KUSHAL CHAND Vs. COMMISSIONER OF WEALTH TAX

JUDGEMENT

(1.) ON the request of the assessee, the Income-tax Appellate Tribunal has referred the following question of law arising out of its order dated January 25, 1984, in respect of the assessment years 1976-77, 1977-78 and 1978-79 :

(2.) THE brief facts of the case are that the assessment of the assessee under the Wealth-tax Act were finalised by the Inspecting Assistant Commissioner (Assessment). THE Inspecting Assistant Commissioner (Assessment) included the amount of capital standing to the credit of the assessee in the books of the firm, Messrs. Surana Enterprises, which owned a cinema building known as "Raj Mandir Cinema", of which the assessee was a partner. In the assessment order framed by the Inspecting Assistant Commissioner (Assessment), he took the value of the said building without applying the provisions of Rule 2 of the Wealth-tax Rules, 1957. THE Commissioner of Wealth-tax issued a notice to the assessee under section 25(2) on the ground that the Inspecting Assistant Commissioner (Assessment) included the amount of capital standing to the credit of the assessee in the books of the said firm on its face value without applying his mind to the relevant rules and the valuation as provided under Rule 2 of the Wealth-tax Rules.

(3.) THE contention that the order could be said to be only erroneous and not prejudicial to the interests of the Revenue has also no substance. Learned counsel for the assessee has placed reliance on the decision of CIT v. Trustees Anupam Charitable Trust [1987] 167 ITR 129 (Raj). THE said decision is of no assistance to learned counsel for the assessee. It was observed in this case that the error envisaged by section 263 was not one which depended on possibility or guess work, but it should be actually an error either of fact or of law. THE Commissioner of Income-tax categorically said that the speculative business could not qualify for deduction, much less exemption under section 11, it cannot be said that there was any error in the order of the Income-tax Officer relating to the assessment year 1971-72. THE judgment relied on by learned counsel for the assessee is not on the proposition that even if the mistake of law is committed, the order cannot be revised. Conversely it supports the view of the Revenue that if there is an error either of fact or law, the power under section 263 could be exercised.