Judgment:
assessing officer allowing change of previous year without enquiry and also taxwise prejudicial to revenue--Revisional jurisdiction invocable.
There was no material on record either in the form of notices and/or letters issued by the Income Tax Officer seeking clarifications from the assessee regarding the change or in the form of entries in the order sheet indicating that the pros and cons of the change of the accounting period were weighed and a conscious decision, after due application of mind, was taken. Therefore, the Commissioner's finding that no enquiry had been conducted by the Income Tax Officer before passing the order under section 3(4) is correct. The income by way of lottery earned in September, 1984 was taxable under the Act, and would have been brought to tax, in the assessee's case, for the previous year ended on 31-3-1985 relevant for the assessment year 1985-86. By reason of the change granted by the Income Tax Officer, the assessment year 1985-86 was skipped. The lottery income was then to be considered for taxation only in the previous year ending on 30-6-1985, relevant to the assessment year 1986-87. The shifting or postponement of the year of taxation by means of the change of accounting period resulted in loss of revenue since the rates of income-tax were lowered by the Finance Act, 1986 for the assessment year 1986-87. Once the Commissioner was able to establish loss of revenue, the fact that the assessee or the Income Tax Officer did or did not intend it, was hardly relevant.
Not to current assessment years as change in previous year is not now permitted.
Power of assessing officer exercisable only after making of proper enquiry.
There was no material on record either in the form of notices and/or letters issued by the Income Tax Officer seeking clarifications from the assessee regarding the change or in the form of entries in the order sheet indicating that the pros and cons of the change of the accounting period were weighed and a conscious decision, after due application of mind, was taken. Therefore, the Commissioner of Income Taxes finding that no enquiry had been conducted by the Income Tax Officer before passing the order under section 3(4) is to be upheld.Since the Commissioner of Income Tax had taken upon himself the task of examining the veracity of the reasons and had also found them unsupported and unconvincing, it followed that the grant of the change of accounting period was a fortiori, erroneous and, hence, prejudicial to the interests of revenue. The income by way of lottery earned in September, 1984 was taxable under the Act, and would have been brought to tax, in the assessee's case, for the previous year ended on 31-3-1985 relevant for the assessment year 1985-86. By reason of the change granted by the Income Tax Officer, the assessment year 1985-86 was skipped. The lottery income was then to be considered for taxation only in the previous year ending on 30-6-1985, relevant to the assessment year 1986-87. The shifting or postponement of the year of taxation by means of the change of accounting period resulted in loss of revenue since the rates of income-tax were lowered by the Finance Act, 1986 for the assessment year 1986-87. Therefore, the Commissioner of Income Tax has rightly invoked his revisional jurisdiction under section 263.
: Not to current assessment years as the present system of uniform previous year of 12 months has been introduced with effect from 1-4-1989 and the accounting period necessarily is to be the financial year.
1. The appeal is directed against the order under Section 263 of the Income-tax Act, passed by the Commissioner of Income-tax on 3-2-1989 by which he cancelled the order passed by the Income-tax Officer on 28-11-1986 under Section 3(4) of the Act, acceding to the request of the assessee to a change of his accounting period from 31st of March to 30th of June.
2. The facts giving rise to the appeal are these. The assessee was being assessed to income-tax from the assessment year 1983-84, for which the previous year was 31-3-1983. The income was determined at Rs. 26,000 for that year by order passed under Section 143(1) of the Act, on 12-3-1985. For the assessment year 1984-85, the return was filed on 27-3-1985 declaring income from business in fish at Rs. 15,228 and the assessment was finalised under Section 143(1) on 28-3-1985. On the following day, i.e., 29-3-1985, the assessee filed an application to have his previous year changed from 31st of March to 30th June. The application was supported by certain reasons ; the application itself ran as under : With due respect, I beg to request you to kindly allow me to change my previous year (accounting year ending on 31-3-1985 to 30-6-1985 as it is convenient on my part for the following reasons :-- (a) For convenience in transaction with banks and other financial sources.
