TMI Blog2002 (7) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... s, the appellant has assailed the judgment and order dated March 11, 2002, passed by the Income-tax Appellate Tribunal, Gauhati Bench, Guwahati (hereinafter referred as the Tribunal ), disposing of I.T.A. Nos. 201/Gauhati of 1996 and 334/Gauhati of 1997 filed by the Revenue. As the questions of fact and law were similar both the appeals were heard analogously and we propose to dispose of the same by this common judgment and order. We have heard Dr. A.K. Saraf, senior advocate, assisted by Mr. D. Baruah, advocate, for the appellant, and Mr. K.P. Sharma, senior advocate, for the Revenue. It would be necessary to set out the bare facts to comprehend the issue under examination. The appellant claims to be a partnership firm carrying on the business of running a restaurant in Paltanbazar area of Guwahati in the District of Kamrup. On September 22, 1993, a search was conducted in its premises and those of its other groups in the course of which the books of account of the appellant was seized by the authorised officer under the Income-tax Act, 1961 (hereinafter referred to as the Act ). During the search and seizure made under section 132(1) of the Act, certain statements of one ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Assessing Officer to ₹ 25,000. This time the Revenue being aggrieved approached the Tribunal with the aforementioned two appeals. I.T.A. No 201/Gauhati of 1996 relates to the assessment year 1992-93 and I.T.A. No. 334/Gauhati of 1997 to the assessment year 1993-94. The learned Tribunal by the consolidated order under challenge allowed the appeals. While doing so, it held that the appellant's partner had made his statements suo motu under section 132(4) of the Act and that in the facts and circumstances of the case it was satisfied that neither there was any coercion nor any inducement or threat at the time of making the disclosure under the aforesaid provision of law. It further noticed that no statements of the witnesses in whose presence the disclosures were recorded had been produced in support of the allegation of threat, inducement or coercion and further there was a considerable time lag between the search and the letter dated December 24, 1993, retracting the statements. The orders of the Commissioner of Income-tax (Appeals), Guwahati, were set aside and the Tribunal directed that the orders of the Assessing Officer adding ₹ 4,00,000 to the taxable i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rised officer, the appellant was entitled to an opportunity to explain the same and the omission on the part of the Assessing Officer in that regard has patently vitiated the order of assessment. He argued that the learned Tribunal in passing the impugned order had totally left out of consideration the above aspect of the matter and on that count alone the impugned orders as well as the assessment orders passed under section 143(3) of the Act are liable to be set aside. The learned senior counsel in support of his argument pointed out that the Department as well had been discouraging the trend of recording statements during the search, seizure and survey operations and placed before us a departmental communication being File No. 286/2/2003-IT(Inv.) dated March 10, 2003, issued by the Ministry of Finance and Company Affairs, Department of Revenue, Central Board of Direct Taxes, Government of India. By the said communication, the officers concerned had been advised to focus and concentrate on the collection of evidence of income leading to information as to what had been disclosed or not likely to be disclosed before the Department and as not to make attempts to obtain confessions as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. Assessment year 1992-93 4,00,000 Assessment year 1993-94 4,00,000 --------- Total 8,00,000 --------- This was on September 23, 1993, in the presence of two witnesses. The retraction of the statement came only on December 24, 1993, followed by a reiteration on the part of the appellant on February 20, 1995, in the course of the assessment proceeding. There is evidently a delay on the part of the appellant and its partners in retracting the statements recorded. The attention of this court has not been drawn to any material on record to establish that any attempt was made on behalf of the appellant to prove the allegation of inducement threat or coercion through the witnesses. We have examined the impugned orders rendered by the learned Tribunal with the reasonings in support of its finding against the complain of threat, inducement or coercion and we find no good and sufficient reason to differ from it. In our view, in the facts and circumstances of the case, having regard to the materials on record, the appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the month in which the return is furnished. (3) On the day specified in the notice issued under sub-section (2), or as soon afterwards as may be, after hearing such evidence as the assessee may produce and such other evidence as the Assessing Officer may require on specified points, and after taking into account all relevant material which he has gathered, the Assessing Officer shall, by an order in writing, make an assessment of the total income or loss of the assessee, and determine the sum payable by him or refund of any amount due to him on the basis of such assessment. A plain reading of the above provision of law makes it manifestly clear that if the Assessing Officer while making the assessment of the tax liability considers it necessary to ensure that the assessee had not understated the income or had not computed excessive loss and had not underpaid the tax in any manner he shall serve on the assessee a notice requiring him either to attend his (Assessing Officer) office or to produce or cause to be produced any evidence on which the assessee may rely in support of the return. It is thereafter on the date specified in the notice or subsequent thereto as may be, tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in that way alone and all other modes of execution are impliedly prohibited. It is apposite to recall in this context an observation of the apex court in National Thermal Power Co. Ltd. v. CIT [1998] 229 ITR 383 that the purpose of an assessment proceeding before the taxing authority is to assess correctly the tax liability of the assessee in accordance with law. Logically, therefore, if a procedure is established by law governing the said assessment it is incomprehensible that a deviation therefrom can be permitted and that too to the prejudice of the assessee. In Pullangode Rubber Produce Co. Ltd. v. State of Kerala [1973] 91 ITR 18 (SC) relied upon by the learned senior counsel for the appellant the Kerala High Court had refused to direct the Tribunal to submit the two questions relating to disallowance of ₹ 79,680 as revenue expenditure of the appellant company. The disallowance had been on the ground that the expenses had been capitalised in the appellant company's accounts. The entries in the account books of the appellant company disclosed that the said amount was laid out or expended for the cultivation, upkeep or for maintenance of immature plants from whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bserving that the assessee had failed to discharge the burden that the statement was not voluntary and that there was no grievance that the same was made in a mistaken belief of facts or law. This decision, in our opinion, does not further the case of the Revenue in so far as the non-compliance with section 143(3) is concerned. No complaint was made therein that the assessee-company had been denied the opportunity of explaining the disclosure as revealed by the statement of its managing partner. On an over all consideration of the facts and circumstances of the case discussed above, we are of the considered view that the mandatory requirement of affording opportunity to the appellant firm to adduce evidence in support of the return and explain the disclosures made in the statement of its partner recorded on September 23, 1993, has not been complied with. The learned Tribunal in passing the impugned orders also did not address itself to this vital aspect of the matter. We are, therefore, unable to sustain the impugned orders of the learned Tribunal restoring the amount of ₹ 4,00,000 as undisclosed income of the appellant firm for the assessment years in question. We, theref ..... X X X X Extracts X X X X X X X X Extracts X X X X
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