TMI Blog1988 (6) TMI 77X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee to produce papers, books of account, etc., with which the assessee did not comply. The ITO gave the assessee sufficient time to produce materials and accounts. In course of his examination of the accounts which he made partly, the ITO asked the assessee to furnish explanation under section 69 about the nature and the source of certain entries found in the books and also to furnish explanation why the payments made in cash of Rs. 2,500 should not be disallowed. The assessee produced cash-book, ledger account, local purchase file, etc. These books were impounded by the ITO under section 131 after recording the reasons that on test check he noticed certain cash purchases made on different dates from M/s. New Auto Store, Mawlonghat, Shillong have not been entered in the books on the date or dates of such purchases. The ITO wanted to make close scrutiny for determination of income. The ITO mentioned that after impounding of the accounts, the assessee filed revised return under the Amnesty Scheme on 31-3-1986 disclosing income from other sources, to the extent of Rs. 1,50,000 besides the income shown in the original return of Rs. 8,520. 4. The ITO mentioned that the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , inferred that the payments were made from undisclosed sources. He discussed these points in the assessment order, which we need not reproduce here in detail. He found that in total the payments as per cash memos came to Rs. 1,92,098. The assessee had disclosed only to the extent of Rs. 1,50,000 under the said scheme. Thus, the difference of Rs. 42,098 was added back under section 69C as the assessee had not been able to explain the source in spite of specific opportunities were given. 5. The assessee went up to the CIT (Appeals) in appeal. The CIT (Appeals) fixed the case for hearing on various dates and the assessee sent request for adjournment. The CIT (Appeals) allowed the adjournments on different occasions. Ultimately, the CIT (Appeals) allowed the last adjournment and noted that no further adjournment would be allowed. From the order of the CIT (Appeals), it is seen that one Shri D. C. Goyal, father of Shri N. K. Goyal, partner appeared. But any way, the CIT (Appeals) observed that since sufficient opportunities were given to the assessee and the assessee was not serious with the appeal, he proceeded to dispose of the appeal ex parte on the basis of materials on record. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessment to include Sales tax liability allowed wrongly which should be disallowed under section 43B, which could be done by resorting to section 154. It is stressed before us that in the circumstances of the case, re-opening of the assessee and reaching at a different conclusion was not permissible at all particularly when the original return was only at Rs. 8,520. At this stage, the assessee's learned counsel argues that on the basis of the return filed originally, the ITO, B-Ward, Shillong had jurisdiction over the assessee. It is argued that under the said Amnesty Scheme, the assessee filed a return showing an additional income of Rs. 1,50,000 and on that ground alone, the ITO, B-Ward, Shillong would cease to have jurisdiction over the case of the assessee as the income as per revised return exceeded Rs. 1,00,000. It is pointed out that in such case of having income return of Rs. 1,00,000 or more, the ITO, A-Ward, Shillong only would have proper jurisdiction vide order passed by the Commissioner of Income-tax under section 124, copies of which are placed in our file. It is stressed by the assessee's learned counsel that on the basis of the order dated 6-6-1985, the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the assessee had not been given sufficient opportunity for the appearance. It is clarified by the assessee's learned counsel that the CIT (Appeals) did fix the case from time to time for which the assessee asked adjournment from time to time due to necessity and compelling circumstances. It is also pointed out that when the case was fixed for the last time, Shri D. C. Goyal, father of one of the partners did appear for obtaining adjournment before the CIT (Appeals) and not for participating in hearing as such. It is clarified that the CIT (Appeals) has noted in the top of the order that Shri D. C. Goyal appeared, but yet the CIT (Appeals) in latter part of the order noted that since sufficient opportunities were given to the assessee, he would proceed to dispose of the case on merits and on the details available on record. It is urged that on this ground alone, the impugned order of the CIT (Appeals) are vitiated and requires to be set aside. 12. The learned Departmental Representative, on the other hand, supports the order of the CIT (Appeals). Various submissions were made to show that the ITO did give more than adequate opportunities to the assessee to explain the position ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... course, the assessee has argued that the ITO on the background of the case, could take action under section 154 to disallow or otherwise liability on account of Sales tax in view of section 43B but would not warrant action under section 143(2)(b) as done by the ITO and wrongly sustained by the CIT (Appeals). We have gone through the relevant sections and sub-causes in order to appreciate the assessee's point of view. It is seen that primarily the ITO could have reopened the assessee made summarily under section 143(1) as he found that certain disallowance had not been made. It cannot be said automatically that section 154 would have to be taken mechanically as the ITO would have to call for the details and other materials before he make the disallowance and in such circumstances, section 154 cannot legally or strictly be invoked. As such, this cannot be said to be a mistake apparent on record in view of the decision of the Hon'ble Supreme Court in the case of T. S. Balaram, ITO v. Volkart Bros. [1971] 82 ITR 50. So, this contention of the assessee cannot be entertained. 