TMI Blog1995 (5) TMI 53X X X X Extracts X X X X X X X X Extracts X X X X ..... tive, it is clear from the order that the incriminating material seized by the income-tax authorities was looked into by the Assessing Officer before framing the assessment. In fact, the Assessing Officer had issued three enquiry letters dated 6-2-1987, 10-2-1987 and 29-1-1988, copies of which are placed at pages 9 to 14 of the assessee's compilation. 3. The ld. CIT, however examined the record of the assessee and noticed that the document seized during the income-tax search had not been considered by the Assessing Officer. He also noticed that some of the investments had not been looked into and on some, enquiries had not been made. The ld. Commissioner accordingly issued a show-cause notice dated 4-2-1992 listing as many as nine items which were not considered by the Assessing Officer at the time of original assessment. The assessee furnished a detailed reply dated 15-9-1992 which is placed at pages 4 to 8 of the assessee's compilation. 4. The ld. Commissioner, after enumerating the nine items mentioned in the show-cause notice in the body of the order passed under section 263 of the Act, took cognisance of the reply submitted by the assessee but held that it was neither pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (P) Ltd. was incorporated on 5-5-1984 and that no income was earned up to 29-9-1984 when the assessee resigned from directorship. The assessee had explained that shares worth Rs. 10,000 of this company had been purchased after debiting the same in the books of accounts and since no income had been earned, nothing was to be shown in the return. As regards item No. (viii), it was submitted that business in the style of M/s. J.K. Feeds was being run by Sardarni Jasbir Kaur w/o Dr. Jagmohan Singh, sister-in-law of the assessee, as a proprietary concern. It was pointed out that in the reply submitted, it had been explained that the proprietary concern was proposed to be converted into a partnership concern for which purpose a partnership deed dated 17-10-1984 was also executed but this remained a paper transaction only and no activity was done by the partnership concern. It was also pointed out that neither any investment was made nor did the firm actually come into existence. It was also submitted that Sardarni Jasbir Kaur was assessed in her proprietary capacity for the said business for assessment year 1985-86. 7. As regards item No. (ix), it was submitted that all the incriminati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and prejudicial to the interests of the revenue. Relying on the Rajasthan High Court decision in CIT v. Trustees Anupam Charitable Trust [1987] 167 ITR 129, it was submitted that the error envisaged by section 263 was not one which depended on possibility or guesswork, but it should be actually an error either of fact or of law. The learned counsel for the assessee, therefore, forcefully submitted that all the necessary enquiries had been made by the ITO and the ld. Commissioner had failed to point out any error in the assessment order. It was, therefore, pleaded that the impugned order may be vacated. 9. The ld. Departmental Representative submitted that in the show-cause notice, 9 reasons were given by the ld. Commissioner for invoking his jurisdiction under section 263. According to the ld. Departmental Representative, these very reasons were incorporated in the impugned order. It was submitted that these were valid reasons which could justify the intervention by the learned Commissioner. It was submitted that the Assessing Officer had failed to consider the entire evidence and hence the setting aside of assessment order became a necessity. The ld. Departmental Representative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se law cited by the assessee and referred to above makes it abundantly clear that the ld. Commissioner must state the reasons for intervention before assuming jurisdiction under section 263 and while passing the order under section 263 must come to a conclusion that the order passed by the Assessing Officer was not only erroneous but also prejudicial to the interests of the revenue. In the case of Kanda Rice Mills the facts were more or less similar to what we find in the instant case. In that case for assessment year 1979-80, the Assessing Officer completed the assessment. The ld. Commissioner intervened under section 263 of the Act and set aside the order of assessment with a direction to make fresh assessment on the ground that business loss of the assessee amounting to Rs. 30,000 was determined after adjusting deductions under section 80J and was allowed to be carried forward and also due to certain other infirmities. The Tribunal found that no firm conclusions were arrived at by the Commissioner in his revisional jurisdiction, and therefore, it could not be said that the assessment made by the Assessing Officer was erroneous, which was one of the pre-requisites for the exercis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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