TMI Blog1993 (4) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... various claims made in the return as against the assessment order passed by the Income-tax Officer under section 144 at "nil" income ?" This reference relates to the income-tax assessment of the assessee-company for the previous year, being the calendar year 1981 corresponding to the assessment year 1982-83. In respect of the said year, the assessee-company filed its return of total income on June 26, 1982, declaring a net assessable loss of Rs. 4,45,140. The said return was accompanied by the audited profit and loss account, balance-sheet and other relevant details in respect of the calendar year 1981. The Income-tax Officer issued a notice under section 143(2) of the Income-tax Act, 1961, asking the assessee-company to produce its books ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wholly arbitrary, mala fide, capricious and based on conjectures and surmises and was also contrary to the provisions of law. The Commissioner of Income-tax (Appeals) found that, even if there were good reasons for passing an ex parte order, the Income-tax Officer was wholly unjustified in totally ignoring the loss claimed by the assessee-company. The Commissioner observed that the Income-tax Officer should have based his judgment on the records of the assessee-company for earlier years. He could have derived support from the trend in the tea trade during the calendar year 1981 ; he could have looked around and seen how other tea companies were functioning. Instead of doing this, the Income-tax Officer was piqued and peeved by the behaviour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the loss of the assessee-company for the said year after giving effect to rule 8 of the Income-tax Rules, 1962, at Rs. 4,20,900 as against the returned loss of Rs. 4,45,140. The Revenue appealed to the Appellate Tribunal against the said order passed by the Commissioner of Income-tax (Appeals). The Tribunal found that the Income-tax Officer, while framing the ex parte assessment, had not given any basis for determining the assessee's income at "nil" and erred in totally ignoring the loss disclosed by the assessee-company in its return of total income for the assessment year 1982-83. The Tribunal observed that, while framing an ex parte assessment under section 144, it was the duty of the Income-tax Officer to consider all the relevant m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lable material and the circumstances of each case. In State of Orissa v. Maharaja Shri B. P. Singh Deo [1970] 76 ITR 690, the Supreme Court has observed (at page 691) : "Apart from coming to the conclusion that the material placed before him by the assessee were not reliable, the Assistant Collector has given no reasons for enhancing the assessment. His order does not disclose the basis on which he has enhanced the assessment. The mere fact that the material placed by the assessee before the assessing authorities is unreliable does not empower those authorities to make an arbitrary order. The power to levy assessment on the basis of best judgment is not an arbitrary power ; it is an assessment on the basis of best judgment. In other words ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthority has in the matter. In CIT v. Kanpur Coal Syndicate [1964] 53 ITR 225, the Supreme Court held that the Appellate Assistant Commissioner has plenary powers in disposing of an appeal. The scope of his powers is conterminous with that of the Income-tax Officer. He can do what the Income-tax Officer can do and also direct him to do what he has failed to do. This view was reiterated by the Supreme Court in Jute Corporation of India Ltd. v. CIT [1991] 187 ITR 688. In this case, the Commissioner of Income-tax (Appeals) himself looked into the audited accounts as well as the past assessment records of the assessee-company and, thereafter, computed the total income of the assessee for the assessment year 1982-83. The procedure adopted by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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