Revisional power under income-tax law requires an order to be both erroneous and prejudicial to revenue before cancellation.

Section 33B of the Indian Income-tax Act, 1922 permitted revision only where the assessment order was both erroneous and prejudicial to the interests of the revenue. A mere omission by the Income-tax Officer to deal with a claim in the return was not enough by itself. The Commissioner had to apply his own mind to the assessee's objection and decide on merits whether any prejudice to the revenue existed. As the Commissioner cancelled the assessment and directed a fresh assessment without examining that statutory precondition, the revisional action was held not maintainable and the issue was answered in favour of the assessee.

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Issues: Whether action under section 33B of the Indian Income-tax Act, 1922, was maintainable where the Commissioner cancelled the assessment without examining on merits whether the assessment order was prejudicial to the interests of the revenue.

Analysis: Section 33B confers revisional power only when the assessment order is both erroneous and prejudicial to the interests of the revenue. A mere error, such as omission by the Income-tax Officer to deal with a claim in the return, is not enough by itself. The Commissioner was required to apply his own mind to the assessee's objection and determine on merits whether the assessment caused prejudice to the revenue. By cancelling the assessment and directing a fresh assessment without examining the merits of the claim, the Commissioner failed to satisfy the statutory precondition for revision.

Conclusion: The action under section 33B was not maintainable and the question was answered in the negative, in favour of the assessee.

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