TMI Blog1999 (5) TMI 51X X X X Extracts X X X X X X X X Extracts X X X X ..... and the circumstances of the case, the order of the CIT under s. 263 may be cancelled. 5. The appellant craves leave to add, alter or vary any of the grounds of appeal. 3. It is found that for the asst. yr. 1988-89 the Asstt. CIT, Inv. Cir. 2(1), Surat, completed the assessment in the case of the assessee-firm by an order under s. 143(3), dt. 20th June, 1989. As per this order the total income of the assessee comes to Rs. 6,90,750 as against the total income declared in the return of income filed on 29th Aug., 1988 amounting to Rs. 6,80,000. Later on the CIT, Surat called for and examined the case records of the assessee-firm and thereafter he formed an opinion that the order passed by the AO was erroneous and prejudicial to the interest of the Revenue. The following are the reasons given by the CIT while issuing notice under s. 263 to the assessee: "Assessment made by the AO under s. 143(3) of the Act on 20th June, 1989, is erroneous insofar as it is prejudicial to the interest of Revenue. Item No. 1 to 13 of the enclosed Annexure 'A' were not verified by the AO at the time of assessment proceedings under s. 143(3) of the Act. (i) Investment in factory premises jointly wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the CIT under s. 263 on the ground that the assessment order passed by the AO is not erroneous or prejudicial to the interests of the Revenue as alleged by the CIT. The mere fact that some items were not mentioned in the assessment order, does not mean that they were not considered by the AO before passing the assessment order. In fact the assessee did furnish explanations in respect of various items called for by the AO and since these explanations were accepted, the AO deemed it fit to complete the assessment without mentioning these details in the assessment order. Moreover, certain points which were not relevant for the assessment of the assessee-firm, were not mentioned in the assessment order. The omission to mention such details will not make the assessment order erroneous so as to justify the action under s. 263, it is stated by the learned counsel. The learned counsel further referred to a voluminous paper book filed before us containing the details of various orders passed by the authorities below at various stages of the proceedings and the correspondence between the assessee and the authorities in this connection. He has also filed a chart showing itemwise details with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anation does not necessarily indicate application of mind on the part of the AO. The assessment order does not show that the AO considered all the relevant materials before passing the assessment order. The learned Departmental Representative also referred to a number of decisions such as Sunanda Rani Jain vs. Union of India (1975) 99 ITR 391; 395 (Del) (sic), CIT vs. M.M. Khambatwala (1992) 198 ITR 144 (Guj), CIT vs. Emery Stone Mfg. Co. (1995) 126 CTR (Raj) 345 : (1995) 213 ITR 843 (Raj), Tarajan Tea Co. (P) Ltd. vs. CIT (1994) 117 CTR (Gau) 179 : (1994) 205 ITR 45 (Gau), etc. The learned Departmental Representative further pointed out that the CIT has only set aside the assessment order with a direction to do the assessment afresh and hence the order of the CIT does not deserve to be quashed but has to be upheld by the Tribunal. 8. We have considered the rival submissions and the evidence on record. The provisions of s. 263 insofar as it is relevant for the purpose of deciding the present appeal reads as under: "Sec. 263(1): The CIT may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the AO is erroneous i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partners a search and seizure operation was carried out under s. 132(1) of the Act on 3rd Dec, 1987, during which besides various books of accounts and incriminating documents, the following unexplained cash and valuables were seized: Particulars From business premises Quantity Valued at (in Rs.) Rough diamonds 4,271.66 cts. 9,87,642 Polished diamonds 214.68 cts. 6,44,000 Cash - 20,000 From residential premises Diamond-rough 104.00 cts. 5,200 Cash - 97,448 --------- Total 17,54,290 --------- Subsequent to the search and seizure operation the ADI (Inv)-III Surat had prepared a detailed appraisal note which was forwarded to the AO for consideration and action while completing the assessment, by the DDI (Inv.), Surat under his letter dt. 29th Feb., 1988, and one month thereafter an order under s. 132(5) of the Act dt. 30th Mar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O had acted carelessly and without concerned for the interest of Revenue, while completing the assessment. During the course of proceedings under s. 263 of the Act the assessee filed voluminous documents exceeding 100 pages, only to explain the issues raised during the proceedings under s. 263 of the Act but these documents filed during the proceedings under s. 263 of the Act are not available in the case records of the assessee, which in term indicates that the assessee's explanation were not called for on those issues during the course of the assessment proceedings. The omission in making inquiry and negligence in completion of assessment by the AO was an act erroneous and prejudicial to the interest of Revenue and in view of this the assessment order passed by the AO is required to be set aside for recompletion of the assessment de novo, in accordance with law, and assessment order is accordingly set aside. 4. I consider it necessary to point out here that the order passed under s 132(5)/132(12) is not conclusive to the proceedings under s. 143(3) of the Act and the AO shall be at liberty to re-evaluate those decisions, in the light of informations gathered during the proceedi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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