TMI Blog2007 (10) TMI 340X X X X Extracts X X X X X X X X Extracts X X X X ..... 0. Notice under s. 143(2) was issued on 3rd Jan., 2005. A further fresh notice under ss. 143(2)/142(1) along with detailed questionnaire was issued on 11th Jan., 2005 which was served on Shri Nagendra Soni, the Authorised Representative of the assessee on 12th Jan., 2005. Application for adjournment was received on 19th Jan., 2005. The case was fixed on 3rd Feb., 2005. The assessee filed written submissions, which were examined with reference to the details filed vis-a-vis documents seized during the course of search. Vide his letter dt. 3rd Feb., 2005, the assessee stated that the undisclosed income of Rs. 26,94,040 was worked out on the basis of seized material by considering the net accretion in the assets less actual liabilities. It was further contended that the block return included income derived from M/s General Engineering Co., M/s Pipar Filling Station, M/s Choudhary Freight Carriers, Himmatnagar, M/s Mahadev Roadlines, Khariya Khangar and M/s Mahadev Travel Agency, and from the buses and trucks which were not disclosed in the regular returns and which were owned and possessed by the assessee. The assessee also disclosed income in respect of expenditure incurred in constr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ill 21st Feb., 2005. A fresh proposal was sent to the learned CIT on this date and the assessee was again reminded vide letter dt. 22nd Feb., 2005 to file objections against his opinion of getting the accounts audited. The assessee filed objections on 23rd Feb., 2005, which were immediately faxed to the learned CIT for consideration. who after examination of relevant material, granted his approval vide his letter dt. 23rd Feb., 2005 and communicated it to the Asstt. CIT vide his office letter No. 2129. The learned CIT also intimated vide letter No. 2129, dt. 23rd Feb., 2005 to the Jt. CIT of his approval under s. 142(2A). Shri Shailendra Bardia was appointed as special auditor, who wrote several letters to the assessee to produce books of account, documents, etc., for the purpose of audit, but the assessee did not comply with the request. A letter dt. 12th April, 2005 was written to the assessee to co-operate with the auditor. The assessee objected to the appointment of special auditor arguing that he had not maintained regular books of account and hence audit was not possible. He further raised several objections qua the legality of search, fees payable to the auditor, etc. The AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 158BE could not be invoked. He further referred to the fact that the fees payable to the auditor was not fixed and the auditor himself was not aware as to the name of the concerns which were required to be audited by him under s. 142(2A). He also pointed out that the record was lying seized with the Department and if at all the accounts were to be audited, then it was open to the Revenue to deliver the seized record to the auditor. It was contended that the motive behind reference under s. 142(2A) was to gain time-limit. He relied on the judgment of the Hon'ble jurisdictional High Court in the case of CIT vs. Bajrang Textiles (2006) 205 CTR (Raj) 287 to contend that the direction for special audit was illegal and hence assessment was barred by time. He further relied on the judgment of the Hon'ble Supreme Court in the case of Rajesh Kumar Ors. vs. Dy. CIT Ors. (2006) 206 CTR (SC) 175 : (2006) 287 ITR 91 (SC) in support of the proposition that the learned CIT had not granted adequate opportunity to the assessee before according approval to the appointment of special auditor. 3.ii Per contra, the learned senior Departmental Representative supported the impugned order on this po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the passwords were not known to the assessee and the Department has sufficient expertise to open such data by clearing password which was no available with him. As regards the time-limit under s. 158BE, the learned Departmental Representative contended that in the original letter to the assessee the time for completing the audit was mentioned by way of reference made to the auditor specifying the time-limit and this fact was clearly made known to the assessee once again which was evidenced by the letter dt. 12th April, 2005 of the AO to the assessee, a copy of which is placed at pp. 52 to 54 of the Departmental paper book in which it was clearly made known that the completion of audit was to be done within 120 days. Our attention was drawn towards the letters written by Shri Shailendra Bardia, the special auditor, to the assessee for making available the books of account, records, documents, statements, etc. for the purposes of special audit under s. 142(2A). It was stated that despite various letters written by special auditor, the assessee had not extended any co-operation and stuck to his stand that the appointment of auditor was not valid and that he was not going to pay the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tor for the calculation of undisclosed income. A great deal of stress was laid on the fact that on the receipt of information called for, the AO, without applying his mind to the accounts/record proceeded to make reference for the appointment of special auditor. It was thus contended that it shows the inability of the AO who s not capable for completing assessment at his own and instead ordered for appointment of special auditor thereby shifting his duty. In the opposition, the learned Departmental Representative referred to the detailed query letter issued by the AO for contending that the AO had sufficient time to examine the books and seized documents and it was only after that he came to the conclusion that the accounts were complex and audit was required. It was on the completion of this exercise that he directed for the appointment of special auditor after complying with the necessary conditions. 