TMI Blog2007 (7) TMI 149X X X X Extracts X X X X X X X X Extracts X X X X ..... ces of the case, the Income-tax Appellate Tribunal is legally correct to draw a conclusion that the Commissioner of Income-tax has failed to establish nexus between the stock found at the time of search with the assessment under appeal ?" 2 The reference relates to the assessment years 1983-84 to 1985-86. 3 Briefly stated the facts giving rise of the present reference are as follows: 4. The respondent-assessee field his return of income for the three assessment years in question on March 14, 1986. As the return for the assessment year 1983-84 was out of time, the same was regularized by the Income-tax Officer by issuing notice under section 148 read with section 147 of the Act. A search was conducted in the premises of the assessee's father on June 12, 1986. The Commissioner assigned the search cases of the group to the then Inspecting Assistant Commissioner, Range-II, Muzaffarnagar, to make assessments of the group at one place. Other officers at Muzaffarnagar were requested to forward the group cases to the Inspecting Assistant Commissioner, Range II, Muzaffarnagar. However, for the assessment year 1983-84 the Income-tax Officer completed the assessment on July 18, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s while prosecuting studies at Bangalore. Then he has made reference to the enquiry to be made in the case of M/s. Surender Kumar and Sons for the assessment year 1986-87. So far as the sources of meeting the expenses of education of the assessee are concerned, the material on record of the Income-tax Officer does not suggest that there were withdrawals from the capital account of the assessee for meeting such expenses. In addition, he has some income, from tuition work. The Commissioner of Income-tax has not recorded any finding on the inadequacy of such expenses. He has also referred to the enquiries to be made in the case of Surinder Kumar and Sons for the assessment year 1986-87. The period for this assessment year falls beyond the three assessment years, i.e., 1983-84, 1984-85 and 1985-86. Even, in the case of that firm, the stock found as a result of search was on June 12 1986, which will be relevant for the assessment year 1987-88 and not for the assessment year 1986-87. The Commissioner of Income-tax has not given any reasons in his order as to how there was a nucleus between the availability of stocks on June 12, 1986, with the assessments for the assessee for the assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax is based on mere suspicion and surmises. I have already discussed in the earlier part of this order that the Commissioner of Income-tax has failed to establish nexus between the stock found at the time of search with the assessments under appeal and even with the firm M/s. Surinder Kumar and Sons for the assessment year 1986-87. He was even not given any finding about the inadequacy of the withdrawal for meeting the expenses on the technical education of the assessee at Bangalore. 7. In view of these facts it cannot be said that the orders passed by the Income-tax Officer were prejudicial to the interests of the Revenue. I am, therefore, unable to sustain the order passed by the Commissioner of Income-tax under section 263 of the Income-tax Act, 1961, for all the three assessment years The same are cancelled." 5 We have heard Sri A. N. Mahajan, learned standing counsel appearing for the Revenue and Sri Krishna Agrawal, learned counsel for the respondent-assessee. 6 Sri A. N. Mahajan, learned standing counsel submitted that the Income- tax Officer had completed the assessments in due haste without considering the material on record and without making any further enqui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner of Income-tax was not justified in the initiating proceedings under section 263 of the Act in respect of the assessments completed under section 143(1) of the Act. In the case of Vikrant Crimpers [2006] 282 ITR 503, the Gujarat High Court has held that the Commissioner being bound by the directions of the Central Board of Direct Taxes cannot exercise powers under section 263 of the Act in the case of a summary assessment. Respectfully following the aforesaid decision we are of the considered opinion that the Commissioner of Income-tax was not justified in initiating the proceedings under section 263 of the Act in respect of the assessment years 1984-85 and 1985-86. 10. So far as the assessment for the assessment year 1983-84 is concerned, we find that the assessment has been made under section 143 (3)/148 of the Act. The date fixed by the assessing authority was 18th July, 1986 and on that very date the assessee's counsel had filed certain details and evidences and after discussion the assessment was framed. Even though in the assessment order there is no mention that the detailed enquiry has been made nor any evidence has been discussed yet we find that the returned in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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