(b) For convenience in transactions with other parties particularly with those whose accounting year (previous year ending in June & July).
(c) For procurement of orders and despatch the same with other business world. So, I request you to kindly pass necessary orders allowing me to change my previous year (accounting year) from 31-3-1985 to 30-6-1985 and oblige.
The effect of the request was that, if accepted, it would mean that the previous year commencing on 1-4-1984 would close, instead of on 31-3-1985, on 30-6-1985 i.e., after a period of 15 months. That would result in the assessment year 1985-86 being skipped, and the assessment year after 1984-85 would be the assessment year 1986-87.
3. The Income-tax Officer passed orders on the application on 28-11-1986. There is some discussion in the impugned order of the Commissioner of Income-tax as to what transpired during the interregnum but we will advert to those events later. For the present, suffice to say that the change was accepted by the ITO subject to certain 'comments'. The order itself is as under :-- The first previous year will comprise of 15 months from the month of April 1984 to Month of June 1985. In this case you will have no previous year for the assessment year 1985-86. Your previous year will be from April 1984 to June 1985. Corresponding to the assessment year 1986-87. You are hereby requested to file the return immediately with payment under Section 140A. This return should be submitted by December 1986.
Declaration regarding particulars of Wealth should be submitted immediately, as discussed.
4. On 24-11-1988, the Commissioner of Income-tax issued notice under Section 263 and invited the assessee's objections to his proposal to revise the order passed by the Income-tax Officer on 28-11-1986 accepting the assessee's request for a change of his accounting period on the ground that the order so passed was erroneous and prejudicial to the interests of revenue. The assessee filed his objections vide letter dated 30-1-1989. After hearing the assessee thereafter, the Commissioner of Income-tax passed the impugned order on 3-2-1989 cancelling the order passed by the Income-tax Officer granting the change of previous year.
5. The main grounds on which the CIT considered the order granting the change in the accounting period erroneous and prejudicial to the interests of revenue may be summarised as below : (i) there has been no enquiry by the Income-tax Officer before accepting the assessee's request and the order is therefore erroneous in law; (ii) there was, as a result of the change of the accounting period, no assessment to income tax for the assessment year 1985-86; (iii) t here was post ponement of the tax due under Section 140A of the Act, by about 18 months in respect of the assessment year 1986-87 as the return for that year was filed only in December 1986; (iv) there would be no wealth-tax assessment for the assessment year 1985-86, even though the assessee had won the first prize of Rs. 2.5 crore in a lottery which amount was paid to him in August to September 1984, which resulted in loss of revenue; (v) there was loss of revenue to the extent of Rs. 11,14,436 because of the skipping of the income-tax assessment for the assessment year 1985-86, since, though the previous year consisted of 15 months from 1-4-1984 to 30-6-1985 for the assessment year 1986-87 and the lottery income was to be assessed in that year, there was a reduction in the rates of tax applicable for the said assessment year; and (vi) the reasons furnished by the assessee in support of the request for the change were factually incorrect, not supported by evidence and vague.
6. The Commissioner of Income-tax, on the above grounds, cancelled the order passed by the Income-tax, Officer accepting the change of the accounting period from 31-3-1985 to 30-6-1985.
7. In support of the appeal against the order of the Commissioner of Income-tax, the following broad grounds were canvassed : (i) that the impugned order was barred by limitation; (a) that the CIT has no power under Section 263 to revise an order passed under Section 3(4) of the Act; (iii) that there was no oblique motive on the part of the assessee, such as evasion of tax, in seeking the change ; and (iv) that there was no prejudice caused to revenue by the order passed by the Income-tax Officer. On the other hand, Mr. Biswas, the learned departmental representative, sought to support the impugned order on the grounds of lack of enquiry by the Income-tax Officer and prejudice to Revenue. He cited the decision of the Hon'ble Calcutta High Court in Dawjee Dadabhoy & Co. v. S.P. Jain [1957] 31 ITR 872 in support of his arguments.