3.2.ii Having heard both the sides and perused the relevant material on record, we do not find any reason to dispute the point canvassed by the learned Authorised Representative that the AO is duty-bound to apply his mind to the accounts and seized documents before directing specia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which have been discussed elsewhere in this order. The position, which, therefore, emerges is that the AO had examined the accounts thoroughly and only thereafter, issued detailed letter which contained 61 queries covering seized documents, including the printouts taken from six CPUs as per Panchnama, dt. 16th Feb., 2003. Such a substantial time of more than one and half month fully justifies the stand of the learned Departmental Representative that the AO had applied his mind. We are not convinced with the submission made by the learned Authorised Representative that since books were not examined in his presence, it meant that there was no examination. There is hardly any bar on the AO to examine books and seized documents in the absence of the assessee. The sequence of events by which the AO raised queries one after other on different dates goes show that he was consistently looking into the accounts and other seized documents. We, therefore, do not endorse the view of the learned Authorised Representative that the AO had failed to apply his mind to the accounts and mechanically ordered for appointment of special auditor. 3.3 Opportunity of hearing. 3.3.i The learned Authoris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that once the objections have been raised in writing before the Chief CIT and those submissions were considered, it cannot be stated that the learned CIT had not considered such submissions and had not given adequate opportunity to the assessee to make submissions against the order of approval for appointment of special auditor. In view of this decision and the facts of our case, we are satisfied that the authorities had applied proper mind to the objections of the assessee and it was only thereafter that the order appointing special auditor was passed. 3.4 Appointment of auditor to gain time 3.4.1 The learned counsel for the assessee contended that the AO was wholly unjustified in ordering the appointment of special auditor at the fag end of the time-limit for completion of assessment. It was argued that the AO has, by his action of appointing special auditor, adopted a device to extend time available with him for the completion of assessment. Per contra, the learned Departmental Representative submitted that the process of appointing special auditor was completed well before the limitation period and there cannot be any handicap on the power of the AO to do so. 3.4.ii Afte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The petitioner protesting against the said order went to the Hon'ble High Court by way of writ petition claiming that the action of the AO in appointment of special auditor was a device to save time as the assessment was going to be time-barred very shortly. The Hon'ble High Court did not accept the petition and upheld the appointment of special auditor. In view of the aforenoted judgment of the Hon'ble High Courts, we do not find any substance in this contention raised on behalf of the assessee and hold it to be not maintainable. 3.5 Jurisdiction of the Tribunal to examine validity of s. 142(2A) order 3.5.i The learned Authorised Representative has forcefully contended that the appointment of the special auditor be declared null and void as the due process of law has not taken place. We are not inclined to go into this question for the reason that the Tribunal is not competent to examine the validity of the order appointing special auditor under s. 142(2A). The scope of the appeals to the Tribunal has been set out in s. 253 from which it is discernible that the order of the learned CIT appointing special auditor under s. 142(2A) is not subject-matter of challenge before it. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a case when raid has been conducted at the premises of an assessee. Had that been so, limited to the facts involved in that case, we would have negatived the contentions of the learned counsel for the petitioner. But, certain observations of general nature have been made. The effect of these observations appears to be that in every case where the AO issues a direction in terms of s. 142(2A) of the Act, the assessee has to be heard before such order is passed. This does not appear to us to be the correct position of law. Therefore, we refer the matter to a larger Bench. The records be placed before the Hon'ble Chief Justice of India for constituting an appropriate Bench." 