Admittedly, in the instant case, the assessee is not carrying on the business of the firm by himself nor is it the case of the Revenue that the assessee is maintaining the accounts of such business regularly. In our view, the Revenue is not entitled to invoke the special provisions of section 7(2) of the Act read with rules 2A to 2G in the facts of this case where only the net wealth of the firm and the interest of the assessee therein are being determined. Section 4(1)(b) specifically lays down that the value of share in a firm is to be determi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the year 1984 and the notice was dated March 14/15, 1984, fixing March 20, 1984, as the date for showing cause. The assessee obtained an interim order staying the proceeding on March 19, 1984, by moving the present writ petition. Ultimately, the writ petition was dismissed on August 26, 2003, upon hearing the parties. In such circumstances, in fairness the authorities ought to have given a fresh notice fixing another date of hearing as the requirement of section 25(2) includes an opportunity of hearing to the assessee before the final order is passed. When the proceeding itself was heard almost after 20 years, after the writ petition was dismissed, fresh notice ought to have been issued fixing a date of hearing and intimating such date of hearing to the assessee concerned to make it an effective opportunity of hearing as required by the statute. Though a contention was further advanced on behalf of the assessee that the proceeding has been decided by passing an assessment order on October 1, 2003, after service of notice of appeal upon the respondent on September 29, 2003, in view of our above findings, we are not inclined to enter into the above factual question. We find that i ..... 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