TMI Blog2002 (9) TMI 252X X X X Extracts X X X X X X X X Extracts X X X X ..... otice under s. 158BC of the IT Act, calling for the block return was issued on 16th April, 1998, in response to which the return was filed by the assessee, showing undisclosed income of Rs. 18,33,436. The block assessment order was passed on 6th Sept., 1999 by estimating the undisclosed income of the group as a whole on the basis of various books and documents seized. The undisclosed income of the group as a whole was estimated, amongst various members of the group in the ratio of total turnover of 5 years upto the broken period of each member and the total turnover of 5 years upto the broken period of entire group. Hearing for the assessment had started from 5th July, 1999 and the written submissions were made upto 18th Aug., 1999. Submissions were made explaining various seized papers and replies to the queries raised by the AO. Statement of Shri Shyamlal Rohra, the main spokesperson of the group was recorded at the time of search on 17th Oct., 1997. Further statement was given by the Shri Shyamlal B Rohra before the Dy. Director of IT (Inv.) under s. 131 of the IT Act, 1961, on 1st Dec., 1997. The assessment order was passed on 6th Sept., 1999. Block assessment order in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act to be framed afresh in accordance with the provisions of the law keeping in view the directions contained in the order." 5. Shri S.K. Tulsiyan, the learned counsel for the assessee submitted that the order passed by the learned CIT, under s. 263 of the Act is wrong, invalid, illegal and bad in law. He submitted that the learned CIT erred in holding that the AO, while passing the block assessment order, had not examined the seized documents, necessary for completing the block assessment and had not conducted proper enquiries in that regard, although the block assessment had actually been completed after due and proper examination of all the relevant seized documents and relevant materials. He submitted that during the course of assessment proceedings, the representative of the assessee appeared on various dates before the AO like on 5th July, 1999, 6th July, 1999, 7th July, 1999, 9th July, 1999, 14th July, 1999, 16th July, 1999, 19th July, 1999 and finally on 18th Aug., 1999 and made discussions with the AO with regard to the various details submitted by the assessee group on different dates. He submitted that the following details worked out on the basis of various seized b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Accordingly, the learned counsel for the assessee submitted that exactly the same had happened in this particular case. But so far as the assessee is concerned, he furnished the full details of all the papers and documents seized, explaining the subjects contained therein. He submitted that the assessee duly submitted before the AO the duplicateness of many of the seized papers and documents pertaining to the same subject, viz., suppression of production of milk. Some of these papers relate to different periods and short listing was done not only by the assessee but even by the AO himself by taking into consideration those materials which contain the details of production of milk as well as of the by-products in a most explicit manner for the maximum period possible. According to the learned counsel for the assessee, there was nothing on record to show that the AO left out of consideration, any important seized material, documents or books. Pointing out to the order of the learned CIT, he submitted that even the CIT has not exactly said so in his impugned revisionary order, but merely states in a very vague manner that the AO had not considered all the materials. 7. To the obse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hri P.K. Vyas had stated things in an estimated manner. Shri Vyas had wrongly stated the number of buffaloes to be 1400, whereas the actual number was 1387 only. In the same way, the estimated suppression of 1350 ltrs. of milk had been stated whereas Shri Shyamlal Rohra estimated the same at 1300 ltrs. He pointed out that there is also not much of difference in these two estimated figures, and in any case, the average figure on the basis of seized documents has been taken into consideration, which was correct and cannot militate against facts. 