8. We have carefully considered the rival contentions. We have perused the orders of the Income-tax Officer and the Commissioner of Income-tax. We have also studied the decisions cited by both the sides.
On a consideration of the rival arguments, we find that the order of the Commissioner of Income-tax is unexceptionable and has to be upheld.We give our reasons in the succeeding paragraphs.
9. Before dealing with the grounds raised by the Commissioner of Income-tax in support of the revision straightaway, it would be useful to remind ourselves of the nature of the powers vested in the Commissioner of Income-tax under Section 263 of the Act. The Commissioner of Income-tax, under the said provision, is constituted the revising authority, having powers of superintendence over the proceedings before the Assessing Officer. It may happen that either due to lack of vigilance or due to misapprehension of facts or law or due to sheer inadvertence or indifference errors may creep into the orders passed by the Assessing Officer. Such errors either of facts or law, may result in loss of revenue and thereby cause prejudice to the interests of revenue: It should be remembered that the Department itself has no right of appeal against any erroneous orders passed by the Assessing Officer in any proceedings. It is certainly not in the public interest or in the interests of the State that such erroeous orders should be left undisturbed at the cost of public finances. The image of the Department and the morale of the officers manning the same has also to be preserved and should not be permitted to suffer because of such erroneous orders. However, it is not the intention of the law that the power vested in the Commissioner of Income-tax should be exercised in a petty-fogging manner or in such a manner as to question the exercise of discretionary powers conferred upon the Assessing Officer or merely to rope in a few more rupees to the exchequer, if the orders passed in the proceedings are otherwise valid and are in accordance with law.
10. We are concerned in the present case with a situation where the Assessing Officer has passed an order acceding to the request for a change of the accounting period from 31st March to 30th June. The Income-tax Act, confers upon the Income-tax Officer the power to grant such request. However, he as prospector of the revenue, has to ensure, before accepting the request, that there is no loss of revenue on account of the change. He may impose conditions upon the assessee before accepting the change, subject, of course, to the rider that such conditions must be valid, reasonable and legal. The power conferred on the Income-tax Officer under Section 3(4) implies that every application for change in the accounting period should be carefully scrutinised by the Income-tax Officer who is expected delve into subterranean details and apply his mind to the reasons therefor and the consequences thereof before passing an order thereon. The main charge of the Commissioner of Income-tax in the impugned order is that there has been no enquiry of any kind by the Income-tax Officer before accepting the change. Now, the first thing expected of the Income-tax Officer is that he should have examined the correctness or the validity of the reasons for the change. The Commissioner of Income-tax has found that all the three reasons given by the assessee in support of the request for the change of his accounting period were factually incorrect. It may be mentioned here that it was not necessary for the Commissioner of Income-tax to have made enquiries himself and that it would have been sufficient or perfectly lawful for him to have stopped with merely establishing that no enquiries had been made by the Income-tax Officer. However, presumably with a view to indicating to what extent the lack of enquiry by the Income-tax Officer has put the revenue to prejudice, he has, in paragraph 7 of his order, dealt with each and every reason and found the same to be incorrect or unsubstantiated. The application for the change was made on 29-3-1985.
