1981 (5) TMI 72 - AT - Income Tax

Summary

Issues:
1. Jurisdiction of CIT to revise assessment orders made under section 144B.
2. Whether the CIT's order was a speaking order providing clear findings on items listed.
3. Consideration of objections raised by the assessee by the CIT.
4. Allegation of assessments being made hastily without proper enquiry.
5. Abdication of powers by the CIT and delegation of discretion to the IAC.

Analysis:
1. The appeals were against the CIT's orders under section 263 of the IT Act for the assessment years 1975-76 and 1976-77. The CIT set aside the assessments directing the IAC to make fresh assessments. The assessee contended that assessments made under section 144B were essentially orders of the IAC due to the ITO being bound by IAC's directions, thus questioning CIT's jurisdiction. The Tribunal held that assessments made following IAC's directions cannot be revised by the CIT under section 263, citing previous decisions and statutory merger principles.

2. The assessee argued that the CIT's order lacked clear findings on specific items listed as erroneous and prejudicial to revenue. The CIT's order did not address objections raised by the assessee, leading to a lack of proper consideration. The Tribunal found merit in this argument, emphasizing the necessity of a speaking order with detailed findings on contested items. Failure to address objections and provide clear reasoning rendered the CIT's order deficient.

3. The CIT's failure to consider objections raised by the assessee was a crucial point of contention. The assessee asserted that objections were not evaluated, and explanations provided were disregarded. The Tribunal noted the importance of the CIT examining objections raised by the assessee before setting aside assessments. By not considering the assessee's objections, the CIT's decision-making process was deemed flawed, contributing to the order's invalidity.

4. The allegation of assessments being hastily conducted without proper enquiry was refuted by the assessee. The Tribunal reviewed the assessment process and found that assessments were made following due procedures under section 144B. The Tribunal emphasized that the assessments were not rushed, as evidenced by multiple hearings and the involvement of senior department officers. The CIT's assumption of hasty assessments lacked factual basis, leading to a dismissal of this argument.

5. The final issue centered on the CIT's alleged abdication of powers and delegation of discretion to the IAC. The Tribunal observed that the CIT appeared to have surrendered judgment to the audit party and delegated decision-making authority to the IAC. Such delegation of discretion by the CIT was deemed improper, as it compromised the CIT's independent evaluation role. By failing to exercise discretion and relying on audit suggestions, the CIT's order was considered flawed, leading to its cancellation by the Tribunal.