3.5.iii On a careful reading of this judgment, it is clearly deducible that the observation of the Hon'ble Supreme Court in the case of Rajesh Kumar qua the opportunity of predecisional hearing for appointment of special auditor has to be granted to the assessee before issuing direction in a search case has been held to be valid. What is found to be not -a correct position of law are the observations about directions in term of s. 142(2A) to be given in all cases only after the assessee is heard. Insofar as disc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mination by the Tribunal. All such orders are outside the ambit of the Tribunal's jurisdiction. Our view is fortified by the recent decision in the case of Smt. Jaswinder Kaur Kooner vs. CIT (2007) 211 CTR (P H) 200 : (2007) 291 ITR 80 (P H). In this case the assessee raised a plea that the order of transfer of jurisdiction under s. 127 being void, the entire assessment proceedings should be annulled on that ground. The Tribunal came to the conclusion that since the assessee had not challenged such order at the relevant forum the assessment could not be set aside. When the matter finally travelled to the Hon'ble High Court, it was held that the scope of assessment proceedings under the Act is confined to determining the income of the assessee liable to tax. If the assessee is aggrieved by the order of transfer the remedy of the assessee is to challenge such an order in independent proceedings either before the higher administrative authorities as per the Act or in any independent proceedings by way of writ petition. It is further observed "If no such challenge is made at the initial stage, the issue cannot be raised in appeal against the assessment order". 3.5.v We are, therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ointment of special auditor is valid as on this date, there is no question of excluding the time granted to the special auditor while computing time-limit as enshrined under s. 158BE. It is austere that if the period of 120 days as granted to the special auditor is taken into consideration, the completion of the assessment is within limitation period. 3.6.iii The next inter-connected contention raised by the learned Authorised Representative is about the non-mentioning of the limit of 120 days for completion of block assessment in the letter to the assessee. He contended that the Asstt. CIT in his letter dt. 23rd Feb., 2005 appointing special auditor under s. 142(2A) has not prescribed any time-limit no default can be alleged on the part of the assessee. He has referred to such letter, a copy of which is placed at p. 98 of the paper book. It was, therefore, pleaded that the exclusion clause as per Expln. 1 (ii) to s. 158BE did not apply. In the opposition, the learned Departmental Representative has referred to various pages of the paper book to contend that the auditor was required to submit the report within 120 days after receipt of letter of authority from AO. 3.6.iv After ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the report would stand excluded. It is trite law that if no time-limit has been prescribed in any section for passing an order, then it cannot be held that the order passed is vitiated. But, such order has to be passed within a reasonable time. Here we draw support from the order of the Bombay Bench of the Tribunal in the case of Raymond Woollen Mills Ltd. vs. ITO (1996) 57 ITD 536 (Bom) in which the subject-matter for consideration was the period prescribed for taking action under s. 201(1A). After considering various decisions, it was held that if no period has been prescribed then action has to be taken within a reasonable time. What is a reasonable time depends on situation to situation and fact to fact. Here we are confronted with a situation in which the section specifically provides the time-limit of maximum 180 days for furnishing of report by auditor. The case would have been different if the special auditor had been given time of more than 180 days for furnishing of the report. Even if it is presumed for a moment that the assessee was not informed of the last date by which the report was to be submitted by the letter of the Asstt. CIT dt. 23rd Feb., 2005, it would not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iew has been taken by the Hon'ble apex Court in several judgments including Kapurchand Shrimal vs. CIT (1981) 24 CTR (SC) 345 (1981) : 131 ITR 451 (SC) and Guduthur Bros. vs. ITO (1960) 40 ITR 298 (SC). In this case penalty was validly initiated but the order of the penalty was set aside in appeal for not giving opportunity of hearing to the assessee. It was held that the non-compliance with s. 28(3) did not render the order to be illegal. It was further held that the ITO was well within his jurisdiction to continue the proceedings after correcting the irregularity from the stage where it has occurred and to assess the appellants to a penalty, if any, which the circumstances of the case may require. Adverting to the facts of the instant case, we observe that such a procedural irregularity in not initially intimating the time of 120 days allowed to the special auditor cannot render the entire proceedings invalid, which was eventually made good during the assessment proceedings itself by a later letter to the assessee. 3.7 Complexity of accounts 3.7.i The learned Authorised Representative has forcefully argued that the assessee had not maintained proper books of account and hence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pecial auditor as per the letter of Asstt. CIT dt. 23rd Feb., 2005 are quite different, which are reproduced as under: "1. To examine all the books of account, bills, vouchers, loose sheets, documents, bank statements, etc., which are seized and retained by the Asstt. CIT, Central Circle-I, Jodhpur, at the time of carrying out search in February, 2003 or the documents summoned and impounded during the course of proceedings under s. 158BC with the aim to enable the Department to arrive at true state of financial affairs of various concerns in which you are associated either as proprietor or partner (both in individual or HUF capacity) or a direction of the company or a sham or benami owner covering the block period 1st April, 1996 to 6th Feb., 2003. 