The Income-tax Officer had not chosen to make any enquiry into the same. It was only on 19-11-1986, when the assessee's representative appeared suo motu (i.e., not pursuant to any notice) before the Income-tax Officer in connection with the application, that entries were made in the order-sheet that the assessee had no taxable wealth and that the return of income for the assessment year 1986-87 would be filed before the end of December 1986 along with payment of tax under Section 140A. These entries, according to the Commissioner of Income-tax, would show that the Income-tax Officer had decided to accept the change in the accounting period on 19-11-1986 itself. The formal order, however, was passed on 28-11-1986, after nine days during which period also the Income-tax Officer has not made any enquiry. We see force in the ground taken by the Commissioner of Income-tax. There is no material on record, either in the form of notices and/or letters issued by the Income-tax Officer seeking clarifications from the assessee regarding the change or in the form of entries in the order sheet indicating that the pros and cons of the change of the accounting period were weighed and a conscious decision, after due application of mind, was taken. As stated earlier, nothing had transpired earlier to 19-11-1986, during the pendency of the application for change. The Income-tax Officer, as pointed out by the Commissioner of Income-tax, has not also made any enquiry during that period into the correctness of the reasons justifying the change in the accounting period. We therefore agree with the Commissioner of Income-tax that no enquiry has been conducted by the Income-tax Officer before passing the order under Section 3(4) of the Act on 28-11-1986. The Delhi High Court in Gee Vee Enterprises v. Addl CIT [1975] 99 ITR 375, the Karnataka High Court in Thalibai F. Jain v. ITO [1975] 101 ITR 1 and the Gujarat High Court in Addl. CIT v. Mukur Corpn. [1978] 111 ITR 312 have held that if the order has been passed without making any enquiry into the claims made by the assessee, the Commissioner of Income-tax can invoke the jurisdiction under Section 263 and revise the order. We therefore uphold the finding of the Commissioner of Income-tax in this regard.
11. This conclusion of ours would have been sufficient to dispose of the appeal. However, as stated earlier, we find that the Commissioner of Income-tax has been at pains to point out how the reasons advanced by the assessee for the change are factually incorrect. He has also pointed out the prejudice caused to the revenue by the order passed by the Income-tax Officer in terms of loss of revenue. Considerable arguments were also advanced before us on this aspect of the revision.
It has therefore become necessary to deal with these two aspects a little elaborately and record our findings on them. Taking the reasons adduced by the assessee for the change first, we find that the assessee's representative had admitted before the Commissioner of Income-tax that the first reasons, viz., that the change was necessitated by reasons of convenience of transactions with the banks, financial institutions etc. was not correct. The Commissioner of Income-tax has, on a scrutiny of the partnership deeds, also found that none of the firms in which the assessee is a partner had accounting periods ending on June or July. Thus, the second reason that the change in the assessee's accounting period would accord with the close of the accounting periods of the firms was also found to be incorrect, factually. The third reason that the change would facilitate procurement of orders and despatch of goods to the outside "business world" was in our opinion rightly rejected by the Commissioner of Income-tax as being vague and unsupported by any evidence. Since the Commissioner of Income-tax has taken upon himself the task of examining the veracity of the reasons and has also found them unsupported and unconvincing, it follows that the grant of the change of accounting period was, a fortiori, erroneous and hence prejudicial to the interests of revenue.
12. We may now move on to the point made out by the Commissioner of Income-tax in terms of loss of revenue. The Calcutta High Court has, in Dawjee Dadabhoy & Co. 's case (supra) held that the words "prejudicial to the interests of revenue" in Section 33B of the 1922 Act, which was substantially the same as Section 263 of the present Act, "must mean that the orders or assessment challenged are such as are not in accordance with law, in consequence whereof the lawful revenue due to the State has not been realised or cannot be realised" and that the words "can mean nothing else". The Commissioner of Income-tax has observed that loss of revenue arises on account of two consequences that flow from the order passed by the Income-tax Officer: (i) that there will be no return of income for the assessment year 1985-86 and (ii) that there will be no return of wealth for the assessment year 1985-86 in respect of the assessee's wealth on the valuation date 31-3-1985. In order to appreciate the point regarding loss of revenue a few facts have to be noticed. The assessee was kicky to win the first prize of Rs. 2.5 crore in the ATWWA Bumper raffle draw held on 14-6-1984. After deducting agents' commission of Rs. 62,50,000 and TDS of Rs. 63,28,125, the assessee was paid Rs. 1,24,21,875 by cheque dated 30-8-1984. A certificate for the TDS was also issued to him under Section 203 of the Act. Now, the income by way of lottery is taxable under the Act, and would have been brought to tax, in the assessee's case, for the previous year ended on 31-3-1985 relevant for the assessment year 1985-86. By reason of the change granted by the Income-tax Officer in the previous year of the assessee from 31-3-1985 to 30-6-1985, the assessment year 1985-86 is skipped. The lottery income would then be considered for taxation only in the previous year ending on 30-6-1985, relevant to the assessment year 