TMI Blog1992 (2) TMI 130X X X X Extracts X X X X X X X X Extracts X X X X ..... ent at - Rs. 23,976 (d) Guineas valued by the department at - Rs. 6,500 (e) Jewellery and ornaments valued by the department at - Rs. 82,736 ------------------------ Rs. 7,45,390 ----------------------- Certain books of accounts were also seized. An order under section 132(5) was passed on 5-12-80 by the ITO, estimating, in a summary manner, the income of the assessee, including the above-mentioned amounts of Rs. 7,45,390 at Rs. 13,10,996 and retaining the seized assets described above. The assessee preferred an application to the CIT, West Bengal-XI, Calcutta, under section 132(11) of the Act against the summary order passed under section 132(5). The application was heard and disposed of by the CIT by order dated 7-1-1982. Suffice to say, for the present purpose, that the order passed under section 132(5) was confirmed. 3. On 24-7-1982, the assessee filed its return of income for the assessment year under appeal disclosing a total income of Rs. 42,170. This was, however, revised by return filed on 2-3-1984 to Rs. 42,160. Thereafter, it appears that the assessment proceedings were set in motion by issue of notices calling for details regarding the income to be ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d be waived under power of the IAC. No other penalty proceedings are to be initiated and no prosecution launched. 4. Primary gold amounting to Rs. 1,23,178 is to be assessed in the hands of J.P. Goel (HUF). This should be assessed in the assessment years 1980-81 and 1981-82. Penalty under section 271(1)(c) at 20% should be levied and interest waived. Assessment for the year 1980-81 should be reopened and the assessee has agreed to file revised return for 1981-82 and return for 1980-81 after it is reopened. No other penalty proceedings are to be initiated nor any prosecution launched. 5. It is claimed that the entire jewellery is of long use. However, they have agreed to offer jewellery worth Rs. 53,073 to be assessed in the hands of Smt. Dwarka Devi Goel for assessment years 1980-81 and 1981-82. Similarly value of silver bars are also to be assessed in her hands. The assessments are to be made in the two years 1980-81 and 1981-82. It is claimed that the jewellery and silver bars are old possessions but offered for assessment to buy peace. No interest should be levied and minimum penalty at 20% under section 271(1)(c) should be levied. 6. Seized cash and jewellery, silver bar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice itself which reads as under : " Re: Order under section 143(3)-A.Y. 1981-82 Jagadish Prasad Goel (HUF) Pan - 11-001 - PN -7529 ------------- Cal/1(1)/B. - Action under section 263 - proposal regarding. On perusal of the Income-tax record of the abovenamed assessee for the assessment year 1981-82 it is found that the assessment order passed by the Inspecting Assistant Commissioner of Income-tax (Assessment), Range-I, under section 143(3) on 25-2-1985 is erroneous and prejudicial to the interest of revenue. I hold this view because a search operation under section 132 of the I.T. Act, 1961 was conducted in the premises of the assessee on 9-9-1980. Books of accounts, cash, jewellery, primary gold etc. were seized during the search. The Inspecting Assistant Commissioner of Income-tax (Assessment) Range-I, while framing the said assessment order did not take into account the value of following seized items, neither he did clearly accept the explanation of the assessee as to the source of cash, gold etc. seized during the search. The value of cash seized Rs. 5.09 lakhs, primary gold (50% to be taken) Rs. 61,598, Guinea valued Rs. 6,500, Silver Bar valued Rs. 23,976 i.e... ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction under section 263. Apparently as a sequel to the representations made by the assessee before the CIT as above, the office of the CIT issued a letter addressed to the principal Officer of M/s Gobind Ram Sri Kishan of 46 Strand Road, Calcutta, from whom, according to the assessee, it had taken a loan of Rs. 1,70,000 which had formed part of the bash of Rs. 5,09,000 found at the time of search, for verification. Since there was no representation on behalf of the said firm the ITO, Hqrs., attached to the CIT, W.B.-I, wrote to the assessee on 4-7-1985 that since the assessee's claim with regard to the loan was not verifiable, an adverse conclusion " may be drawn on the proposal for action under section 263 ". It is not known from this letter as to what conclusions were drawn by the CIT in respect of the other explanations given by the assessee regarding the assets seized at the time of search. Be that as it may, the assessee wrote back to the CIT on 13-7-1985 reiterating its earlier explanations and further pointed out that it gathered from the firm that in their (firm's) assessment the genuineness of the loan had been accepted after due verification. 