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TMI Blog2012 (11) TMI 551X X X X Extracts X X X X X X X X Extracts X X X X ..... in para-4 of the order that the depreciation was required to be debited to the profit and loss account and he has also failed to appreciate that all the conditions of writing off of bad debts had adequately been complied with and the amount have been advanced to M/s Hari Dev & Brothers and M/s Shah Soap Mills in the ordinary course of business. 4. The CIT has also erred in setting aside the case to the Assessing Officer which proves that he was not in confirmed opinion on all the issues raised by him in the show cause notice, u/s 263 and on this issue alone, the setting aside of assessment by the CIT deserves to be quashed. 5. That the appellant craves leave to add or amend any grounds of appeal before the appeal is-finally heard or disposed off." 3. In the course of present appellate proceedings, ld. 'AR' gave brief history of the case. He referred to page 35 of the Paper Book which is a questionnaire dated 13.05.2008 issued by the AO. Ld. 'AR' referred to page 53-54 of the Paper Book which is the 'show cause notice' u/s 263 issued by the CIT on 28.1.2010 for the assessment year 2006-07. Page 56-60 contain reply to notice u/s 263 of the Act issued by the CIT. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onnaire along with notice u/s 142(1) was issued, in response to which Shri Yogesh Aggarwal, Advocate, attended assessment proceedings from time to time and the case was discussed with information/documents as called for were filed, which were examined and placed on record. Books of accounts along with vouchers were examined. During the course of assessment proceedings it was noticed that the freight and forwarding expenses were not properly vouched. Therefore an addition of Rs. 25,000/- is being made." 5(ii) A bare perusal of the above assessment order passed by the AO reveals that it is ideally laconic and cryptic assessment order. There are no findings by the AO, in the impugned assessment order on any issue. Therefore, discernibility of the application of mind by the AO, is incomprehensible. It is not humanly feasible to perceive in mental state of affairs of the AO, at the time of passing assessment order, unless his mind is clearly demonstrated by way of well -reasoned and speaking assessment order. Therefore, there cannot be assumption that the AO has considered the issues raised by the CIT, in his impugned order u/s 263 of the Act. The AO has failed to specify even the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the order u/s 263, dated 24.01.2011, viz depreciation not debited to Profit & Loss Account, bad debts and interest free advances. 7. The ld. CIT found that assessee had not debited the depreciation in the Profit & Loss Account, but had claimed the same directly in the computation of income annexed to the return. This fact is evident from the computation sheet, annexed to the return of income. Counsel of the assessee, before the CIT, in the course of revisionary proceedings u/s 263 of the Act submitted that there is no need to charge the depreciation to the Prof it & Loss Account. This contention of the assessee, was not found to be acceptable by the CIT. Ld. CIT recorded the finding that overall profit will not be affected if depreciation is later debited to the Profit & Loss Account but the capital accretion which in this case was made before debiting to Profit & Loss Account, resulted in enhanced capital distributed to the partner. In the present case, profit of Rs. 8,59,925/- was divided between two partners and this was the amount which went to increase the profit of partners as per copies of accounts of the partners. This issue has not been considered by the AO while framin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by a number of decisions, particularly by decision of Hon'ble Delhi High Court in the case of GEE VEE Enterprises V Addl . CIT (Delhi) (1975) 99 ITR 375 (Del). The relevant part of the ratio of the decision is reproduced hereunder : "it is not necessary for the Commissioner to make further inquiries before canceling the assessment order of the Income-tax Officer. The Commissioner can regard the order as erroneous on the ground that in the circumstances of the Income-tax Officer should have made further inquiries before accepting the statements made by the assessee in his return. The reason is obvious. The position and function of the Income-tax Officer is very different from that of a civil Court. The statements made in a pleading proved by the minimum a evidence may be adopted by a civil court in the absence of any rebuttal, court is neutral. It simply gives decision on the basis of the pleading and evidence which comes before it. The Income-tax Officer is not only an but also an investigator. He cannot remain passive in the face of a return which is apparently in order but calls for further inquiry. It is his duty to the truth of the facts stated in the return when the c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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