TMI Blog2015 (9) TMI 1611X X X X Extracts X X X X X X X X Extracts X X X X ..... ts noted in the seized materials represented amounts in lakhs Revision u/s 263 - Held that:- As under section 263 the Commissioner had every power to direct the Assessing Officer to take into account materials, accounts and other circumstances which were not considered when the original assessment order was prepared. On a query from the Bench as to whether the reassessment done which was the subject matter was on the basis of the materials which were not considered by the Assessing Officer in the original assessment, learned senior counsel has informed that so far as the assessment which gave effect to the order under section 263, the materials considered were entirely different. Therefore, we are of the considered opinion that the finding of the Tribunal that the order of the Commissioner of Income-tax invoking the power under section 263 was in order does not require any interference in this appeal. - I. T. A. Nos. 207 of 2012and 89 and 99 of 2014. - - - Dated:- 8-9-2015 - ANTONY DOMINIC and SHAJI P. CHALY, JJ. Joseph Markose, Senior Advocate, V. Abraham Markos, Binu Mathew, Tom Thomas (Kakkuzhiyil), Abraham Joseph Markos and Abraham Varghese Tharakan, Advocates, f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an amount of ₹ 14,78,500 was found and seized. Consequent to the search, a notice under section 158BC of the Act was issued to the assessee on September 23, 2003, requiring the assessee to file a return of undisclosed income for the block period April 1, 1996, to March 31, 2002, and broken period up to October 9, 2002. In response to the above notice received by the assessee on September 23, 2003, the assessee filed a return in Form No. 2B on November 27, 2003, declaring nil undisclosed income for the block period. After complying with the procedure contemplated under law and after taking into consideration the sworn statements of Anupkumar Saha, Asok K. Singh, S. K. Jain, and the incriminating documents seized from the office premises of the assessee at New Delhi, and the explanations offered by the assessee, it was found that the assessee had made illegal payments to various officials of Government agencies which were inadmissible in computing the income of the assessee and, therefore, the Assessing Officer held that it has been proved undoubtedly that the undisclosed income of the assessee, which was not recorded in the books were, therefore, liable to be assessed as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 89 of 2014, was pending before the Com missioner of Income-tax (Appeals), by notice dated February 27, 2007, the Commissioner of Income-tax, Kochi, proposed to invoke his powers under section 263 to revise the assessment order. In response to the said notice, the appellant filed a reply urging various contentions but the Commis sioner of Income-tax rejected the contentions of the appellant and passed annexure B order dated March 21, 2007, having found that the block assessment made under section 158BC read with section 143(3) was erro neous and prejudicial to the interests of the Revenue and further that the relevant materials adverted to by the Commissioner of Income-tax which were available at the time of assessment were not considered while com pleting the assessment. Accordingly, the Assessing Officer was directed to re-do the assessment after giving due opportunity to the assessee and after considering all relevant materials. Aggrieved by the said order, the assessee preferred an appeal before the Tribunal and the Tribunal found that the order passed by the Commissioner of Income-tax was legal and in order. In the appeal filed by the assessee, the following questions of law ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sciplinary proceedings against the alleged reci pients of the payments, any adverse inference can be drawn against the appellant so as to hold that the alleged undisclosed income derived from entries in the loose sheets related to illegal payments made by the appellant warranting block assessment proceedings ? 10. Heard the learned senior counsel appearing for the appellant and the learned senior standing counsel for the Revenue. 11. The thrust of the contentions raised by the learned senior counsel for the assessee, so far as I. T. A. No. 89 of 2014 was concerned, was that the appellant was not provided with sufficient opportunity for cross-examination of the witnesses whose sworn statements were recorded by the Assessing Officer and, therefore, the acceptance of evidence and presumptions drawn as contemplated under section 132(4) and (4A), respectively, could not be sustained under law. It was further contended by the learned senior counsel that so far as the recovery of the amount was concerned from the hotel premises from Anupkumar Saha, the assessee-company had no manner of connection with the said person or the amount recovered. It was also contended that merely becaus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ears 