TaxTMI 
TaxTMI 
2016 (7) TMI 408
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....he Commissioner suo moto under it, is that the order of the Income Tax Officer is erroneous insofar as it is prejudicial to the interests of the revenue. The Commissioner has to be satisfied of twin conditions, namely, (i) the order of the assessing officer sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the revenue. If one of them is absent - if the order of the Income Tax Officer is erroneous but is not prejudicial to the revenue or if it is not erroneous but is prejudicial to the revenue- recourse cannot be had to section 263(1) of the Act. 7. There can be no doubt that the provision cannot be invoked to correct each and every type of mistake or error committed by the assessing officer, it is only when....
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....ht 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". In our view this interpretation is too narrow to merit acceptance. The scheme of the Act is to levy and collect tax in accordance with the provisions of the Act and this task is entrusted it the revenue. If due to an erroneous order of the Income Tax Officer, the revenue is losing tax lawfully payable by a person, it will certainly be prejudicial to the interests of the revenue. 10. The phrase 'prejudicial to the interests of the revenue' has to be read in conjunction with an erroneous order passed by the assessing officer. Every loss of revenue as a conseque....
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....ssessee has avoided paying tax which was lawfully payable then in that event the same is clearly prejudicial to the interest of revenue as is evident from the last lines of para 9 of the judgment extracted herein above. He, therefore, submits that if the said line of reasoning is accepted then the Assessing Officer has to record a finding in relation to the utilization of the corpus of the amount for which the assessee is claiming exemption on making an inquiry whether it was utilized for development or not. He, therefore, submits that reversal of the order by the Tribunal is erroneous. Prima-facie, the aforesaid argument raises substantial questions of law to the following effect : 1. Whether on the facts and circumstances of the case a....