TMI Blog1996 (8) TMI 164X X X X Extracts X X X X X X X X Extracts X X X X ..... d departmental representative has no objection if the delay is condoned. Therefore, we proceed to decide the appeals on merit. 3. The business premises of the assessee were surveyed under section 133A of the Income-tax Act on 24-11-1990. During the survey operations, the revenue officers came across certain loose papers, documents etc. which pertained to the assessment year 1991-92. From these papers, the Assessing Officer found that there were number of gawalies, whose balances are shown as credit balances in the books of Bharat Dairy, Pachora. The Assessing Officer also noticed certain other discrepancies also. The Assessing Officer also found that huge balances of sundry creditors and debtors were not fully verifiable. Therefore, the Assessing Officer investigated the case and completed the assessments for the assessment years 1989-90 and 1990-91. On the basis of discrepancies found in the loose papers and documents pertaining to the assessment year 1991-92, the Assessing Officer made the agreed addition of Rs. 1,00,000 for the assessment year 1989-90 and Rs. 2,35,000 for the assessment year 1990-91. In addition to the above agreed additions, the Assessing Officer also added ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enquiries in the case and should not have made the additions on the agreed basis. The Assessing Officer should have also initiated penalty proceedings under section 271(1)(c) of the Income-tax Act. Thus, the Commissioner exercised his power under section 263 of the Income-tax Act and set aside both the assessments with the direction that the Assessing Officer should make these assessments in accordance with law. 7. The assessee is in appeal before us. The learned counsel of the assessee Shri K. A. Sathe pointed out that the loose papers and documents found during the course of the survey related to the assessment year 1991-92. No document or paper pertained to the assessment years 1989-90 and 1990-91. On the basis of the documents found for a year subsequent to the years under consideration, no assumption of jurisdiction under section 263 of the Income-tax Act is justified. 8. He further pointed out that the Assessing Officer had applied her mind and had completed both the assessments after a due scrutiny of the books of account. He drew our attention to para 2 for the assessment year 1989-90 wherein the Assessing Officer even issued the questionnaire to investigate the case. H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d also the order of the Commissioner under section 263 cannot be justified. 10. The learned counsel continued and pointed out that every order of the Assessing Officer cannot be subjected to revision under section 263 of the Act. The assessment orders which are made by the Assessing Officer in accordance with law cannot be interfered with. By drawing our attention to the decision of the Bombay High Court in the case of CIT v. Gabriel India Ltd. [1993] 203 ITR 108, the learned counsel pointed out that before the assumption of jurisdiction under section 263 of the Income-tax Act, the Commissioner must give a clear finding that the order of the Assessing Officer is erroneous and by virtue of that error prejudice has been caused to the interest of revenue. However, an order cannot be termed as erroneous unless it is not in accordance with law. If the Assessing Officer acting in accordance with law makes the assessment, same cannot be branded as erroneous by the Commissioner simply because, according to him the order should have been written more elaborately. The learned counsel pointed out that the jurisdictional High Court has clearly laid down that section 263 of the Income-tax Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sioner under section 263 with respect to the directions to initiate penalty proceedings, the learned departmental representative drew our attention to the decision of the Madhya Pradesh High Court in the case of Addl. CIT v. Kantilal Jain [1980] 125 ITR 373. He pointed out that if, during the pendency of proceedings which ultimately ended in an order of assessment, the Assessing Officer has omitted to take notice of facts attracting the penal provisions, such an order would be erroneous and the Commissioner would be entitled to exercise the revisional jurisdiction under section 263 of the Income-tax Act. The learned departmental representative, therefore, argued that the assessment order of the Assessing Officer was erroneous insofar as it was prejudicial to the interest of revenue and therefore, the Commissioner was justified in assuming the jurisdiction under section 263 of the Income-tax Act. His order, therefore, should be maintained. 15. We have considered the rival submissions in the light of judicial pronouncements brought to our notice. Before the Commissioner can exercise powers under section 263 of the Income-tax Act, 1961, two conditions must be satisfied, namely, that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer. The Assessing Officer had consciously accepted the condition of the assessee and did not initiate the penalty proceedings. As far as the completion of the assessment proceedings are concerned, we find that the Assessing Officer has made proper investigation and had completed the assessments after due enquiry. The CIT, therefore, was not factually correct in stating that the assessments were completed in a haste without application of mind. 17. It is well-settled that the power of suo motu revision under section 263 is in the nature of supervisory jurisdiction and can be exercised only if warranted by facts. The CIT cannot term an order as erroneous, unless it is not in accordance with law. If the Assessing Officer acting in accordance with law makes certain assessment, the same cannot be branded as erroneous simply because according to the CIT the order should have been written more elaborately. The section does not visualise a case of substitution of the judgment of the CIT for that of the Assessing Officer. 18. We have reproduced above the reasons for interference for assumption of jurisdiction under section 263. The CIT, as it appears from the facts of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me jurisdiction under section 263 of the Income-tax Act. In this regard, we are supported by the ratio of the decision of the Madhya Pradesh High Court in the case of Shri Govindram Seksariya Charity Trust. In the said case, the assessee was a charitable trust. For the assessment years 1973-74 and 1975-76 to 1977-78, the CIT had found that the debtors of the assessee persons to whom the provisions of section 13(3) of the Income-tax Act were applicable and that the income of the assessee would be deemed to have been used for the benefit of those persons, as provided by section 13(2) of the Act. On these facts, the CIT was of the view that the Assessing Officer had allowed exemption under section 11 of the Act to the assessee without examining in detail the applicability of the provision of section 13(1)(c)(ii) of the Act. Therefore, the CIT set aside the assessment order of the Assessing Officer. On these facts, the Hon'ble High Court held that the Tribunal, after examining the record, found that to the audit objections that the assessee was not entitled to the benefit of exemption, by virtue of the provisions of section 13(1) of the Act, the Assessing Officer had given detailed rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y held by the Delhi High Court in some other decisions also which arc placed on page 2 of the material papers. It may also be mentioned that against this decision, the Supreme Court had rejected the SLP. 21. We may also mention here that penalty proceedings under section 271 of the Income-tax Act could be initiated by the Assessing Officer or the Dy. CIT(A) or the CIT(A) in the course of any proceedings under the Income-tax Act. Only these three Income-tax Authorities are recognised as competent to record the satisfaction regarding the leviability of the penalty under section 271. In our view, no such power has been given to the CIT under section 263 of the Income-tax Act. 22. We are aware that there are some contrary decisions in favour of the department, one such decision has been mentioned above in the case of Kantilal Jain. However, in view of the decision of the Hon'ble Supreme Court in the case of CIT v. Vegetable Products Ltd. [1973] 88 ITR 192, we take the view favourable to the assessee and held that the CIT cannot revise the order of the Assessing Officer on the leviability of the penalty under section 271 of the Act. Moreover, it bears repetition that the Assessing O ..... X X X X Extracts X X X X X X X X Extracts X X X X
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