TMI Blog1992 (11) TMI 280X X X X Extracts X X X X X X X X Extracts X X X X ..... essee had shown purchases of ₹ 85,773, ₹ 44,949 and ₹ 36,151 from the aforesaid parties, respectively. The assessee had also filed copies of accounts of these parties as appearing in the books of account for different years showing purchases alleged to have been made during the accounting periods of assessment years 1970-71 and 1971-72. The Assessing Officer initiated enquiries into the transactions with the abovenamed parties. Enquiries made from the State Bank of India revealed that cheques issued by the assessee purporting to be for payments in respect of purchases made from the said parties were bearer cheques and the payments thereof were received either by the assessee himself or by his employees. Enquiries revealed that firms styled as Reliable Trading Co. and K.K. Trading Corporation were not in existence at the addresses given by the assessee, while the third party Amritlal Bros, denied any dealings with the assessee. Thereafter the assessee moved a petition under section 271(4A) of the Income-tax Act, 1961 ('the Act'). In that petition, he admitted that he had made an investment of about ₹ 90,000 outside the books of account and that money ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal, which, after taking note of the observation made by the Commissioner, quashed the Commissioner's order by observing as below: We have heard the parties and have gone through the order of the Commissioner carefully. We find that the main objections of the Commissioner are that apart from the evidence in the shape of declaration by the assessee's various relations, there was no evidence that the amounts disclosed by the declarants were really made available to the assessee for investment in making purchases and that assuming the amounts were made so available to the assessee, there was no evidence that the assessee did utilise those amounts for making alleged purchases from Bombay parties. From these two circumstances the Commissioner has drawn an inference that the assessee made an attempt to hoodwink the department by making fictitious entries in the name of some bogus parties and when his dishonesty was detected an attempt was made to take refuge under the voluntary disclosure scheme. Since according to him the assessee did not come up with clean hands under that scheme also, he made another attempt to cheat the department by not making the entire disclosure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the income originally assessed, he treated a sum of ₹ 2,66,878 as income of the assessee in respect of various transactions which had been the subject-matter of investigation. The assessee appealed to the Commissioner (Appeals), who vide order dated 19-2-1981 annulled fresh assessment, on the ground that the Commissioner's order under section 263 which gave jurisdictions to the Assessing Officer to make fresh assessment had been set aside by the Tribunal. Against the order of the Commissioner (Appeals) the revenue came in appeal before the Tribunal which vide order dated 7-6-1982 upheld the view taken by the Commissioner (Appeals). The Commissioner, thereafter moved an application under section 256(1) for referring a question of law arising out of the Tribunal's order dated 7-6-1982 and the Tribunal rejected the same. 8. Feeling aggrieved the Commissioner has moved the present application [IT A No. 149 of 1983 under section 256(2) of the Act] praying that the Tribunal be directed to state a case and to refer the following question for the opinion of this Court: Whether the Income-tax Appellate Tribunal New Delhi was justified in law in holding that there was n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. (No. 1) v. CIT [1991] 187 ITR 412 in which this Court observed that it is beyond dispute that under section 263 the Commissioner has power to set aside the assessment order and send the matter for fresh assessment if he is satisfied that further enquiries are needed and that the order of the ITO is prejudicial to the interests of the revenue. He also placed reliance on a judgment of the Hon'ble Calcutta High Court in CIT v. Panna Devi Saraogi [1970] 78 ITR 728 in which also the view taken was that the Commissioner has the power to cancel the assessment and direct fresh assessment to be made that will give the assessee the fullest opportunity of making out its case at that stage. The same view was taken by the Hon'ble Gujarat High Court in Addl. CIT v. Mukur Corpn. [1978] 111 ITR 312 . 