1A. To report any irregularities, illegal or unlawful transaction or transactions not permitted in the law if noticed in the accounts so recasted, reframed on the basis of the entries available in the books of account, loose sheets, documents, seized from your premises. 2. To state and report the instances of cash payments in contravention of ss. 269SS, 269T and/or 40A(3) of the IT Act, 1961. 3. To report any facts and circumstan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it, may not be really so if one tries to understand it carefully. Therefore, special audit should not be directed after a cursory look at the accounts. There should be honest attempt to understand the accounts of the assessee". This part of the judgment has been approved by the Hon'ble Supreme Court in the case of Rajesh Kumar, which has been reproduced verbatim in the apex judgment. After going through this para, we find that the meaning of the word 'complex' is fairly settled. 3.7.v Here, it would be relevant to refer to the letter of the Asstt. CIT, Circle-1 Jodhpur, written to the learned CIT, Central, Jaipur, for the proposal of the appointment of special auditor under s. 142(2A), contents of which are as under: "Sub: Proposal for special audit under s. 142(2A) of IT Act, 1961 in the case of Shri Badri Ram Choudhary, Jodhpur, block period 1st April, 1996 to 6th Feb., 2003-approval regarding. A search under s. 132(1) was conducted at the residence as well as several business premises on 6th Feb., 2003. A number of incriminating documents were seized from these places. The case was centralized to this Circle by CIT-II, Jodhpur, vide Notification No. 1 of 2003-04 under s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hicles belonging to other (benami) have been claimed belonging to the assessee which includes buses and trucks. (6) Documents relating to agriculture land and agriculture income have also been found along with papers relating to construction of shops. (7) Expenditure on social functions including marriage in the family have been recorded in various annexures seized during search. (9) The assessee thus runs a fleet of trucks and buses and also runs travelling business with branches across the country. The most important thing is that no regular books of account of any business have been maintained by the assessee. The books maintained on computer recorded only sales/receipts and some bank transactions in respect of business of 3 petrol pumps. No books of account have been maintained for recording business of buses and trucks. The assessee has raised loans for purchase of a number of vehicles but in absence of books of account the source of payment of instalments is not properly ascertainable. In the loose papers cash amounts in lacs of rupees have been sent to Ahmedabad and other places where the offices of financers are located for payment of installments. (10) In the seize ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nership was not transferred. (ii) These petrol pumps are run in the name of M/s. General Engineering Company. The assessee has both disclosed income from these petrol pumps in his block return but in the account available Shri Ram Jivan son of the assessee has been shown as proprietor during some period falling in the block period and another son, Shri Jugal Kishore has been shown as the proprietor. (iii) Accounts are available for period from 1st April, 1999 whereas the block starts from 1st April, 1996. Therefore, turnover is to be estimated on the basis of purchase made from Indian Oil Corporation for both the pumps. (iv) The sales during financial year 1999-2000 are more than Rs. 10 crores but in the expenses capital expenditure on building of more than Rs. 6 lacs could be ascertained only by audit. Capital of Shri Raj Kishore Choudhary has been shown at Rs. 90,64,136 and the cash available in the cash book as on 1st April, 1999 is Rs. 45 lacs. However, the capital of Shri Ram Kishore Choudhary at the end of year is Rs. (-) 1,10,77,472. Thus, the plus figure of more than Rs. 90 lacs in the capital account transformed into negative balance of more than Rs. 1.10 crores coul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee to help in determination of the correct and true profits of the business. It is also emphasized that despite the nature of transaction including submission....... money the account of the assessee have never been....... even though the case falls within the provision of s. 44AB of the IT Act, 1961. You are therefore, requested to kindly look into the matter and approve audit under s. 142(2A) of the Act, 1961. For this purpose name of following chartered accountants is recommended. 1. Nauratan Mal Mertia, Jodhpur 2. Shailendra Bardia, Jodhpur 3. Ajit Raj Bhansali, Jodhpur" 3.7.vi When we refer to the contents of the proposal sent by the Asstt. CIT to the CIT for appointment of special auditor in conjunction with the terms of reference to the special auditor, the position which comes out is that the special auditor was to examine the books of account, bills, vouchers and other documents, etc. with a view to determine the true state of affairs of various concerns in which the assessee was connected either as partner or as director, in individual or HUF capacity, so that his correct undisclosed income may be determined by the AO. It is borne out from the reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ask. The assessee assailed this order. The Hon'ble High Court did not find any reason to interfere in the order passed and hence petition was dismissed. 