9911796707
TMI Blog1988 (9) TMI 92X X X X Extracts X X X X X X X X Extracts X X X X ..... . Necessary details/documents examined and placed on record. The assessee derives income from truck operation for which no books of accounts maintained. After discussion the total income is computed as under: 1. Income from house property 2,000 . Less 1/6th repairs for 2 months 55 1,945 2. Income from truck operation . 12,880 Add Rs. 2,500 for non-maintenance of books of accounts . 2,500 3. Income from other sources Interest on F.D.R. . 6,400 Saleof jewellery . 16,250 . . 39,975 Less 80 C 6,400 . 80 T 9,500 . 80 V 3,000 18,900 . . 21,075 Add agricultural income for rate purposes . 10,100 . . 31,175 3. The CIT considered the assessment to be erroneous and prejudicial to the Revenue and he, therefore, issued a notice dt.24th Feb., 1987under s. 263 in the following terms: "The CIT Delhi-VI,New Delhihas called for the assessment records in your case for the asst. yr. 1985-86. Examination of the same reveals that the details and particulars of income declared under various heads in your return of income for the year above said has not been given by you truly and completely. The ITO, PSC-VII has, without proper scrutiny and investigation of the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the ownership of the FDRs, bank accounts etc. Thereafter the CIT passed the impugned order setting aside the assessment. 5. The Commissioner in the impugned order reproduced the computation of income as submitted by the assessee alongwith the return. Then he stated that a show cause notice dt.24th Feb., 1987was issued mentioning that the ITO had failed to enquire into the volume of investment and sources thereof and that the ITO had accepted the genuiness of loan and liabilities without any enquiry. Then he referred to the second notice issued to the assessee and then he stated that during the relevant accounting period the assessee had claimed to have sold jewellery for Rs. 97,500, the cost of acquisition of which was claimed to be Rs. 81,250 and that the ITO in accepting the capital gains thereon failed to examine the source of acquisition of the jewellery. Then he also mentioned in para 3 of his order that the assessee could have an agricultural income of Rs. 1,000 per annum only while she had returned an agricultural income of Rs. 10,000 which was accepted by the ITO. According to the CIT it was only an attempt to convert her unaccounted income into white money and the ITO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ground of jurisdiction. On behalf of the Revenue it was pointed out that the assessee's assessments for asst. yrs. 1982-83, 1983-84 and 1984-85 were also framed by the same ITO on a single day on 1st Oct., 1984 and that the assessment for 1985-86 was made in undue haste and hurry in a matter of about a week only. It was also pointed out that the facts about the existence of bank accounts and FDRs came to light later on and that the ITO did not make proper enquiries while making the assessment as on 18th May, 1985. Regarding jurisdiction it was pointed out that according to the notifications issued by the Commissioner it was ITO, Private Salary Circle-IV, who had jurisdiction over the assessee. 7. Both the parties placed reliance on certain authorities. On behalf of the assessee reliance was placed, amongst others, on the following cases: (i) CIT vs. Chawala Trunk House (1980) 18 CTR (P&H) 84 : (1983) 139 ITR 182 (P&H). In this case it was held that it is a condition precedent for the exercise of jurisdiction under s. 263 that the assessment order must be prejudicial to the interest of Revenue. Even an erroneous order cannot be interfered with if it is not prejudicial to the int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and prejudicial to the interest of Revenue. (ii) Additional CIT vs. Mukur Corporation (1978) 111 ITR 312 (Guj). In this case it was held that the Commissioner in proceedings under s. 263 need not come to any firm conclusion. 9. We have considered the arguments raised and the rulings cited carefully. 10. We have reproduced above the terms of notice dt.24th Feb., 1987issued by the Commissioner to the assessee. In this notice the Commissioner made the following points: (i) The assessment was made without proper scrutiny and appreciation of facts. (ii) The ITO failed to enquire into the volume of investment and sources for the immovable property and accepted the genuiness of the loans and liabilities without any enquiry. (iii) The truck income has been under-assessed. (iv) The sources of investment in fixed deposit has not been enquired into. (v) The source of acquisition of jewellery has not been examined. 11. As already stated in its reply, the assessee asserted that the ITO had made a thorough enquiry into the matter and this is specifically stated in the assessment order. It was also stated that an affidavit of Sardar Inderjit Singh from whom a sum of Rs. 3,70,000 was clai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne Sarder Inderjit Singh. While in the notice dt.24th Feb., 1987the Commissioner's charge was that the ITO failed to enquire into the sources of acquisition of this property, in the impugned order passed by him there is no finding that in fact it was so. At page 1 of the order he states that in the notice issued to the assessee it was mentioned that the ITO failed to enquire into the volume of investment and sources thereof but strangely enough nowhere in the order he referred to this aspect of the matter again to record a finding that what was his impression while issuing the notice was also his finding after considering the assessee's reply. As regards jewellery in the notice dt.24th Feb., 1987, it was stated that the source of acquisition of jewellery had not been examined. In the impugned order the CIT deals with this aspect as below: "That apart during the year relevant to the asst. yr. 1985-86 Smt. Wallta claimed to have sold jewellery for Rs. 97,500 whose cost of acquisition was claimed to be Rs. 81,250. In the immediately preceding year, jewellery was declared at Rs. 1,06,250. Information gathered would indicate that the assessee had been selling the jewellery in the earli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... directed the ITO having competent jurisdiction to process the assessment de novo in accordance with law. We are amused to contemplate what it actually means. The ITO, Private Salary Circle IV did not have the assessee's return of income. We do not know whether the Commissioner meant that the ITO, Private Salary Circle IV should send for the return that was filed before ITO, Private Salary Circle VII or whether he mean that the ITO, Private Salary Circle IV should initiate action under s. 147 and call for a fresh return. 12. The assessment record of this case was not produced at the hearing and the learned Departmental Representative stated that the assessment records are missing and have been reconstructed. When were the records lost is not clear. In the first notice issued on 24th Feb., 1987 it was stated that the Commissioner had called for the assessment records for asst. yr. 1985-86 and examined the same. In the final order passed by the Commissioner under s. 263, however, this important statement is totally missing. Under s. 263, the Commissioner's opinion that the order is erroneous and prejudicial to the interest of the Revenue has to be formed on the examination of record ..... X X X X Extracts X X X X X X X X Extracts X X X X
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