2004 (7) TMI 24

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....ing the order under section 263 based on the record of assessment?" Briefly stated the facts giving rise to the present reference are as follows: The assessee filed on August 23, 1977, a return showing income of Rs. 33,310 which included Rs. 28,068 as profit under section 41(2) of the Act on the sale of truck No. UPL 9030. After receipt of the return the Income-tax Officer made a note "investment in new truck No. UTY 355 to be looked into" on the return and issued notice dated March 4,1980, under section 143(2) read with section 142(1) of the Act requiring the assessee to produce account books, and bank pass books, etc., on March 17,1980. That day, i.e., March 17, 1980, the assessee appeared before the Income-tax Officer and filed a revis....

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....ome of Rs. 20,000 was filed and in due haste the Income-tax Officer did not appear to have made inquiry about the bank accounts, copy of which was filed by the assessee. (ii) The Income-tax Officer also did not inquire the reason for variation in the profit under section 41(2) of the Act as Rs. 28,068 was shown earlier and Rs. 48,068 later. (iii) The Income-tax Officer also did not consider the applicability of section 271(1)(c) of the Act in respect of the income shown in the revised return. The Commissioner of Income-tax recorded a finding that the assessment was erroneous in so far as it was prejudicial to the interests of the Revenue, and, therefore, he issued notice dated February 26, 1982, under section 263 of the Act to the assess....

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....setting aside the whole of the assessment order and further section 263 of the Act refers to a particular proceeding that is being considered by the Commissioner and it is not possible, when the Commissioner is dealing with the assessment proceedings and the assessment order, to expand the scope of the these proceedings which are being sought to be revised by the Commissioner. As the proceedings for the levy of a penalty are proceedings independent of and separate proceeding from the assessment proceedings and there is no identity between the two, the assessment cannot be said to be erroneous or prejudicial to the interests of the Revenue because of the failure of the Income-tax Officer to record his opinion about the leviability of penalty....

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....d. In the assessment order it has also not been dealt that earlier the applicant was asked to furnish certain details and the assessee had furnished those details by filing a revised return. There is no mention of the details, which had been furnished by the assessee. The hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. [2000] 243 ITR 83, has held as follows: "A bare reading of this provision makes it clear that the prerequisite to the exercise of jurisdiction by the Commissioner suo motu under it, is that the order of the Income-tax Officer's erroneous in so far as it is prejudicial to the interests of the Revenue. The Commissioner has to be satisfied of twin conditions, namely, (i) the order of the Assessing Officer sough....