3.7.x In the case of Sewaram Takhtani vs. Asstt. CIT Anr. (2004) 188 CTR (MP) 441 : (2004) 270 ITR 509 (MP), the petitioner was subjected to search in which several incriminating documents indicating his own and also hi associate's involvement in various types of benami transactions not reflected in the regular books of account, were found. It was also noticed that even the books of account maintained had several erasures/alterations and corrections. In this background of facts, the authorities felt that the books of account were complex in nature and needed to be scrutinized by special auditor. The Hon'ble High Court, while relying on the decision of Living Media (SC), upheld the appointment of special auditor on the ground that petitioner had indulged in several benami transactions with a view to evade tax. Adverting to the facts of our case, it is found as an undisputed fact that the assessee had also indulged in several benami transactions by way of purchase of vehicles and petrol pumps, etc., in respect of which he had hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Road Lines and M/s Mahadev Travel Agency, and buses and trucks which were not disclosed in the return of income but owned and possessed by the assessee. The assessee further disclosed income in respect of expenditure incurred in construction of Mahalakshi Palace which was not accounted for in the regular books of account maintained by M/s Kamini Construction (P) Ltd., being the owner of the hotel building. In para 9 of the said letter, it was further stated that the income from plying of vehicles which was not disclosed in the return for the block period considering the material on record. Vide letter dt. 15th Feb., 2005, the assessee claimed that he had capital of Rs. 67,18,288 at the beginning of the block period. Here, it is important to mention that the assessee in his individual capacity is a partner in four concerns mentioned in para 7.1 of the assessment order. He is partner, in the capacity of Karta of HUF, in the concerns mentioned in para 7.2 of assessment order. Besides that, he has four proprietorship businesses as mentioned in para 7.3 of the assessment order. Apart from the above, he also derived income from two petrol pumps in benami names, viz. General Engineering ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urchase price for the purpose of making balance sheet, when the depreciation has been actually claimed for computing the income of the block period. Vehicles which are purchased in the years 1990-91 to 1996-97 have been consistently used for earning undisclosed income but when the matter comes to the determination of capital, such vehicles have been shown at original cost thereby boosting up the opening capital so as to obtain its higher benefit in the block period in the shape of opening capital and thus evading tax by showing less accretion to the undisclosed assets found at the time of search. The learned Authorised Representative has fairly conceded this fact that the opening capital has been calculated by taking the actual cost of the vehicles and not the WDV. We further note that the undisclosed income from vehicles has been shown in the block period with starting point of net receipts and thereafter depreciation and interest have been claimed. There is no explanation as to how the amount of the net receipts has been calculated. In order to achieve the figure of net receipts, there should first be the figure of gross receipts and then the details of expenses which are deducte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch figures as adopted by the assessee are also devoid of any base as the net receipts from the vehicles are estimated for the block period and even the opening capital has been taken by adopting the cost of vehicles rather than their WDV. From the above discussion, it is more than clear that the accounts of the assessee were complex and the figures so declared were beyond the comprehension as no rational basis for the income disclosed in the block return was understandable. Neither the assessee extended any co-operation towards the completion of assessment nor had any force to support his figures declared as undisclosed income for the block period. If these accounts are not intricate and complex then which other accounts can be said to be complex, is anybody's guess. The complexity is overflowing as majority of important figures are clearly beyond the understanding of an AO. The intricacies involved in the accounts which led to the vast difference in these figures along with other factors, as taken note of by the AO for proposing the appointment of a special auditor, could not have been sorted out without the help of an expert in this field, being a chartered accountant. In the li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vested undisclosed income in two petrol pumps, which were not in his name; in the hotel building in which he is interested as director; and held various vehicles in the benami names, from which he was regularly earning undisclosed income. The purpose of the direction given by the Asstt. CIT is only to enable the Department to determine the amount of undisclosed income invested by the assessee in various concerns in which he was interested either as proprietor or partner (in individual or HUF capacity) or as director. The entire purpose of this exercise was aimed at determining the total undisclosed income of the assessee, which was scattered in various concerns. The