TMI Blog1996 (9) TMI 625X X X X Extracts X X X X X X X X Extracts X X X X ..... ani was taken and that he had admitted that the jottings on the loose papers, note-books and diaries represented part of the undisclosed income. It was further noted that the entries appearing in the various loose-papers, note-books, etc., the items required to be multiplied by hundred to arrive at the correct figure. The notice further stated that the item of liability against Manav Mandir Trust was the only correct amount and the rest of the amount required multiplication by hundred. It was further noted that the Assessing Officer having accepted the submissions of the assessee to the effect that there was only one stray example and concluded the assessment on the returned income and accordingly the Commissioner felt that the order passed by the Assessing Officer was erroneous and prejudicial to the interest of the revenue. The assessee objected to the notice and consideration of the notings in pages 40, 41 and 42 was also objected. The Commissioner, however, in paras 3 and 4, he submitted, had rejected the contentions raised by the assessee. The learned counsel, Mr. Pardiwala, submitted that in the course of assessment proceedings, the assessee addressed a letter to the Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment based on the returned income. The learned counsel submitted that the present action of the Commis- sioner in exercising his powers under section 263 of the Act is, in effect, directed towards the directions of the Commissioner, who is of equal rank, who was his predecessor holding the same charge, which is not permitted by section 263 of the Act. He contended that the Commissioner is empowered to revise the order of assessment made by the Assessing Officer and does not cover those situations where the Assessing Officer passes orders in obedience of the direction of orders of the Commis- sioner. The learned counsel, Mr. Pardiwala filed a copy of the order of the Tribunal in Trustees of Parsi Panchayat Funds Properties v. Director of Income-tax (Exemption) [IT Appeal No. 3065 (Bom.) of 1995 dated 18-10-1995] for the assessment year 1990-91 and submitted that the Tribunal had considered the decision of the Madhya Pradesh High Court in H.H. Maharaja Raja Pawer Dewas v. CIT [1982] 138 ITR 518/[1983] 15 Taxman 363 , the jurisdictional High Court decision in Brihan Maharashtra Sugar Syndicate Ltd. v. Dy. Commissioner of Agricultural Income-tax [1987] 165 ITR 279 (Bom.) and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nner in which such proceedings are to be disposed of would be interference with the judicial or quasi-judicial functions of the ITO. If the ITO acts in accordance with such directions and disposes of assessment proceedings accordingly, his orders will be liable to be set aside on that ground. 3. In the case of Gordhandas Desai P. Ltd. v. ITO [1981] 129 ITR 495, it has been held by the Hon. Mumbai High Court that the CIT is not competent to give directions on the application of rectification. He cannot usurp functions of ITO. On this basis, ITO was directed to pass an order on the application for rectification ignoring the communications of the CIT. 4. Even in the case of J.K. Synthetics Ltd. v. CBDT [1981] 83 ITR 335, the Hon. Supreme Court held that the Board is not competent to give directions regarding exercise of power to the subordinates. On similar lines the CIT is not empowered to give directions to his subordinates. 5. On similar facts, in the case of Trustees of Parsi Panchayat Funds Properties v. Director of Income-tax (Exemption) Mumbai, IT Appeal No. 3065 (Bom.) of 1995, the Hon. Tribunal, Bombay Bench A , Bombay has given a decision to which the Hon. Accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner by the Assessing Officer as well as the copy of the office-note made by the Assessing Officer. For the sake of facility, the directions issued by the Commissioner vide his communication dated 30-3-1992 are reproduced below : No. BC.XII/18/91-92. Office of the Commissioner of Income-tax, Bombay City-XII, Bombay. Dated : 30-3-1992. The D.C. (IT) Spl. Range-12, Bombay. Sub : M/s. Savani Transport Ltd. Subsequent to my letter of even No. dated 18-2-1992, this issue has been discussed with the D.C. Spl. Range-12, Bombay more than once. At the time when this letter was received by D.C. had the draft of the assessment under preparation which he has subsequently completed and we have gone through the draft assessment order also. The issue involved basically is whether the seized material particularly in sheet Nos. 40, 41 and 42 represents a summarised version of the unaccounted income of M/s. Savani Transport Limited and if so whether the figures of income shown therein are the actual figures or are figures in hundreds. The objection of the assessee contained in their letter dated 17-2-1992 and further articulated in the subsequent discussion is that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the group had a share in the booty. Even in this more likely presumption, there are contradictions. For example, why should there be an item of income-tax shown as an expense to find its place in an account of concealed income. Further why should there be items like proposed donation. Although the Truck numbers given at various places show trucks belonging to the assessee or sold by the assessee, why should some of the trucks be shown as liability in its balance sheet ? In view of the above, whichever way I look at it there is no case for an addition that has to be made in the same manner as was done in the asst. year 1989-90. I think the best bargain that we have to complete the assessment by accepting the assessee s offer to make an addition of the same amount as was done in asst. year 1989-90 without multiplying the figures as per seized statements by hundred. This would come to about ₹ 75,000 for the present year. The representative of the assessee has made the offer obviously to save the assessee from unnecessary litigation. There are very strong reasons supporting such an acceptance firstly, it is impossible that the assessee would be making income outside the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... they have observed that cases where the Assessing Officer had followed the directions of the Commissioner and concluded the assessment, the Commissioner has no powers to revise the assessment under section 263 of the Act. In the case of Trustees of Parsi Panchayat Funds Properties (supra), the Tribunal had extracted from the observations of the Supreme Court decision in Sirpur Paper Mills Ltd. s case (supra). The Tribunal had stated in that order that the Supreme Court had given a categorical finding that a superior authority could not issue any directions in regard to the manner of framing an assessment and that the authority following such a direction could not be held to have applied his mind, which application of mind is the fundamental or primary requirement. In that case, the assessment was framed by the Assessing Officer on the basis of directions received from the CBDT, which the Commissioner sought to revise and this was struck down by the Supreme Court. The Tribunal further observed that the Supreme Court had categorically held that the superior authority could not interfere with the statutory functions of an authority and that the superior authority could not revise an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e dropping of the proceedings, which revision was upheld by the Tribunal and the Rajasthan High Court upheld the order of the Tribunal. The Tribunal upheld the revision on the ground that mere mentioning in the order-sheet that he had received directions or that he had discussed the matter with the Commissioner would not deprive the Commissioner in invoking his powers. In the instant case, where at the instance of the assessee the Commissioner had intervened and directed the Assessing Officer to complete the assessment at the returned figure, which the Assessing Officer, who was subordinate to the Commissioner, had followed and concluded the assessment. 5. In view of the above, the conclusion is that in the present facts which show that the assessment was framed according to the directions received from the Commissioner, the successor Commissioner is not empowered to revise the said order because it tantamounts to revising his predecessor s directions. On this jurisdictional aspect we uphold the claim of the assessee. While doing so we may observe that we have taken guidance from the Supreme Court decision in Sirpur Paper Mills Ltd. s case (supra). 6. In view of the above, me ..... X X X X Extracts X X X X X X X X Extracts X X X X
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