10. Referring to the explanation furnished by the assessee in the statement of Shri Shyamlal B Rohra, recorded on 1st Dec., 1997 and 2nd Dec., 1997, relating to A-11, on the basis of which the learned CIT has concluded that the AO was required to conduct certain further enquiries regarding the real purchase price of buffaloes, the learned counsel for the assessee submitted that it is comparatively an insignificant matter, because in the block assessment, the income from suppression of production of milk and of by-products have been taken into consideration and unaccounted income for assessee group has been computed on that basis. He furthe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mation gathered during the survey conducted at Shyam Dairy, Zhaveri Bazar and Dudh Sagar, Khar, needed further examination, the learned CIT's comment on this issue is extremely vague. According to the learned counsel for the assessee, there is nothing on record to show that these surveys led to any independent discovery of undisclosed income. The learned CIT also did not mention anything about such potentiality of the survey. It was explained before the CIT in the assessee's second letter dt. 13th March, 2002 that Shyam Dairy, Zhaveri Bazar is merely a retail shop wherein milk is purchased mostly from outsiders and furthermore this business was carried out by a separate entity viz., Bhajansons Dairy Farm, a partnership firm. Similarly it was explained that Mohan Bihari Diary is a separate assessee totally unconnected with the assessee group. It was further explained that Dudh Sagar, Khar was also merely one of the customers of the assessee, having no connection with the group. He, therefore, concluded that the CIT's remarks are not supported by any cogent reason and are mere probings in the dark. Similarly, the learned counsel for the assessee took us step by step to the remarks, o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... examining the seized books of accounts and the learned CIT, even if he be not satisfied with the results of the enquiries of the AO, cannot substitute his own opinion about certain perceived enquiries, which could also have been conducted. He prayed that the revisionary order passed by the CIT, under s. 263 which is based on surmises, guesswork and possibilities alone, be (sic). 15. Shri T.K. Shah, the learned Departmental Representative strongly supported the order of the learned CIT. He took us through the relevant paragraphs of the order of the learned CIT and pointed out that the learned AO had not perused the entire seized material and had also failed in conducting necessary enquiries. Accordingly, the learned CIT is justified in invoking the provisions of s. 263 of the Act. He relied upon the decisions of the Supreme Court in the case of Rampyari Devi Saraogi vs. CIT and Smt. Tara Devi Aggarwal vs. CIT. 16. We have considered the rival submissions and perused the facts on record. It is now well-settled position of law that in order to assume jurisdiction under s. 263 of the Act, the CIT must satisfy himself prima facie that the order of the AO is erroneous and prejudici ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is unsustainable in law." The Hon'ble Supreme Court in the above judgment have disproved the observations of the Hon'ble Madras High Court in the case of Venkata Krishna Rice Co. vs. CIT and have referred to CIT vs. Gabriel India Ltd. and have impliedly approved the observations of the Bombay High Court in the aforesaid judgment. 17. It is equally well established that where the AO fails to make necessary enquiries, which he is required to make and decides the issue without making such enquiries, then the order of the AO will be erroneous in law. Reference can be made to the decisions of Supreme Court in the case of Rampyari Devi Saraogi vs. CIT and Smt. Tara Devi Aggarwal vs. CIT. 18. The basis of the impugned order of the learned CIT is that while passing the block assessment order, the AO had not examined the seized materials, necessary for completing the block assessment and had not conducted proper enquiries in that regard. From the facts of the case and from the detailed contentions of the learned counsel for the assessee, reproduced in paras 5 to 12 above, it is proved beyond any shade of doubt that the assessment had actually been completed after due and proper exa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT cannot indirectly do what is barred from doing under the Act. Following observations of the Hon'ble Bombay High Court in the case of Gabriel India Ltd. are very relevant: "This is because the ITO has exercised the quasi-judicial power vested in him in accordance with law and arrived at a conclusion and such a conclusion cannot be termed to be erroneous simply because the CIT does not feel satisfied with the conclusion. It may be said in such a case that in the opinion of the CIT the order in question is prejudicial to the interests of the Revenue. But that by itself would not be enough to vest the CIT with the power of suo motu revision because the first requirement, namely, that the order is erroneous, is absent." In the said case, earlier the Bombay High Court had held that "If an ITO acting in accordance with law makes certain assessment, the same cannot be branded as erroneous by the CIT simply because according to him the order should have been written more elaborately. This section does not visualize a case of substitution of the judgment of the CIT for that of the ITO who passed the order, unless the decision is held to be erroneous." 20. While passing the order ..... X X X X Extracts X X X X X X X X Extracts X X X X
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