7. At this stage of the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of the assessee, the successor-CIT overruled the same and passed an order under section 263 on 29-1-1987, the operative portions of which are as under : " 5. Notice under section 263 was issued proposing to modify or enhance or cancel the assessment. Shri J.P. Goel Karta of the HUF along with Shri D.P. Lundia, A.R. appeared and filed the written statement objecting to the proposed revision. The objections have already been discussed at length in the preceding paragraphs. The assessee has also raised a technical objection that the impugned order of assessment was passed on the basis of a written instruction from CIT a copy of which was also endorsed to the assessee. Since the Assessing Officer's order embodies the direction of the CIT it cannot be the subject-matter of proceedings under section 263 of the I.T. Act, 1961 by the succeeding CIT. 6. The objection of the assessee is not correct. It is a settled principle of law [10 ITR 152 (Allahabad) 52 ITR 453 (Madras)] that except when approval or sanction of higher authority is statutorily laid down in the Act, the order of the ITO is his own even though based on the ad ministrative direction of his superiors. The directi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 984 cannot be treated as instructions issued under section 1 19(3) of the Act and that at any rate the CIT having only ordered fresh enquiry the assessee cannot have any grievance against such direction. 9. It will be convenient to first dispose of the contention of Mr. Singh based on the principle of promissory estoppel. In elaboration of the said contention, he submitted that pursuant to the instructions issued by the CIT on 29-8-1984 the assessee had filed revised returns (both income-tax and wealth-tax) in accordance with those instructions and also paid the taxes on the income and wealth declared in the revised returns. Though the assessee had been contesting the decisions of the authorities to assess him on the income properly assessable in the hands of other persons, in order to purchase peace and to put to an end to the protracted controversy he had agreed to abide by the decisions taken by them and had filed the revised returns. Accordingto Mr. Singh the assessee would not have filed such returns if it had known that the assurances given by the predecessor-CIT would be later thrown overboard by the successor-in-office. In his submission, the assessee had altered its posi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and were of general application. They constituted a sort of an invitation made generally to sugar mills in the State of UP. in Motilal Padampat Sugar Mills Co. Ltd.'s case. In Godfrey Philips India Ltd.'s case it was a case of an instruction issued by C.B.E.C. to all assessees manufacturing cigarettes and was, therefore, interpreted as containing the view of the Board from which it could not later resile, the assessees having acted upon it. We are not concerned, in the present case, with any such instructions of such general nature, and, therefore, we are unable to invoke the doctrine of promissory estoppel to set aside the order of the successor-CIT passed under section 263 of the Act. This contention of Mr. Singh fails. 12. The next contention of Mr. Singh that the instructions issued by the CIT on 29-8-1984 should be considered as having been issued under section 119(3) of the Act and hence binding on the Assessing Officer cannot also be accepted in the light of the decision of the Calcutta High Court, in the case of ITO v. Eastern Scales (P.) Ltd. [1978] 115 ITR 323. It was held in the said decision that the instructions of the CIT under section 119(3), cannot control the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... objections of the assessee based on the provisions of section 119(3) which are not relevant at this juncture, since we have already held that these objections have no force, as held by the CIT himself at paragraph 5 of his order. 14. It will be seen from the above, that the main thrust of the CIT's order under section 263 is that there has been no enquiry or verification of the claims and explanations made by the assessee before the Assessing Officer. Before going into the correctness of this conclusion, we have to deal with two preliminary objects raised by Mr. Singh in this connection. He submitted that though the notices dated 20-5-1985 and 1-7-1986 issued by the CIT referred to guineas and silver bars, there is no reference to these items in the order passed under section 263 on 29-1-1987 and, therefore, we have to take it that the CIT did not consider the assessment erroneous and prejudicial so far as these items were concerned. He submitted that we should assume that the CIT was satisfied with the explanations offered by the assessee in reply to the show-cause notices. Shri Singh further objected to the inclusion of the bank accounts in assumed names in the order passed u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... njab National