TaxTMI 
TaxTMI 
2009 (2) TMI 431
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....o the scope and ambit of the power of the Commissioner to exercise suo motu power of revision under section 263(1) of the Income-tax Act, 1961. 3. As all the appeals have been heard analogously and the parties are represented by the same counsel, they are being disposed of by this common order. 4. The facts in the case pertaining to M/s. Daga Entrade (P) Ltd. in I. T. A. No. 117(Guwahati) of 2004 had been noted by the learned Tribunal and since the relevant facts are not different for the other assessees, the necessary facts for adjudicating the present appeal reflected in this order, pertain to I. T. A. No. 1/2005 (CIT v. Daga Entrade (P) Ltd.). 5. The assessee, M/s. Daga Entrade (P) Ltd. filed return of income on November 30, 2000, showing total income of Rs. 11,400. The case was selected for scrutiny and process under section 142(1) and 142(2) were issued. 6. Following information gathered by the Department that M/s. S. S. Sipani and Co. is providing accommodation entries, search operations were made at Bangalore and in the office of Mr. D. K. Sipani C. A. at Guwahati. Following search, blank share certificates of 28 companies were found. This indic....
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....revisional power by the Commissioner of Income-tax inasmuch as, it has been found by the Commissioner of Income-tax that the appraisal report, following the search made by the DDIT (Investigation), have not been considered by the Assessing Officer at the time of making assessments. It is also pointed out that the said appraisal report prepared after search and seizure operation in the Sipani group of company's office at Bangalore and the office of their chartered accountant Mr. D. K. Sipani at Guwahati, were very much avail-able with the Assessing Officer. Yet the Assessing Officer did not make any enquiry with regard to the findings and recommendations in the said appraisal report, while finalizing the assessments. Accordingly, it is con-tended that because of this omission, the assessment orders have become erroneous and have also caused prejudice to the interest of the Revenue and, therefore, exercise of suo motu revisional power by the Commissioner of Income-tax under section 263(1) of the Income-tax Act, and directing fresh assessments, was justified in law. 12. Learned counsel for the Revenue also contends that the Commissioner of Income-tax has held the assessment order t....
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....d only on substantial questions of law, would not be justified as it could not be demonstrated as to how the Tribunal's order raises a substantial question of law. 18. To indicate the powers of the High Court to entertain appeals under section 260A, the learned counsel has relied upon the following decisions : (1) CIT v. Mangilal Didwania [2006] 286 ITR 126 (Raj) ; (2) Sangrur Vanaspati Mills Ltd. v. CIT [2006] 283 ITR 267 (P&H) ; and (3) CIT v. S. V. Electricals P. Ltd. [2005] 274 ITR 334 (MP). 19. On examination of the order passed by the Commissioner under section 263 of the Income-tax Act, it is seen that the assessment orders passed by the Assessing Officer were held to be erroneous on the ground that the relevant information revealed through the appraisal report of the DDIT (Investigation) was not enquired into and appropriate verification required to be made, were also not made by the Assessing Officer. This appraisal report was taken to be a relevant document, required to be considered by the Assessing Officer and yet it was found that the Assessing Officer disregarded the report and never confronted the assessee with the facts revealed in the appraisal repor....
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.... may call for and examine the records of any proceeding under the Income-tax Act and no reasons are required to be given by the Com-missioner, for calling for and examination of records of any proceeding. It is also provided that the Commissioner on scrutiny of any proceeding, may consider the order passed by the Income-tax Officer to be erroneous and prejudicial to the interest of the Revenue. Once the Commissioner concludes that an erroneous order has been passed which has caused pre-judice to the interests of the Revenue, he may exercise suo motu power of revision. 24. Only at this stage of consideration, an appropriate opportunity to the assessee is required to be given and the assessee is required to be heard. Thereafter, the Commissioner can pass appropriate orders, including an order, modifying the assessment or cancelling the assessment and directing fresh assessment. 25. The Supreme Court in Rampyari Devi Saraogi [1968] 67 ITR 84, while examining the scope of revisional power under section 33B of the Income-tax Act, 1922, which is identical as section 263(1) of the current Income-tax Act, held that it is not necessary for the Commissioner to embellish the short....
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....the Assessing Officer was very much aware about the appraisal report indicting the assessee. Yet the materials revealed through the appraisal report were not considered by the Assessing Officer, while finalizing the assessments, nor were the assessees confronted and given opportunity to rebut the findings of the appraisal report. The Assessing Officer merely stated that some loose sheets seized during the survey were not relevant for the period of assessment under consideration, without referring to the actual appraisal report or indicating any reason as to why the appraisal report ought not to be considered. 31. Referring to the above circumstances, the Commissioner held that the assessments have been finalized without reference to relevant materials and therefore, the said assessment orders, in our considered view, have been rightly held to have been erroneously passed by the revisional authority and the reasons indicated by the Commissioner are found by us to be sufficient, without undue elaboration. We are also of the view that non-referring in detail to the contents of the appraisal report by the Commissioner of Income-tax has not resulted in any error, justifying interf....
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....eference to the terms of section 33B itself. Courts would not be justified in imposing additional limitations on the exercise of the said power on hypothetical consideration of policy or the extraordinary nature of the power." 37. When it is seen that relevant materials have been ignored at the time of making assessment, which has resulted in erroneous assessment, the exercise of suo motu revisional power was justified and we are of the considered opinion that, it was wrong on the part of the Tribunal to say that the basis for assumption of jurisdiction to pass orders under section 263 of the Income-tax Act, was not decipherable, in the revisional order of the Commissioner of Income-tax. 38. The Assessing Officer did not consider the appraisal report at all, although the said report was available with him at the time of making assessment. The appraisal report, which has been placed before us, in our view, is very much relevant for the purpose of making assessment and as such the interference by the Commissioner of Income-tax is found by us to be justified. 39. We find in the present cases that relevant materials were ignored b....