1947-48 and 1981-82 and 1982-83, respectively. Learned senior counsel has invited our attention to the last paragraph of the former judgment, wherein it was held as follows (page 723) : It is to our mind impossible to hold in the face of the application for remittance signed in the name of Tilokchand, that this amount was sent by the assessee and the finding to that effect reached by the Tribunal must be held to be unreasonable and perverse. What at the highest could be said to be established by the material evidence on record is that Tilokchand remitted the amount of ₹ 1,07,350 from Madras and this amount was received by Nathirmal in Bombay. Even if we accept that Tilokchand and Nathirmal were employees of the assessee as held by the Tribunal, the utmost that could be said is that an employee of the assessee in Madras remitted the amount of ₹ 1,07,350 to another employee in Bombay. But, from this premise it does not at all follow that the remittance was made by the employee in Madras on behalf of the assessee or that it was received by the employee in Bombay on behalf of the assessee. The burden was on the Revenue to show that the amount of ₹ 1,07,350 sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ., etc., belonging to such person. Therefore, after evaluating the evidence so collected by the Income-tax Officer during the course of search, what is recovered could be treated as belonging to the assessee. Therefore, according to us, definitely the burden was on the assessee to prove that those incriminating materials and money were not belonging to it. This could have been discharged either by cross-examining the witnesses or by adducing evidence. 16. However, even the grounds incorporated in the appeal memorandum which was handed over to us at the time of hearing, did not contain a claim that a demand/request for cross-examination was made but, on the other hand, all that is stated is that no opportunity was offered to the assessee to cross-examine the abovesaid persons. The relevant ground in the memorandum of appeal is extracted for ready reference : 3.4 The appellant also take the objection that the Assessing Officer has relied upon the statements of Mr. Anup Kumar Saha, Mr. Ashok Kumar Singh and Mr. S. K. Jain, to draw adverse conclu sions against the appellant without offering an opportunity to the appellant to cross-examine the abovesaid persons. 17. So far as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 132 can be taken into account only for the purpose of search operations and, therefore, the acceptance of evidence and presumption drawn by the Assessing Officer to conclude an assessment order could not be sustained under law. However, in view of the introduction of section 158BH to the Income-tax Act, sub-section (4) and sub-section (4A) of section 132 are applicable in the matter of conducting the assessment by the Assessing Officer and, therefore, there was no illegality or infirmity on the part of the Assessing Officer to have taken into account the sworn statements of the witnesses taken on oath. 20. So also, the learned senior counsel for the assessee contended that since the Appellate Tribunal has only approved the findings of the Assessing Officer, there was no re-appreciation of the pleadings, materials and evidence and, therefore, the order passed by the Appellate Tribunal was vitiated and suffered from legal error. To the said contention, the learned senior counsel for the Revenue has invited our attention to the judgment in S. N. Mukherjee v. Union of India, AIR 1990 SC 1984 and specifically invited our attention to last part of paragraph 35 of the said judgment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t it was not only when incriminating circumstances were found out, section 263 can be invoked by the Commissioner of Income-tax but when there were omissions to consider the relevant materials and if the order passed by the Assessing Officer was erroneous and prejudicial to the interest of the Revenue, section 263 can be invoked. Learned senior counsel for the Revenue has also invited our attention to the judgment reported in CIT v. Travancore Tea Estates Co. Ltd. [1988] 172 ITR 733 (Ker) and specifically drawn our attention to last but one paragraph of the judgment, which read thus (page 743) : In our view, therefore, the power of the Commissioner under sec tion 263 remains in full force, notwithstanding the order of the appel late authority, in respect of matters not considered and decided in appeal. Accordingly, we answer the question in the negative, that is, in favour of the Revenue and against the assessee. 24. Bearing these principles in mind, we have gone through annexure B order of the Commissioner of Income-tax produced along with the appeal memorandum and found that the Commissioner had found out several materials which were not taken into consideration by the As ..... X X X X Extracts X X X X X X X X Extracts X X X X
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