TaxTMI 
TaxTMI 
2003 (2) TMI 56
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....6-77 and 1977-78 in his own case. As on the respective valuation dates, the assessee was stated to have held annuities of the value of Rs. 38,09,898, Rs. 39,09,562 and Rs. 36,89,575. The simple claim of the assessee was that the said amounts are not includible in his net wealth. The Wealth-tax Officer accepted the plea of the assessee and accordingly did not include the assessee's interest in the annuities in his net wealth. The Commissioner of Income-tax, in purported exercise of the power conferred upon him to revise orders of subordinate authorities, called for and examined the records of the assessee's case for the said years and accordingly set the law in motion by issuing notice dated September 28, 1988. The Commissioner required the assessee to show cause as to why the assessments should not be revised by him in exercise of the power conferred upon him under section 25(2) of the Wealth-tax Act, 1957 (for short "the Act"). The Commissioner, having taken the value of the annuities held by the assessee on the respective valuation dates, found that the Wealth-tax Officer failed in including the value of the annuities in the net wealth and accordingly committed error in det....
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....rein. Consequential directions were issued requiring the Wealth-tax Officer to issue demand notices for additional demands raised for the said years. The assessee preferred appeals against the orders of the Commissioner of Wealth-tax passed under section 25(2) of the Act. The Tribunal set aside the order of the Commissioner. The Tribunal observed that "before invoking jurisdiction under section 25(2) of the Act, it is for the learned Commissioner to indicate the error in the assessment orders which resulted in prejudice to the interests of the Revenue. In our opinion, this exercise has not been done". The Tribunal observed that without examining the terms and conditions of the annuity policies it is not possible to decide as to whether the assessee had any interest in preasenti in such policies and if so what is the present value of the future annuities. The Tribunal found that the terms and conditions of the annuity policies unless examined, it cannot be held to what extent the assessee would be entitled to relief under the proviso to section 5(1)(vi) of the Act. The Tribunal noticed that on representation by the assessee's counsel before the Wealth-tax Officer that the assesse....
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....e view of the Commissioner. The question is whether the view expressed by the Tribunal is based on a correct understanding of the enabling provisions of section 25(2) of the Act and the nature of the order passed by the Commissioner. The Madras High Court in Venkatakrishna Rice Co. v. CIT [1987] 163 ITR 129, while considering the scope of section 263 of the Income-tax Act, which is analogous to the provision on hand observed that : "two things which must co-exist in order to give jurisdiction to the Commissioner to interfere in revision. The order of the Income-tax Officer in question must not only be erroneous but also the error in the Income-tax Officer's order must be of such a kind that it can be said of it that it is prejudicial to the interests of the Revenue. In other words, merely because the officer's order is erroneous, the Commissioner cannot interfere. Again, merely because the order of the officer is prejudicial to the interests of the Revenue, then again, that is not enough to confer jurisdiction on the Commissioner to interfere in revision. These two elements must co-exist". The proposition laid down is unexceptionable. However, the court having said so, furthe....
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....ausing prejudice to the interests of the Revenue it is susceptible to be corrected by the Commissioner in exercise of his jurisdiction under sub-section (2) of section 25 of the Act. In Malabar Industrial Co. Ltd. v. CIT [1992] 198 ITR 611 the Kerala High Court observed that the language used in section 263 of the Income-tax Act has a very wide import. The Kerala High Court expressed its inability to concur with the observations and the decision of the Madras High Court in Venkatakrishna Rice Co. v. CIT [1987] 163 ITR 129. It is held that the question whether an order is prejudicial to the interests of the Revenue would depend upon the facts of each case and there can be no universal formula applicable to find out any such prejudicial error. The Kerala High Court further approvingly referred to the law laid down in one of the earliest decisions in Dawjee Dadabhoy and Co. v. S. P. Jain [1957] 31 ITR 872, 881 (Cal), which is to the following effect : "The words 'prejudicial to the interests of the Revenue' have not been defined, but it must mean that the orders of assessment challenged are such as are not in accordance with law, in consequence whereof the lawful revenue due to the....