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2007 (1) TMI 579 - AT - Income TaxAddition u/s 69 - documents found during the course of survey - assessment completed u/s 144 - whether the CIT was justified in assuming jurisdiction u/s 263 - violation of principles of natural justice - HELD THAT:- It is clear that the CIT, Bhatinda passed order u/s 263 in respect of both the issues which have already been considered and decided by the CIT(A) in appeal. May be that there was mistake on the part of the AO in working out the quantum of addition on account of unexplained investment and interest accrued/received on the undisclosed advances. But it cannot be said that the issues were not considered by the CIT(A) in appeal. In fact, the learned CIT(A) is vested with wide powers coterminus with that of AO. These powers also include enhancement of income. Now if the learned CIT(A) after referring to the entries was of the view that there was under-assessment, he could have exercised such powers and enhanced the income. But the CIT(A) on the contrary allowed partial relief. The fact remains that the issues on which CIT revised the order u/s 263 had been considered and decided in appeal by the CIT(A). Therefore, as per Expln. (c) to s. 263(1), the CIT, Bhatinda was not justified in assuming jurisdiction u/s 263 in respect of matters already considered and decided in appeal. Such action of the CIT was illegal and without jurisdiction. Therefore, the impugned order passed by the CIT is liable to be quashed on this ground itself. Accordingly, the order passed u/s 263 is quashed and the ground of appeal of the assessee is allowed. From the facts discussed above, it is obvious that the show-cause notice issued to the assessee on 28th March, 2003 was served on the assessee on 29th March, 2003 asking for compliance on 31st March, 2003 at 10.30 A.M. Thus, effectively the assessee was allowed only one day's time for submitting its reply. The opportunity to be allowed to the assessee before passing an order under s. 263 has to be a reasonable and effective opportunity. It is not merely a formality. The various judgments, relied upon by the assessee and referred to above also support this view. In fact, the assessee had requested the CIT to allow sufficient time so as to enable it to file effective reply. However, this opportunity was denied to the assessee. Further, the assessee had also requested for supply of documents referred to in the show-cause notice. This was also denied to the assessee. Thus, it is obvious that the statutory requirement of allowing an opportunity of being heard has not been met by the CIT and the impugned order passed by the CIT violated the principles of natural justice. Thus, the impugned order also suffers infirmity on this account. Thus, we quash the impugned order being illegal and without jurisdiction. The grounds of appeal of the assessee are allowed. In the result, the appeal filed by the assessee is allowed.
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