11. The learned counsel for the assessee, on the other hand, contended that in order to enable the Commissioner to acquire jurisdiction under section 263 to interfere with the assessment order, it is to be made out that the assessment order is erroneous as well as prejudicial to the interests of the revenue. According to him, it is not enough that the Commissioner brands the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inistration. There might be cases where the Commissioner might wish to interfere with an order of the Income-tax Officer in order to safeguard the fair name and reputation of the Income-tax Department without any thought of going into the particular aspects of the assessment. Assessments which are mala fide, politically and communally motivated, maybe, however, set aside as being prejudicial to the interests of the revenue. It is unnecessary, for us to illustrate the point any further. All that we wish to observe is that the scope of the interference under this section is not to set aside merely unfavourable orders and bring to tax some more money to the treasury. Nor is the section meant to get at sheer escapement of revenue which, as is well known, is taken care of by provisions elsewhere in the Act such as, for instance, section 147 of the Act. The prejudice must be prejudice to the revenue administration. [Emphasis supplied] (p. 137) Reliance was also placed on H. Kenche Gowda v. State of Kamataka [1988] 174 ITR 389 (Kar.) in which it was held that the revisional power under section 35 of the Karnataka Agricultural Act, 1957 could not be invoked in respect of the income of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d restored the issue for determination by the Assessing Officer so that either side has a proper opportunity of establishing its case. 14. While making an assessment, the ITO has a varied role to play. He is the investigator, prosecutor as well as adjudicator. As an adjudicator he is an arbitrator between the revenue and the taxpayer and he has to be fair to both. His duty to act fairly requires that when he enquires into a substantial matter like the present one, he must record a finding on the relevant issue giving, howsoever briefly, his reasons therefor. In S.N. Mukherjee v. Union of India AIR 1990 SC 1984, it has been observed by the Hon'ble Supreme Court as follows: 35. Reasons, when recorded by an administrative authority in an order passed by it while exercising quasi-Judicial functions, would no doubt facilitate the exercise of its jurisdiction by the appellate or supervisory authority. But the other considerations, referred to above, which have also weighed with this court in holding that an administrative authority must record reasons for its decision are of no less significance. These considerations show that the recording of reasons by an administrative aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion to the income of the assessee, the same would have been considered erroneous by any appellate authority as being violative of the principles of natural justice which require that the authority must indicate the reasons for an adverse order. We find no reason why the same view should not be taken when an order is against the interests of the revenue. As a matter of fact such orders are prejudicial to the interests of both the parties, because even the assessee is deprived of the benefit of a positive finding in his favour, though he may have sufficiently established his case. 15. As is evident from the Tribunal's order, the Tribunal has not discussed the material on record and has not recorded any finding that the assessee's case stood established from the material on record. The Tribunal's view that the Commissioner should have himself recorded a finding is not in accordance with the view taken by this Court in the case of Swaroop Vegetable Products Industries Ltd. (supra). 16. The contention of the learned counsel for the assessee that where action under section 147 to bring to tax the escaped income is permissible under section 147, no action under section 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision of the Madhya Pradesh High Court in Govindram Seksaria Charity Trust v. ITO [1987] 168 ITR 387. In this case also the Tribunal's order was not challenged by way of reference and the Hon'ble Madhya Pradesh High Court, therefore, held that till the order passed by the Tribunal was set aside, the revenue was bound by the order passed by the Tribunal. Reference was also made to a recent decision of the Hon'ble Supreme Court in Union of India v. Kamlakshi Finance Corporation Ltd. AIR 1992 SC 711 in which as Assistant Collector, Central Excise had passed an order disobeying the order passed by the appellate authority. The High Court condemned the conduct of the Assistant Collector and on appeal the Hon'ble Supreme Court upheld the High Courts' view. The Hon'ble Supreme Court stressed upon the need to follow judicial discipline and to give effect to orders of higher appellate authorities. 20. There can be no dispute with the principles of law and propriety laid down in the aforesaid rulings but the facts of the present case are different. As already stated, when the Tribunal passed the impugned order dated 7-6-1982, it had already referred a question of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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