TMI Blog1989 (9) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... t Shillong informed the assessee that he would reopen the assessment orders and fixed a date for hearing. The assessee desired to be heard in person. As she was enceinte she prayed for a long adjournment for the hearing. Her authorised representative, however, was heard. The Commissioner of Income-tax, after inquiry, recorded that the inquiry made on July 29, 1978, by the Income-tax Officer was scrappy in that the assessee was not examined. The inquiry revealed that no account books were maintained by the assessee. One unsigned paper was filed to show she had earned Rs. 8,500, Rs. 8,600 and Rs. 10,100 for the three assessment years. Her opening balance of account was Rs. 5,000 which amount it was represented she received at her marriage from her parents and relatives. Besides, four receipts were filed to show that she was paid Rs. 100 and in one case Rs. 120 from her pupils. She was represented to have imparted sewing lessons. The particulars of the amounts received on this count were not shown. The Commissioner of Income-tax, on the above evidence, held that the inquiry held by the Income-tax Officer was done in haste. The assessee had no books of account. The assessee was not e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer or before the Commissioner of Income-tax. Therefore, the assessee assails the suggested inferences and argued that the conclusions arrived at by the Commissioner of Income-tax or by the Tribunal are mere conjectures. If the inferences of the two authorities are left out, what remains is that the assessee had no income of her own because at Hojai, the assessee could not have imparted lessons or held sewing classes and earned any income in the relevant three assessment years. On these primary facts, the assessee contends that if no income accrued or was earned by her and she filed returns showing income, the Revenue is not prejudicially affected as in such a case where no tax is to be paid, the Revenue levied and can collect some income. In this background, the scope of the words "erroneous and prejudicial to the interests of the Revenue" contained in section 263 is highlighted on behalf of the assessee by learned counsel who appeared for her. The scope and ambit of the above words is covered in many decided cases. In numerous cases, the words "error" and "prejudicial" were held to be two disjunctive factors. Learned counsel for the assessee argued that the two are not disjun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Again, it is not sufficient for the order in question to be prejudicial. An order must be erroneous so as to be prejudicial to the interests of the Revenue. It may, however, be stated that anything which is prejudicial to the interests of the Revenue would be erroneous and that anything which is not lawful would be prejudicial to the interests of the Revenue. For the ingredients or the requirements of the section, reliance may be placed on ..." The Madhya Pradesh High Court in Maharaja Raja Pawer Dewas (H. H.) v. CIT [1982] 138 ITR 518, in like terms, held at page 524 "Under section 263(1) two pre-requisites must be present before the Commissioner can exercise the revisional jurisdiction conferred on him. First is that the order passed by the Income-tax Officer must be erroneous. Second is that the error must be such that it is prejudicial to the interests of the Revenue. If the order is erroneous, but it is not prejudicial to the interests of the Revenue, the Commissioner cannot exercise the revisional jurisdiction under section 263(1) of the Act. " This passage in the Madhya Pradesh case was extracted and followed in V. G. Krishnamurthy v. CIT [1985] 152 ITR 683 by the Karn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judicial to the interests of the Revenue." We respectfully adopt the reasoning and conclusion reached in that case. The Supreme Court in the case of Rampyari Devi Saraogi v. CIT [1968] 67 ITR 84 reiterated what they held in the case of Smt. Tara Devi Aggarwal v. CIT [1973] 88 ITR 323 (SC). In the later case, in point of time, at page 328 it is held : "Even when an income has not been earned and is not assessable, merely because the assessee wants it to be assessed in his or her hands in order to assist someone else who would have been assessed to a larger amount, an assessment so made can certainly be erroneous and prejudicial to the interests of the Revenue. If so - and we think it is so - the Commissioner under section 33B has ample jurisdiction to cancel the assessment and may initiate proceedings for assessment under the provisions of the Act against some other assessee who according to the income-tax authorities is liable for the income thereof." The Supreme Court reached the above conclusion on the facts of that case and what is of importance is that the Supreme Court did not consider the issues as to what forms the record for the purpose of section 263 of the Income- ..... X X X X Extracts X X X X X X X X Extracts X X X X
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