TaxTMI 
TaxTMI 
2001 (6) TMI 205
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.... assessee was running the business. Since the assessee's father was not available, certain questions were asked to him about the father's business in fertilisers. Similarly, the surveying authorities found some evidence to show that the assessee's mother Smt. Sindhubai P. Wani, had sold certain plots of land from which she gained capital gains. In this regard, the assessee explained that the assessee's mother had inherited the land form her father. This was an agricultural land which was converted into non-agricultural land and then developed and sold. The plots were sold from 1988 till 1993. The authorities also noted that a residential house was newly being construed. In explaining this construction, the assessee stated that the construction as of the assessee's father's house and bulk of the investment had come from sale consideration received by the mother from sale of the house. At the conclusion of the statement, the surveying authorities asked the assessee to disclose income from his own business which the assessee declared as under: Asst. yr. Income (Rs.) 1990-91 20,000 1991-92 25,000 1992-93 27,000 1993-94 35,000 1994-95 31,000 The assessee also, on behalf of ....
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..... yrs. 1990-91 to 1994-95 are as under: Asst. yr. Income shown (Rs.) Income assessed (Rs.) 1990-91 20,000 22,000 1991-92 25,000 27,000 1992-93 27,000 29,000 1993-94 35,000 38,000 1994-95 41,000 42,000 8. Later on, the CIT, Nashik, scrutinised the record and noted that instead of verifying the documents found during the course of survey, the AO had simply estimated the income. According to him, the income so estimated by the AO was without any basis and that for determining the correct income, the AO should have confronted the assessee with the material available in his possession. He accordingly invoked his jurisdiction under s. 263 and after giving an opportunity of being heard to the assessee held that proper enquiries were not made in respect of: (i) estimation of income by the AO, (ii) no enquiries in respect of other activities, investments such as fertiliser business and sale of plots, (iii) household expenses, (iv) expenses incurred for cost of construction, and (v) sundry creditors. He accordingly set aside the orders of the AO and directed him to make de novo assessments after making proper enquiries on the different activities of the assessee as i....
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..... Shri C.M. Bhake, the learned Departmental Representative, strongly supported the orders of the CIT. He submitted that since the AO had failed to make necessary enquiries, the CIT was justified in invoking his jurisdiction under s. 263 and setting aside the orders of the AO with directions that he should make de novo assessments after making necessary enquiries. 11. I have considered the rival submissions and perused the facts on record. In passing the order under s. 263, it is expected that the CIT should be prima facie satisfied about the erroneous nature of the assessment which has caused prejudice to the Revenue. Beyond stating that no further enquiries are made, there should be some material which must be pointed out to show that how lack of enquiries have caused prejudice to the Revenue. This has not been done by the CIT in the present case. Reference in this behalf may be made to the decision of the Chandigarh Bench of the Tribunal in N.S. Ichhopani vs. Asstt. CIT (1997) 58 TTJ (Chd) 73 : (1995) 55 ITD 88 (Chd), where the Bench has observed as under: "Setting aside an assessment is no ordinary matter. In fact, in tax laws as in other laws, certainty and finality are the p....
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....e learned CIT cannot order fishing enquiries as held by the Bombay High Court in the case of Garbriel Income Ltd. Accordingly, I hold that the CIT, Nashik, was not justified in invoking his jurisdiction under s. 263. Accordingly, the orders passed by him are quashed. 12. Before I part with these appeals, I must state that the question of propriety of the concerned decision also is to be considered. The learned CIT failed to appreciate that the assessee was a small assessee and there was nothing to indicate on record that there was any large scale evasion or avoidance on the part of the assessee or that any substantial revenue had escaped taxation. When a higher authority, like the CIT sits in judgment over the orders passed by the AO, he should also see that valuable time of the Department is not wasted in making petty enquiries for petty revenue. Here, in the present case, it is noted that a very small assessee was unnecessarily targetted and considerable hardship was being caused to the assessee on account of cancelling the assessments already made. The orders passed by the AO were brief, apparently for the reason that it was the case of a small assessee, but that by itself is n....