TaxTMI 
TaxTMI 
2010 (6) TMI 563
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....o be adopted on principle in matters; involving condonation of delay. We therefore condone the delay and admit the appeals for decision on merits. Facts giving rise to the appeals 2. Common order under section 263 was originally passed by the learned Commissioner of Income-tax on 19-11-1996 by which he had set aside the assessment orders passed by the Assessing Officer for all the three aforesaid assessment years and directed the Assessing Officer to reframe the assessment de-novo in accordance with law after making proper inquiries. The said order passed by the learned Commissioner was subject-matter of challenge before the Hon'ble Patna High Court, which by its order dated 17-11-2006 remanded the matter back to the learned Commissioner for passing the order afresh after giving reasonable opportunity on hearing to the assessee. Pursuant to the aforesaid order of the Hon'ble High Court, the learned Commissioner has passed a fresh order under section 263 of the Income-tax Act, 1961 on 30-3-2007 for all the aforesaid three assessment years by which he has once again set aside the assessment order for the aforesaid assessment years and restored the matter to the file of the Asse....
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.... on 5-1-1995, showing income of Rs. 30,390. Notice under section 143(2) was issued on 6-2-1995 and received duly by the assessee. In response to the departmental notices, Shri R.K. Kaushal, FCA appeared as authorized representative from time to time. The search and seizure operation was carried out at the Ranchi Airport on 1-2-1993 in which the baggage of Dr. R.K. Singh, assessee, was also searched. The search papers were seized by the ADIT (Inv.,), Ranchi. A query was drafted on the basis of search materials and seized papers and other informations. This querry letter was issued to the assessee on 5th January, 1995 fixing the date of reply on 16-1-1995. The reply to the query was received on 6-1-1995. In response to further query, the authorized representative submitted its reply on 23-3-1995. During the course of hearing, the authorized representative further submitted the copy of affidavit of Shri Ram Charitar Sinch, father of the assessee, and the copies of bank statement of the assessee. Further the bank analysis of the assessee was also filed on 28-3-1995 during the course of hearing along with the forwarding letter. The assessee is employed in the office o....
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....onsidering the material found during the course of search and the report of the investigation wing." 6. As stated earlier, the aforesaid order passed by the ld. Commissioner was challenged before the Hon'ble High Court of Patna upon which the Hon'ble High Court set aside the aforesaid order passed by the ld. Commissioner and remitted the matter back to the file of the CIT (Central), Patna or his successor to re-hear the matter in the presence of the assessee and pass necessary orders in accordance with law. In compliance with the aforesaid order passed by the Hon'ble High Court, the CIT (Central) heard the matter afresh and thereafter passed a fresh common order for all the three assessment years under appeal on 30-3-2007 which is now the subject-matter of appeal before this Tribunal. It may be relevant to point out at this stage that the ld. Commissioner has set aside the assessment orders and restored them to the file of the Assessing Officer for fresh assessment on the sole ground that the assessments were made by the Assessing Officer in undue haste and without proper enquiries and verification. The aforesaid reasoning is quite explicit on bare perusal of the following obser....
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..... According to him, the Assessing Officer ought to have verified the correctness of the self-serving affidavit filed by the father of the assessee and the details submitted by others to ascertain the truth. According to the learned Commissioner, failure on the part of the Assessing Officer to do so has rendered the assessment order passed by him erroneous and prejudicial to the interests of the revenue. 9. The ld. Commissioner further noted that the assessee's brother-in-law Shri Shambhu Prasad Singh and father Shri Ramcharitar Singh apparently did not have adequate income. However both of them filed returns after searches were carried out to explain the acquisition of properties in their names as also the ownership of various bank accounts detected at the time of search. The case of the Department is that the investments made in and acquisition of properties and bank accounts belonged to the assessee as Shri Shambhu Prasad Singh and Shri Ramcharitar Singh did not have adequate source of income. For similar reasons the ld. Commissioner has held that the assets including jewellery held in the name of assessee's mother and wife should have been properly examined to ascertain as to....
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....his relatives and therefore the Assessing Officer ought to have acted carefully and cautiously before accepting the returned income. According to him, the Assessing Officer ought to have made proper enquiries and verification before accepting the case of the assessee. He submitted that the returns were filed by Shri Ramcharitar Singh and Smt. Nirmala Singh after searches were carried out. Relying upon the judgment of the Hon'ble Supreme Court in Manji Dana v. CIT [1966] 60 ITR 582, he submitted that the mere fact that the same income has been assessed in the hands of Shri. Ramcharitar Singh and Smt. Nirmala Singh would not be a bar to the assessment of the same income in the hands of the assessee if it was found that the said incomes belonged to him. He submitted that it was non-examination of these crucial aspects which led the learned CIT to invoke his revisional jurisdiction under section 263. 14. The ld. authorized representative for the Department referred to the judgment of the Hon'ble Supreme Court in Malabar Industrial Co. Ltd. v. CIT [2000], 243 ITR 83 5. He submitted that the failure of the Assessing Officer to make proper enquiries and verification regarding the inves....