very admission of the assessee through block return showing undisclosed income having been invested in various concerns in which he is interested by other than as proprietor, is a clear indicator of his having undisclosed income invested in other concerns also in which he is interested. Hence, it became imperative to get accounts audited of all such concerns in which the assessee was interested as taken note of by the AO. We, therefore, do not find any irregularity in the direction of the Department for conducting audit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s provided to the auditor about the facts of the case, which always remain in the knowledge of the assessee only. The contention of the learned Authorised Representative that the special auditor should have conducted audit at the IT Department from the books of account and other documents seized by it is, therefore devoid of any merits. A reference by the learned Authorised Representative to the letter of the learned CIT in which the Asstt. CIT was required to get the accounts audited has to be seen in the context in which it was made being the internal communication. Insofar as the intimation to the assessee about the special audit is concerned, the same was conveyed by the Asstt. CIT vide letter dt. 23rd March, 2005, copy of which has been placed at pp. 43 and 44 of the Departmental paper book in which it is clearly mentioned that "You are directed to get the audit of your books, bills, vouchers, loose sheets, documents, bank statements, etc., seized and documents impounded during the course of search proceedings". From here it is clear that the direction was to the assessee for getting the accounts audited which obviously cannot be the other way, as the audit work has to be got ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmissions and perused the relevant material on record. Factual matrix of the case has been noted above from where it can be seen that the assessee had, at no stage, extended co-operation to the Revenue to enable the making of assessment. Every time it kept on raising objections here and there challenging the appointment of the auditor despite the fact that the documents required by him were duly made available. If he had been really interested in the making of the proper assessment, he would have come clean and assisted in the completion of assessment notwithstanding his objection on the legal issue, which matter could have been sorted out side by side in the appropriate legal platform. We have noted above that the assessee was not interested in the completion of assessment on the basis of material seized and requested the AO to ignore the material and make estimate of undisclosed income which request was not acceded to. It is still further noted that the special auditor also repeatedly requested the assessee for supplying him the necessary information with a view to conduct the audit, which request fell on the deaf ears. Letter of the special auditor dt. 25th March, 2005, copy pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... either as required under the statute or required under the principles of natural justice, it does not make any difference but the fact remains that when the income has not been assessed properly, the only proper course is that income should be assessed properly and in accordance with law. We agree with the CIT(A), he was justified in remitting the matter back to the AO to make a fresh assessment after affording opportunity to the assessee for assessment under s. 144 of the Act. The Tribunal has committed error in annulling the assessment made by the AO. If the statutory requirement has not been complied with, direction can be given to make a fresh assessment after complying with the provisions of s. 144, before framing the fresh assessment. Considering the submissions of Mr. Singhi, we set aside the impugned order of the Tribunal and restore the view taken by the CIT(A). We direct the AO to afford opportunity to the assessee before framing the fresh assessment under s. 144 of the Act." 4.iii We observe that the facts of the instant case are similar to those of Agro Engineers and relying on the judgment of the Hon'ble jurisdictional High Court, we hold that assessment cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f against which the Revenue is in appeal. This shows that a high-pitched assessment was made. It was naturally so because the AO did not have the assistance of the assessee for determination of the correct undisclosed income as the assessee was stuck to his stand that the income be computed on estimate basis without taking proper recourse to the material/documents found at the time of search, etc. It is trite that the purpose of making assessment is to compute the correct income, which the assessee has earned. The assessee cannot be saddled with frivolous additions. At the same time it is expected of the assessee to assist the Department by furnishing necessary details required for the purpose of making a proper assessment. Primarily, the act of making assessment falls in the domain of the AO, which cannot ordinarily be discharged, especially in a search case, without the assessee's active participation. In our case the assessee had not fully participated in the assessment proceedings and the learned CIT(A) was satisfied that proper assessment was not made. In such a situation, he ought to have set aside the assessment order and directed the AO to finalize it afresh instead of emba ..... X X X X Extracts X X X X X X X X Extracts X X X X
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