1986-87. The shifting or postponement of the year of taxation by means of the change of accounting period will result in loss of revenue, since the rates of income-tax were lowered by the Finance Act, 1986, for the assessment year 1986-87. The loss on this account has been worked out by the Commissioner of Income-tax to amount to Rs. 11,14,436. This figure was not disputed by the assessee. In our opinion, therefore, the first part of the ground based on loss of revenue stands proved. The learned representative for the assessee pointed out that it was not the intention of the assessee to shift the liability to tax from the assessment year 1985-86 to the assessment year 1986-87 by means of the change in the accounting period and thereby to reduce the incidence of taxation. But, as held by the Calcutta High Court in Shreepaii Distributors Ltd. v. ITO [1987] 168 ITR 530 in judging the validity of the order passed by the Income-tax Officer under Section 3(4), considerations such as malafides of the assessee are alien to the issue. If the Commissioner of Income-tax is able to establish loss of revenue, the fact that the assessee or the Income-tax Officer did or did not intend it is hardly relevant. There is no requirement, according to our understanding of the provisions of Section 263, that the loss of revenue should be the result of a design on the part of the assessee, either by himself or in concert with the Income-tax Officer, in order that the objection on this ground taken in proceedings under Section 263 may be upheld. We are satisfied that the Commissioner of Income-tax was justified in taking the view that the skipping of the assessment year 1985-86 would result in loss of revenue. The Calcutta High Court in the decision cited supra has also held that loss of revenue is a valid objection that may be taken by the Income-tax Officer while dealing with an application for change of previous year.
The objection of the Commissioner of Income-tax on this ground is upheld.13. The second limb of the objection based on loss of revenue is the escapement of wealth-tax for the assessment year 1985-86. Under Section 2(q) of the Wealth-tax Act, the "previous year" adopted under the Income-tax Act, automatically becomes the "valuation date". Any change in the previous year would result in an automatic change of the valuation date correspondingly. The Supreme Court has, in CWT v. Hall & Anderson Ltd. [1972] 84 ITR 269 held that it is incumbent on the part of the wealth-tax authorities to take the last date of the previous year as the valuation date. It is not denied that the assessee has received the lottery prize by cheque dated 30-8-1984. Had 31-3-1985 continued to be the 'previous year' for income-tax purposes, it cannot be disputed that the assessee would have been prima facie liable for wealth-tax for the assessment year 1985-86, relevant for the valuation date 31-3-1985, in respect of the lottery prize amount. The amount, having been received by cheque, would have either remained in the bank or would have been invested in any other security or other movable or immovable properties. It is not the case of the assessee either before the Commissioner of Income-tax or before us that the money has been frittered away or spent or lost before 31-3-1985 so that it could be said that there would have been no liability to wealth-tax as on 31-3-1985. Nor is it the case of the assessee that his liabilities exceed the amount of his assets, including the monies representing the lottery prize, and therefore there would only be a deficiency or 'negative wealth. Therefore, having received a substantial amount before 31-3-1985, the assessee would, prima facie at least, appear to be a potential wealth-tax payer as on the valuation date 31-3-1985 and it is for him to show that he is not and thus rebut the prima facie presumption. The assessee has not taken any such stand either before the Commissioner of Income-tax or before us. In contrast to the position obtaining under the Income-tax Act in the present case where there will be no escapement of the income by way of lottery by reason of the change of the previous year and there will be only a reduction and a substantial reduction at that--in the incidence of tax liability, the position under the Wealth-tax Act, prima facie, would be that there will be a total escapement of wealth as on 31-3-1985 relevant to the assessment year 1985-86. The reason is easy to glean. Under the Income-tax Act all income arising or accruing to the assessee during the previous year consisting of 15 months from 1-4-1984 to 30-6-1985 is liable to tax; whereas under the Wealth-tax Act, it is the net wealth as on a particular date, i.e., the valuation date 31-3-1985 that is taxed. As pointed out by the Supreme Court in the decision cited supra, shifting of the 'previous year' under the Income-tax Act would automatically shift the 'valuation date' under the Wealth-tax Act with the result that there will be no assessment for the assessment year 1985-86 under the Wealth tax Act. It may be, as stated earlier, that on a proper computation of the net wealth of the assessee as on 31-3-1985 it may be found that he is not liable for wealth-tax on account of a variety of reasons, beginning with loss of the wealth and ending with the liabilities being in excess of the assets. However, such a possibility does not, in our view, in any manner vitiate or affect the jurisdiction of the Commissioner of Income-tax in the present case, firstly because as stated earlier no such case was made out by the assessee and secondly because the receipt of such huge amount would at least prima facie indicate a possibility that the assessee may be chargeable to wealth-tax as on 31-3-1985 which possibility is sufficient for the formation of the belief that there will be prejudice to the revenue on account of loss of revenue, which belief in turn is sufficient to confer jurisdiction on the Commissioner of Income-tax under Section 263. We uphold this ground.
