1999 PLP (Trib (PTD)

6. Having considered the submissions made at the bar we tend to agree with the learned counsel for the 'assessee. The parameters of revisional jurisdiction under the late Act of 1922 came up for our consideration for the first time in 1969. By way of an order subsequently reported 1969 PTD (Trib.) 144 we held that an order to be revised should both be erroneous as well as prejudicial to the interest of the Revenue. The same view favoured by their Lordships of the Bombay High Court in the famous case re: CIT v. Gabriel India Limited (1994) PTD 659 = 203 ITR

108. In that case their Lordships held the view that the Commissioner could not revise an order merely because he disagreed with the conclusion arrived at by the assessing officer. Further that the power of sue motu revision was in the nature of supervisory jurisdiction and could be exercised only if the circumstances specified therein existed; that two situations must exist to enable the Commissioner to exercise the power of revision in this section viz (i) the order should be erroneous; and (ii) by virtue of the order being erroneous prejudice must have been caused to the interest of the revenue. In the view of their Lordships an order could not be termed as erroneous unless it was not in accordance with law.

7. A glance of the aforesaid two conditions make it clear that the revising authority presupposed a fact. It was that if the assessing officer had probed into the capital investment declared the same would not have been accepted or there would have been a kind of addition of deemed income under section 13 of the Ordinance. The order of the assessing officer in question could be erroneous inasmuch as, in the view of the revising authority, he failed in his duty to probe certain investment. However, it would not be described as prejudicial to the interest of the revenue at the stage when the revising authority took upon itself to exercise the revisional jurisdiction. Because at that stage it was only an assumption that if the assessing officer bad probed the investment during this period an assessment at a higher income in all likelihood would have resulted. The alleged prejudice having never been crystallised at the time of framing of assessment or at the time when the revisional jurisdiction was initiated both conditions required under section 66-A did not co-exist. As explained above it is declared view of this Tribunal which again finds support from the said reported judgment of the Bombay High Court that an assessment order 0 order to subject-matter of revisional jurisdiction must be erroneous and such error must have resulted into a prejudice to the revenue.

8. As explained above, the assessment order in question, was sought to be revised only. for the reason that the assessing officer failed in his duty to probe the investment declared by the assessee. This failure on the part of the assessing officer it best was an error. However, to assume that if he had in fact probed the investment an assessment at a higher income would have been the result is supporting one thing after the other. Evidently the condition of prejudice was not available as it was only the view of the revising authority that had the assessing officer acted in a certain manner then more revenue could have come in. This way of reasoning is improper. When the law requires a thing to be done subject to certain conditions then the exercise of jurisdiction in absence of the existence of such condition is totally unjustified. In the aforesaid reported judgment of the Tribunal it was also found that fulfilment of only one condition would not justify exercise of revisional jurisdiction. In that case a Division Bench of this Tribunal was considering the use of similar words of section 34-A of the late Income Tax Act of 1922 as those mentioned in section 66-A of the Income Tax Ordinance. In that case the IAC acting under section 34-A of the Income Tax Act reopened the case of the assessee for the year 1959-60 as in his opinion the order of the assessing officer granting renewal of registration for the charge year was erroneous being prejudicial to the interest of the revenue. On proper appraisal of the facts before it the following three principles were stated by K. Salah-ud-din, learned Accountant Member:

(i) The wording of the relevant section leaves us is no manner of doubt that it is only that order which can be subject of review by the Inspecting Assistant Commissioner which is not only erroneous but is also prejudicial to the interest of revenue. An order may be erroneous but not prejudicial to the interest of the revenue and in that case it would not be open to the Inspecting Assistant Commissioner to review that order under section 34-A of the Act: (ii) the words "prejudicial" to the interest of revenue connotes and signify an order whereby the revenue suffers a loss and the assessee pays tax less than what is really due from him. In the present case had the appellant not been granted registration the incidence of tax would have been higher and accordingly this condition is fulfilled; and (iii) the condition concerning "erroneous" nature of the Income-tax Officer's order as envisaged by section 34-A was not satisfied and the Inspecting Assistant Commissioner had, therefore, no jurisdiction for reviewing the Income-tax Officer's order. On this ground alone the Inspecting Assistant Commissioner's order cannot be sustained and must be cancelled.

9. The exercise of revisional jurisdiction in the case before us when seen in the perspective of the aforesaid view expressed by this Tribunal as early as the year 1969 which also finds support from the view adopted by their lordships of the Bombay High Court leads us to a conclusion that, the impugned order is not sustainable at law. The exercise of revisional jurisdiction, at least most part of it was based upon surmises and an opinion that had the assessing officer probed the investment it could have resulted in more revenue. The two conditions of erroneousness and prejudice as contemplated under section 66-A did not co-exist either at the time of framing of assessment or when the revisional jurisdiction was initiated. Therefore, the impugned order directing cancellation of the assessment order is set -at naught. Resultantly the original assessment order shall continue to hold field. (Sd.) (NASIM SIKANDAR), JUDICIAL MEMBER.

10. INAM ELLAHI SHEIKH (ACCOUNTANT MEMBER).

I have carefully perused the order proposed by my learned brother the Judicial Member as recorded above. The IAC has cancelled the assessment on the two grounds mentioned in paragraph 3 above of the proposed order. It appears that IAC was mainly concerned with the acceptance of the revised capital without the source being probed. Perhaps the IAC has the provision of section 13 in his mind. However, the IAC has not made his own enquiry to come to the conclusion that the assessee could not explain the source in such capital. Thus, it could be said that the action of the cancellation of the assessment was based upon presumption. Under the provision of section 66-A of the Ordinance, the IAC has been empowered to make an enquiry before passing an order or he may cause an enquiry to be made. If the IAC had any doubt about the source of such capital, he should have asked the assessee to establish the source before he cancelled the assessment. With these observation I record my agreement with the findings of my learned brother, Judicial Member and his conclusion that the order of cancellation be set at naught. (Sd.) INAM ELLAHI SHEIKH, ACCOUNTANT MEMBER. C.M.A./8/(Trib.) Order accordingly,