14. We have also to see whether in the present context, the ITO B-Ward, who had the jurisdiction originally as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... different context in the penalty matters, the ITO could initiate penalty proceedings under section 271(1)(c) and the requirements of the law as it stood at the relevant time, the ITO would have to refer the matter to the IAC concerned if the minimum penalty would exceed Rs. 1,000..After some time there was a change or amendment in the procedural law, i.e., to say the ITO, has to refer such penalty proceedings to the IAC concerned for his passing a final order, if minimum amount of penalty would be Rs. 25,000. In such a situation, it was held by the various courts that the IAC concerned to whom reference was made by the ITO under section 274(2) would continue to have jurisdiction to pass a final penalty order notwithstanding the amendment. Reference may be made to the decision of the Hon'ble Gujarat High Court in the case of CIT v. Balabhai Co. [1980] 122 ITR 301, as also as decided by the Hon'ble Punjab and Haryana High Court in the case of CIT v. Ram Nath Prem Kumar [1980] 124 ITR 404. Similar view was expressed by the Hon'ble Calcutta High Court in the case of CIT v. Eastern Development Corpn. [1982] 135 ITR 516 and also as reported in the case of CIT v. Mohinder Lal [1987] 16 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew of the Hon'ble Madhya Pradesh High Court in the case of CIT v. Ram Prakash Saraf [1986] 160 ITR 860. In this connection, it is seen that the Hon'ble Punjab and Haryana High Court (Full Bench) in the case of Mohinder Lal has taken a view that the IAC had jurisdiction to levy the penalty in similar circumstance. It was also observed that other decisions, namely Om Sons' case, Ganesh Dass Ram Gopal's case and Radheshyam Agarwalla v. CIT [1978] 113 ITR 196 (Ori.) were cited before it, but as none of the Supreme Court decisions supports the view that the judicial authority, once seized of the matter, would be divested of the same by the later amendment of the law taking away its jurisdiction, such decisions of other High Courts would have to be dissented from. In the case of CIT v. S. Sardar Singh [1978] 113 ITR 541, the Hon'ble Gauhati High Court on the facts of that case noted that the ITO being satisfied, can initiate proceedings and exercise all powers vested in him for levy of penalty, but when the penalty exceeds Rs. 1,000 section 274(2) takes away his power to levy penalty and the ITO as to make a reference to the IAC who will continue the proceedings as conferred by him. 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e regarding the claim that the ITO ignored the instruction of the Board for re-opening of such assessments, by making enquiries although such authorization was not given to the ITO under the Amnesty Scheme. According to the assessee, the revised return was filed in pursuance of the said scheme in which, amongst other things, the ITO was debarred from making enquiries of certain facts or details. In particular, the assessee's learned counsel draws our attention to the answer given to question No. 19 as given in the Circular No. 451 mentioned earlier. In the present case, we have noted earlier, revised return was filed by the assessee showing higher income after the ITO had impounded the books of account in course of the proceedings made under section 143(2)(b). This finding of the CIT (Appeals) also remains undisturbed. We could not trace out any fact on the basis of which we can hold that the assessee filed the revised return suo motu and voluntarily under the above scheme. It cannot be said that impounding of the books and filing of revised return were only a matter of co-incidence. It appears to us that the revised return was filed as a consequence of the impounding of the books. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame had already been made subject to declaration by the creditor and taxed under the Amnesty Scheme, to ascertain true nature and source of credit. 22. In the instant case, although the CIT (Appeals) did not deal with the issue exhaustively, we have to deal with the various pleas taken up by the assessee's learned counsel before us at the time of hearing and we have given our opinion above. 23. As indicated before, the contention of the assessee is also the CIT (Appeals)'s order was vitiated for not giving sufficient reasons and was influenced by the assessee's non-appearance, and was violative of provisions of section 250(6), which requires that the CIT (Appeals) for that matter should give reasons and a speaking order while disposing of an appeal before him. In the instant case, the CIT (Appeals) after dealing with the preliminary points dealt with by us already earlier in the preceding paragraphs, took up the issue on merits. In his very short order, the CIT (Appeals) mentioned that in the facts and circumstances of the case and for the reasons mentioned in details in the assessment order of the ITO, B-Ward, Shillong, he held that the ITO was justified in making the addition ..... X X X X Extracts X X X X X X X X Extracts X X X X
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