14. It was contended by the learned representative for the assessee that the possibility of any prejudice to the interests of revenue under the Wealth-tax Act cannot be the basis for action under Section 263 of the Income-tax Act. We are unable to accept this contention in view of the use of the words "prejudicial to the interests of revenue" in Section 263. The Madras High Court in Venkatakrishna Rice Co. v.CIT[1987] 163 ITR 129 has held that the word "revenue" has been used in the section to denote the abstract conception of "Crown" or the "State". If this is the way, as has been authoritatively prescribed, to understand the said word, it matters little whether the prejudice by way of loss of revenue is on account of income-tax or wealth-tax. We cannot ignore the fact that the three laws relating to direct taxes- Income-tax Act, Wealth-tax Act and Gift-tax Act- have been held by the Supreme Court in K.P. Varghese v. ITO [1981] 131 ITR 597 to form an integrated scheme of taxation. That apart, even if we were to accept the argument of the assessee, still the order of the Commissioner of Income-tax will have to be upheld since we have already upheld the Commissioner of Income-tax's ground that there is loss of revenue even on account of income-tax. The objection is rejected.
15. That leaves us with the objection of the Commissioner of Income-tax that the tax due for the assessment year 1986-87 under Section 140A of the Act was delayed by about 18 months. The return for the year was due, at the earliest, by 30-6-1986 and the tax under Section 140A, if any, would have been due from that day only. The direction of the Income-tax Officer to the assessee was that the return should be filed before the end of December 1986. Therefore, there is no question of any delay for 18 months in the payment of tax. This objection however is only of academic interest and would have become relevant only if the Commissioner of Income-tax had no objection, in principle, to granting the assessee's request for the change. Since the Commissioner of Income-tax has cancelled the order passed by the Income-tax Officer, the result will be that there will be no change in the previous year and hence the objection becomes infructuous.
16. We may now deal with a few objections of a technical nature raised by the assessee. The contention that the order passed by the Commissioner of Income-tax is barred by limitation is without substance. The Income-tax Officer passed the order on 28-11-1986. Under Section 263(2) the last day for passing the order under Section 263(1) would therefore be 31-3-1989. The order was passed on 3-2-1989. The next objection that the Commissioner of Income-tax has no power to revise an order passed by the Income-tax Officer under Section 3(4) is also without merit, in view of the decision of the Bombay High Court to the contrary in Bennett Coleman & Co. Ltd. v. Allahiri ITO [1983] 141 ITR 239. The contention based on the motive or the lack of it on the part of the assessee to evade tax has been dealt with already and found to be irrelevant to deciding the validity of the Commissioner of Income-tax's action. The main objection that the order passed by the Income-tax Officer is neither erroneous nor prejudicial to the interests of revenue, as we have been earlier, is without merit. The decisions cited by the learned representative for the assessee are also not relevant to the issue. In C.A. Abraham v. ITO [1961] 41 ITR 425 the Supreme Court was concerned with the question whether a penalty can be imposed on the partner after dissolution of the firm. In Dalmia Cement (Bharat) Ltd. v. ITO [1973] 88 ITR 21 the Delhi High Court was concerned with the issue whether the Income-tax Officer was obliged to record reasons for refusing to accept the change of previous year and if they have to be communicated to the assessee. These decisions do not relate to the issue before us.
