TaxTMI 
TaxTMI 
2003 (5) TMI 48
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....as framed by the Assessing Officer on March 31, 2000, who determined the total loss at Rs. 1,27,011. Subsequently, the assessee received a notice dated October 12, 2000, under section 263(1) of the Act to show cause as to why remedial steps may not be taken as the assessment order dated March 31, 2000, in the opinion of the Commissioner, was erroneous and prejudicial to the interests of the Revenue. This opinion had been formed by the Commissioner on the ground that the Assessing Officer, while framing the assessment, had not examined the following points: "(i) During the course of survey operation under section 133A an amount of Rs. 10,50,000 was surrendered by you but in the return of income the surrendered amount was not shown. The Assessing Officer failed to examine this issue properly while framing the assessment. (ii) Proper enquiries/investigation from the parties concerned were not made to ascertain the genuineness of the purchases." The assessee furnished a detailed reply to the show cause notice in which it was explained that the Assessing Officer had made detailed inquiry on both the issues before completing the assessment. On receipt of this reply, the Commi....
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....ain, learned counsel for the appellant, contended that the order of the Commissioner was based on an erroneous premise that the Assessing Officer had not properly examined the issue about surrender of Rs. 10,50,000 by the assessee at the time of surveyor that proper investigations from the parties concerned were not made to ascertain the genuineness of the purchases. He contended that a detailed reply had been filed before the Commissioner in which the details of inquiries conducted by the Assessing Officer had been given. He also referred to the order-sheet entries made from time to time and also to various notices issued by the Assessing Officer and the replies filed in response thereto by the assessee to support his contention that the assessment had been framed after making full inquiries and verification. Copies of the relevant documents as per assessment records have been filed with appeal as annexures A-1 to A-12. Shri A.S. Tewatia, learned counsel for the Revenue, on the other hand, supported the orders of the Commissioner and the Tribunal and maintained that no proper inquiry had been made by the Assessing Officer about the surrendered amount of Rs. 10,50,000 and about ....
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.... Assessing Officer had accepted the contention of the assessee that surrender of Rs. 10 lakhs had been made due to a bona fide mistake in calculation of stock as per books and that in fact there was no discrepancy in stock. In fact, in the assessment order itself, the Assessing Officer has given the following office note to explain as to why the addition of Rs. 10 lakhs was not being made: "In this case survey under section 133A was carried out on November 27, 1997, and physical verification of the stock was made. The total value of the stock at the business premises was worked out at Rs. 52,25,483 as per physical verification as against stock of Rs. 43,21,882 as per books. Against this excess stock of Rs. 9,03,601, Shri Ram Kishan Gupta, husband of a partner, had surrendered an amount of Rs. 10,00,000 at the time of survey. This surrendered income of Rs. 10,00,000 has not been shown in the return filed. Now the assessee has stated that at the time of survey following three bills had been left to be taken in totalling though these bills were duly entered in the account books. The bills are as under: Aggarwal Enterprises: Rs. Bill dated 29-10-1997 2,....
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....s to whether the surrender was improperly made and the same could be retracted at the assessment stage on the basis of evidence, I need not say anything at this stage since the matter is now before the Assessing Officer pursuant to set aside by the Commissioner of Income-tax under section 263. All that I would like to observe is that the Assessing Officer did raise some queries and the assessee filed replies, but not a single sentence is mentioned in the assessment order. The Assessing Officer chooses to deal with the surrender of cash amounting to Rs. 50,000, but does not say anything about the excess stock of Rs. 10,00,000." A perusal of the above shows that the Tribunal has based its findings entirely on the fact that there is no mention in the assessment order about the inquiries made by the Assessing Officer about the discrepancy in stock. This in our view is not the correct approach as is evident from the provisions of sub-section (1) of section 263 of the Act, which reads as under: "263. (1) The Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Assessing Officer is erroneous in so....
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....al on record to show that the matter had been discussed in detail by the Assessing Officer. The least that the Tribunal could have done was to refer to the assessment record to verify the contentions of the assessee. Instead of doing that, the Tribunal has merely been swayed by the fact that the Assessing Officer has not mentioned anything in the assessment order. During the course of assessment proceedings, the Assessing Officer examines numerous issues. Generally, the issues which are accepted do not find mention in the assessment order and only such points are taken note of on which the assessee's explanations are rejected and additions/disallowances are made. As already observed, we have examined the records of the case and find that the Assessing Officer had made full inquiries before accepting the claim of the assessee qua the amount of Rs. 10 lakhs on account of discrepancy in stock. Not only this, he has even gone a step further and appended an office note with the assessment order to explain why the addition for alleged discrepancy in stock was not being made. In the absence of any suggestion by the Commissioner as to how the inquiry was not proper, we are unable to uphold....