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....ore him. The Assessing Officer is therefore, required to act fairly while accepting or rejecting the claim of the assessee in cases of scrutiny assessments. He should be fair not only to the assessee but also to the Public Exchequer. The Assessing Officer has got to protect, on one hand, the interest of the assessee in the sense that he is not subjected to any amount of tax in excess of what is legitimately due from him, and, on the other hand, he has a duty to protect the interests of the revenue and to see that no one dodged the revenue and escaped without paying the legitimate tax. The Assessing Officer is not expected to put blinkers on his eyes and mechanically accept what the assessee claims before him. It is his duty to ascertain the truth of the facts stated and the genuineness of the claims made in the return when the circumstances of the case are such as to provoke inquiry. Arbitrariness in either accepting or rejecting the claim has no place. The order passed by the Assessing Officer becomes erroneous because an enquiry has not been made or genuineness of the claim has not been examined where the inquiries ought to have been made and the genuineness of the claim ought to....
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....ents and remanded the case to the ITO "with a direction to frame assessments after making a close scrutiny as to the extent of initial capital and the actual income earned by the assessee for the years in question." In that case also, the assessment order passed by the Assessing Officer was a non-reasoned or non-speaking order. On these facts, the Hon'ble Patna High Court has held that an assessment without inquiry would be erroneous within the meaning of section 263. The aforesaid judgment of the Hon'ble High Court has been consistently followed in several matters for taking the view that assessments without proper inquiries would be erroneous. These judgments are : CIT v. Smt Rambha Devi [1987] 164 ITR 658 (Pat.); CIT v. Belal Niss [1988] 171 ITR 6438 (Pat.); CIT v. Pushpa Devi [1988] 173 ITR 4459 (Pat.); CIT v. Geeta Devi Agarwal [1988] 174 ITR 60110 (Pat.); CIT v. Smt Sharda Devi Lath [1989] 175 ITR 566 (Pat,); CIT v. Smt. Krishna Devi [1989] 175 ITR 591 (Pat.); CIT v. Smt. Bibi Zaibunnisa [1990] 185 ITR 28411 (Pat.); and Kanpur Textiles Agent v. CIT [1991] 192 ITR 472 (All.). 19. The need for passing a reasoned order in conformity with the principles of natural justice has ....
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....are clear and explicit so as to indicate that the authority has given due consideration to the points in controversy. The need for recording of reasons is greater in a case where the order is passed at the original stage. The appellate or revisional authority, if it affirms such an order, need not give separate reasons if the appellate or revisional authority agrees with the reasons contained in the order under challenge.' Similar view was earlier taken by the Hon'ble Supreme Court in Siemens Engg. & Mfg. Co. Ltd. v. Union of India AIR 1976 SC 1785. It is settled law that while making assessment on assessee, the ITO acts in a quasi-judicial capacity. An assessment order is amenable to appeal by the assessee and to revision by the Commissioner under sections 263 and 264. Therefore, a reasoned order on a substantial issue is legally necessary. The judgment of the Hon'ble Madras High Court on which reliance was placed by the learned Counsel for the assessee also points to the same direction. We have reproduced above the relevant portion of the observations made by the learned Judges. They have held that orders, which are subversive of the administration of revenue, must be regarded....
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....elevant aspects of the case and more particularly those aspects of the case which the learned Commissioner has highlighted in his order under appeal. The Assessing Officer ought to have looked into all the relevant aspects of the case including those highlighted by the learned Commissioner in view of the fact that the assessee was an employee of the Animal Husbandry Department of the Government of Bihar and was involved in what is now widely known as Animal Husbandry Scam. He was also sent to jail. It was a case where search and seizure operations were carried out by the Department leading to recovery of incriminating materials. The CBI had also carried out search and seizure operations and recovered incriminating materials. It was therefore incumbent upon the Assessing Officer to collect relevant information not only from the assessee but also from all the concerned agencies including CBI to ascertain the acquisitions of properties by the assessee and also to ascertain the nature and sources thereof and thereafter record a finding in that behalf. The inaction and failure on the part of the Assessing Officer in making requisite inquiries and verifications on the aspects highlighted....