REVISION Scope of Enquiry By Assessing Officer VisaVis Exercise of Revisional Jurisdiction by Commissioner

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The Tax Publishers REVISION Scope of Enquiry By Assessing Officer Vis-a-Vis Exercise of Revisional Jurisdiction by Commissioner Dr. Nisha Bhandari Revisional Jurisdiction can be exercised by the Principal Commissioner or Commissioner when the order of the assessing officer is found to be erroneous and prejudicial to the interest of revenue. The issue as to whether revisionary power can be exercised, where the Commissioner is not sure about the error in the assessment order has been subject-matter of litigation. The learned author discusses the said issue specifically where the enquiry made by the assessing officer is not adequate or missing. 1. Requirement for assuming revisional jurisdiction under Section 263 The Principal Commissioner or Commissioner can exercise power of revision under Section 263 if the following factors are present : (i) there are any proceedings under the Act, (ii) the assessing officer has passed an order in such proceedings, and (iii) the Principal Commissioner or Commissioner is of the opinion that such order is erroneous and prejudicial to the interest of the revenue. In Surender Kumar Madan, Prop. Diamond Service Station v. ITO (2004) 179 Taxation 19 (Jab-Trib), it was held that the Commissioner would assume jurisdiction under Section 263 only when both the conditions, namely, the order passed by the assessing officer was erroneous and the same was prejudicial to the interest of the revenue were fulfilled and if the order was not prejudicial, the powers under Section 263 could not be invoked. In Cheran Engineering Corporation Ltd. v. CIT (1999) 238 ITR 892 (Mad), it was held that the Commissioner was of the opinion that the order of the Income Tax Officer was erroneous and prejudicial to the interest of the revenue and if once he comes to such a conclusion on the basis of material on records, he could properly exercise the revisional jurisdiction conferred upon him under Section 263 and, therefore, it cannot be said that the Commissioner had lacked the inherent jurisdiction to revise the order of assessment. It is not the case of the assessee that there were no materials or that the materials available were irrelevant, before the Commissioner assumed the jurisdiction under Section 263 to revise the order of assessment. As the power of Principal Commissioner or Commissioner under Section 263 is quasi-judicial in character, therefore, he has not to record his subjective satisfaction but to come to a conclusion in an objective manner. The Commissioner has also to come to a firm conclusion that the order passed by the assessing officer was erroneous and prejudicial to the interest of revenue. The Commissioner cannot sit in judgment over the discretion exercised by the assessing officer. He can legally interfere with the assessment order only if he finds that the order is both erroneous and prejudicial to the interest of the revenue. 2. Order when can be said to be erroneous An order cannot be treated as erroneous, unless it is not in accordance with law. If an assessing officer, acting in accordance with the law makes a certain assessment, the same cannot be treated as erroneous by the Commissioner simply because according to him, the order should have been written more elaboratedly. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers

REVISION

Scope of Enquiry By Assessing Officer Vis-a-Vis Exercise of Revisional Jurisdiction by Commissioner

Dr. Nisha Bhandari

Revisional Jurisdiction can be exercised by the Principal Commissioner or Commissioner when the order of the assessing officer is found to be erroneous and prejudicial to the interest of revenue. The issue as to whether revisionary power can be exercised, where the Commissioner is not sure about the error in the assessment order has been subject-matter of litigation. The learned author discusses the said issue specifically where the enquiry made by the assessing officer is not adequate or missing.

1. Requirement for assuming revisional jurisdiction under Section 263

The Principal Commissioner or Commissioner can exercise power of revision under Section 263 if the following factors are present : (i) there are any proceedings under the Act, (ii) the assessing officer has passed an order in such proceedings, and (iii) the Principal Commissioner or Commissioner is of the opinion that such order is erroneous and prejudicial to the interest of the revenue.

In Surender Kumar Madan, Prop. Diamond Service Station v. ITO (2004) 179 Taxation 19 (Jab-Trib), it was held that the Commissioner would assume jurisdiction under Section 263 only when both the conditions, namely, the order passed by the assessing officer was erroneous and the same was prejudicial to the interest of the revenue were fulfilled and if the order was not prejudicial, the powers under Section 263 could not be invoked.

In Cheran Engineering Corporation Ltd. v. CIT (1999) 238 ITR 892 (Mad), it was held that the Commissioner was of the opinion that the order of the Income Tax Officer was erroneous and prejudicial to the interest of the revenue and if once he comes to such a conclusion on the basis of material on records, he could properly exercise the revisional jurisdiction conferred upon him under Section 263 and, therefore, it cannot be said that the Commissioner had lacked the inherent jurisdiction to revise the order of assessment. It is not the case of the assessee that there were no materials or that the materials available were irrelevant, before the Commissioner assumed the jurisdiction under Section 263 to revise the order of assessment.

As the power of Principal Commissioner or Commissioner under Section 263 is quasi-judicial in character, therefore, he has not to record his subjective satisfaction but to come to a conclusion in an objective manner. The Commissioner has also to come to a firm conclusion that the order passed by the assessing officer was erroneous and prejudicial to the interest of revenue. The Commissioner cannot sit in judgment over the discretion exercised by the assessing officer. He can legally interfere with the assessment order only if he finds that the order is both erroneous and prejudicial to the interest of the revenue.

2. Order when can be said to be erroneous

An order cannot be treated as erroneous, unless it is not in accordance with law. If an assessing officer, acting in accordance with the law makes a certain assessment, the same cannot be treated as erroneous by the Commissioner simply because according to him, the order should have been written more elaboratedly.