Bank, Ballygunge Branch, and (iii) Shyam Iron Works in Punjab National Bank, Ballygunge Branch, Calcutta. Our attention was not drawn to any other bank account such as Bright Steel Corporation, Kaycee Industries etc. referred to by the CIT in his order, Even the bank accounts referred to in the order under section 132(5) have been admitted by the Karta J.P. Goel to be his own in his individual capacity and returns were filed by him admitting the income for the relevant assessment years. These facts have not been controverted nor any material brought on record in the order passed by the CIT to doubt those facts. We therefore uphold the objection to the observations and directions contained in paragraph 4 of the CIT's order, in the absence of any allegation in either of the two notices issued under section 263 that there had been no enquiry regarding the ownership of the bank accounts. 15. We are now left with two items seized during the search, in respect of which the CIT has formed the opinion that no enquiry has been held by the Assessing Officer before completing the assessment. These are (1) cash of Rs. 5,09,000 and (2) Primary gold weighing 784.500 grams ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etailed explanation both for the cash and the primary gold. It was explained before the CIT in proceedings under section 132(11) that the cash was drawn from M/s. Goel Industries, a firm in which the assessee-HUF was a partner, on 5-9-1980 for payment to Bishan Dayal Goel of M/s. Steel Trading Company for supplies. The amount was received by M/s Goel Industries from various persons as stated earlier (page 77 of the paper book). In support of these receipts, cash book extracts of M/s Goel Industries for the period 14-8-1980 to 14-11-1980 were also filed. Letters of confirmations from the persons who gave the monies were also furnished. These are to be found at pages 154 to 158 of the paper book. Statements were taken from the employees/partners/ proprietors of the concerns which gave monies to M/s Goel Industries. These statements are found at pages 144 to 152 of the paper book. All the persons have affirmed having given monies to M/s. Goel Industries. These statements were taken in the months of February and December 1983, earlier to the issue of the instructions by the CIT on 29-8-1984. The order-sheet entries in the case of M/s Goel Industries, a certified copy of which was filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the hands of the assessee. But that is far different from saying that the Assessing Officer had not held any enquiry before completing the assessment in the manner in which he did. The suecessor-CIT, in the order under section 263, has himself held that notwithstanding the instructions issued by the predeccssor-CIT, the assessment order is one passed by the Assessing Officer only for which he alone should take responsibility. In fact we find from the extracts of the order sheet in the case of M/s. Goel Industries for the assessment year 1981-82 that even after the predecessor-CIT issued instructions on 29-8-1984 the Assessing Officer had carried out detailed enquiries and verification of the assessee's contentions and this is home out by the entries made therein on 29-10-1984, 12-11-1984, 12-12-1984, 4-2-1985, 11-2-1985, 18-2-1985, 20-2-1985, 22-2-1985, 25-2-1985 and 28-2-1985. A perusal of these entries further shows that the Assessing Officer continued the scrutiny of the seized books of accounts even after the issue of instructions by the CIT on 29-8-1984. It cannot therefore, be stated that the Assessing Officer had blindly followed the instructions of the CIT vide letter da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rfere with an order of the Income-tax Officer in order to safeguard the fair name and reputation of the Income-tax Department without any thought of going into the particular aspects of the assessment, Assessments which are mala fide, politically and communally motivated may be, however, set aside as being prejudicial to the interests of the Revenue. It is unnecessary, for us to illustrate the point any further. All that we wish to observe is that the scope of the interference under this section is not to set aside merely unfavourable orders and bring to tax some more money to the treasury. Nor is the section meant to get at sheer escapment of revenue which, as is well known, is taken care of by provisions elsewhere in the Act such, for instance, as section 147 of the Act. The prejudice must be prejudice to the revenue administration." At page 139 of the report His Lordship, after referring to the decision of the Supreme Court in Rampyari Devi Saraogi v. CIT [1968] 67 ITR 84 went on to say that the proper way of understanding the basis of the Supreme Court's decision is to interpret the power of the Commissioner as based on the substantial interests of the Revenue and not merely ..... X X X X Extracts X X X X X X X X Extracts X X X X
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