17. Our conclusion is that the Commissioner of Income-tax has made out or established that the order passed by the Income-tax Officer is not only erroneous but also prejudicial to the interests of revenue. We therefore uphold the order passed under Section 263.
18. We may refer to the observations of His Lordship Justice V.Balasubrahmanyan in Venkatakrishna Rice Co.'s case (supra) at pages 137-138 summarising the nature and content of the jurisdiction conferred on the Commissioner of Income-tax under Section 263 of the Income-tax Act: In our judgment, the expression prejudicial to the interests of the Revenue' is not to be construed in a petty-fogging manner, but must be given a dignified construction. It may be noted that the use of the expression 'Revenue', in our opinion, is significant. It denotes some kind of abstraction or symbol in the same sense in which the expression 'crown' is used to distinguish it from any person enthroned. The interests of the Revenue is not to be equated to rupees and paise, merely. There is a biblical saying that we do not live by bread alone. Varying this saying, it may be said that the Revenue does not live by tax alone. In this sense, therefore, the interests of the Revenue are not tied up merely with realising as much Revenue as possible, willy nilly, merely looking to the productivity aspect of taxation. The jurisdiction of the Commissioner under Section 263 is undoubtedly a supervisory jurisdiction. It is intended for interference in special cases to counteract orders which are erroneous as well as prejudicial to the interests of the Revenue. In this context, therefore, the expression 'prejudicial to the interests of the Revenue' 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. There might be cases where the Commissioner might wish to interfere with an order of the Income-tax Officer in order to safeguard the fair name and reputation of the Income-tax Department without any thought of going into the particular aspects of the assessment. Assessments which are mala fide, politically and communally motivated may be, however, set aside as being prejudicial to the interests of the Revenue. It is unnecessary, for us to illustrate the point any further. All that we wish to observe is that the scope of the interference under this section is not to set aside merely unfavourable orders and bring to tax some more money to the treasury. Nor is the section meant to get at sheer escapement of revenue which, as is well known, is taken care of by provisions elsewhere in the Act such, for instance, as Section 147 of the Act.
The prejudice must be prejudice to the revenue administration.
Under Section 264 which might be regarded as a regular revision.
Section 263, however, is a special power, which, so far as we know, has no parallel in any other statute or legal system. It is an extraordinary revisional power. It is also sui generis in its nature, and in the occasion for its exercise, it is to be employed not as a jurisdictional corrective or as a review of a subordinate s order in exercise of supervisory power. It is, on the contrary, to be invoked and employed only for the purpose of setting right distortions and prejudices to the Revenue, which, as we have endeavoured to point out earlier, is a unique conception which has got to be understood in the context of and in the interests of revenue administration. The power, as we conceive, it, is intended to maintain the tone of the revenue administration and the morale of the Officers manning it. Such a power cannot, in any manner, be equated to, or regarded as approaching in any way the appellate jurisdiction or even the ordinary revisional power conferred on the Commissioner under Section 264 of the Act.
The present case, we are satisfied, fully satisfies the tests laid down for the exercise of jurisdiction under Section 263 of the Act which, in our opinion, has been rightly invoked by the Commissioner of Income-tax.
19. Before concluding, we may state that we found certain observations in the order of the Commissioner of Income-tax casting aspersions on the assessee's representative who appeared before the Income-tax Officer and also the Commissioner. We wish to make it clear that we have not been swayed by those observations in reaching our conclusion, nor should it be taken that we subscribe to them. The only impression we gained from a reading of those observations was that they are best ignored. However, as judicial officers we cannot help feeling that those observations appear to us to have been made against persons who have had no opportunity to defend themselves.