TMI Blog2014 (11) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... oner from ascertaining the truth and verifying the correctness of the contents of the documents – absence or failure to properly maintain records cannot per se and by itself, would be a ground to invoke Section 263 of the Act i.e. the assessment order was erroneous and prejudicial to the interest of the revenue – revenue was not able to ensure the trustworthiness of their records and has, therefore, proceeded on the basis that no enquiry or investigation was conducted by the AO – The Tribunal has accepted the stand of the assessee that confirmation, documents, details were filed and ascertained by the AO – thus, the order of the Tribunal is upheld – Decided against revenue. - ITA 19/2013 - - - Dated:- 1-10-2014 - Sanjiv Khanna And V. Kameswar Rao,JJ. For the Appellant : Mr.Kamal Sawhney, Sr. Standing Counsel with Mr.Sanjay Kumar and Mr.Jatin Sehgal, Advocates For the Respondent : Through ORDER Sanjiv Khanna, J (Oral) This appeal by the Revenue pertains to assessment year 2008-09. The respondent assessee was subjected to scrutiny assessment for the said assessment year and assessment order dated 20.08.2010 under Section 143(3) of the Income Tax Act, 1961 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pital introduced by the partners has remained unverified and un-vouched (emphasis supplied) 3. The respondent assessee filed response to the said notice and submitted that at the time of original assessment proceedings, the Assessing Officer had verified addition to the fixed assets amounting to ₹ 5,36,73,181/- in the first half and ₹ 69,31,924/- in the second half. Similarly with regard to addition to capital account, the assessee had filed details and proof in support. 4. The Commissioner of Income Tax held that the order passed by the Assessing Officer under Section 143(3) of the Act was erroneous and prejudicial to the interest of the Revenue as the two issues were not considered/examined/investigated by the Assessing Officer. However, in the body of the order, the Commissioner of Income Tax has referred to the explanation of the assessee on increase in the capital account of the partners as well as details submitted by the assessee vide letter dated 26.05.2010 regarding additions to the fixed assets along with photocopy of the receipts etc. He accepted as a fact that these documents and details were not available on record. The Commissioner did not comment w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 41 ITR 537 (Delhi). Accepting the said assertion, the order under Section 263 of the Act, stands struck down. 6. The issue raised is whether or not the Assessing Officer before passing the order under Section 143(3) of the Act had conducted enquiries which were necessitated and required considering the substantial increase in the capital account of the partners as well as investments made by the assessee firm in the form of capital assets. The finding recorded by the Tribunal on the basis of documents and papers filed before them, was that the said enquiry was duly made. The Tribunal has accepted that the assessee had filed letter dated 26.05.2010 and had also filed copies of income tax returns, computation of income, copy of statement of respective bank accounts of the partners to show that the said additions to the capital account were genuine. Similarly bills etc. for purchase of assets and relevant details were filed during the course of the assessment proceedings. 7. In view of the aforesaid controversy by order dated 13.11.2013, we had asked the Commissioner of Income Tax, Delhi-XIII to file an affidavit, placing on record, copy of the order sheet of the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 263 of the Act that the assessment record was incomplete. Papers and documents had gone missing and probably had been removed. To assume and cast aspersion and slur against the assessee without ascertaining the full facts, cannot be accepted, specially when the surrounding and background facts, do not predicate and necessitated any such inference. Other causes for the said malicious act cannot be ruled out, in the absence of any material or justification implicating and incriminating the assessee. To be fair to the appellant revenue no such direct allegation and assertion is made in the order under Section 263 of the Act. The order sheet of the Assessing Officer filed on record shows issuance of notice under Section 143(2) of the Act on 21.04.2010 for 21.05.2010. Thereafter the case was taken up for hearing on 26.05.2010 when part details were filed. The case was then taken up on 07.06.2010. Thereafter hearings were fixed on 14.06.2010, 24.06.2010, 05.07.2010 and 12.07.2010, on which dates nobody attended. Thereupon another notice under Sections 143(2)/142(1) of the Act was issued on 20.07.2010 and hearings were held on 02.08.2010, 09.08.2010, when more details were filed, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hen Assessing Officer, should be elucidated, investigated and answered. Custodian of the records have to take responsibility and blame for tampering and other lapses, for any such act is not possible without involvement of an insider whether acting on his own or at the behest of the third party, which may the assessee himself. Facts therefore should and must be ascertained and mystery unrevealed. Fair and just conclusion as to the involvement of the person or persons concerned and responsible should be formed. 12. The difference between absence of enquiry and inadequate enquiries, when power under Section 263 of the Act is exercised has been highlighted in several decisions. Even in case of inadequate enquiries, power under Section 263 of the Act can be exercised but not by way of remand. In case of inadequate enquiries, the Commissioner cannot pass a remand order, but he should himself conduct necessary enquiries and record findings why and how the assessment order was erroneous and prejudicial to the interest of the revenue. The said conclusion must be recorded. 13. It is rather unfortunate that the department was not able to ensure the trustworthiness of their records and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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