TMI Blog2000 (2) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... Judge(s) : D. P. WADHWA. and S. S. MOHAMMED QUADRI. JUDGMENT The judgment of the court was delivered by SYED SHAH MOHAMMED QUADRI J.--- The unsuccessful assessee is the appellant in this appeal, by special leave, which arises from the judgment and order of the Division Bench of the High Court of Kerala in I. T. R. No. 15 of 90, passed on October 22, 1991 (see [1992] 198 ITR 611). By the impugned order, the High Court answered 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 Commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment for that year. The Commissioner of Income-tax having examined the records of the assessment found that the nil assessment order passed by the Income-tax Officer was erroneous and it was prejudicial to the interests of the Revenue. He issued notice to the appellant, under section 263 of the Income-tax Act (for short "the Act"), to show cause why the order of assessment should not be set aside and Rs. 3,66,649 should not be assessed under 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 wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consider the first contention, it will be apt to quote section 263(1) which is relevant for our purpose : "263. Revision of orders prejudicial to Revenue.---(1) The Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Assessing Officer is erroneous in so far as it is prejudicial to the interests of the Revenue, he may, after giving the assessee an opportunity 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---. . ." ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T. Narayana Pai [1975] 98 ITR 422, the High Court of Bombay in CIT v. Gabriel India Ltd. [1993] 203 ITR 108 and the High Court of Gujarat in CIT v. Smt. Minalben S. Parikh [1995] 215 ITR 81 treated loss of tax as prejudicial to the interests of the Revenue. Mr. Abraham relied on the judgment of the Division Bench of the High Court of Madras in Venkatakrishna Rice Company v. CIT [1987] 163 ITR 129 interpreting "prejudicial to the interests of the Revenue." 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 patter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evi Saraogi v. CIT [1968] 67 ITR 84 (SC) and in Smt. Tara Devi Aggarwal v. CIT [1973] 88 ITR 323 (SC). In the instant case, the Commissioner noted that the Income-tax Officer passed the order of nil assessment without application of mind. Indeed, the High Court recorded the finding that the Income-tax Officer failed to apply his mind to the case in all perspective and the order passed by him was erroneous. It appears that the resolution passed by the 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 appel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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