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Issues: Proper service of notice under s. 263(1) of the IT Act, 1961 and adequacy of the opportunity given for hearing; Failure of the ITO to consider entries in a seized diary during assessment leading to an erroneous and prejudicial assessment order by the CIT.
Proper service of notice and adequacy of opportunity for hearing: The case involves an appeal against an order passed by the CIT under s. 263 of the IT Act, 1961 for the assessment years 1979-80 and 1980-81. The main contention of the assessee was that the service of notice under s. 263(1) was improper and inadequate time was given for the hearing, thus denying a proper opportunity to be heard. The CIT issued a show cause notice to the assessee, fixing the date of hearing after serving the notice. The assessee raised concerns about inadequate opportunity, which the CIT rejected, emphasizing that the assessee was duly heard and had the chance to present submissions. The CIT's decision was upheld, stating that the opportunity provided was not inadequate, and the assessee had been heard, thus not warranting the setting aside of the order on this ground. Failure to consider entries in seized diary during assessment: The CIT's order was based on the failure of the ITO to take into account entries in a diary seized from the assessee, indicating large-scale manufacturing operations and investments exceeding Rs. 2 lakhs. The CIT found the original assessment erroneous and prejudicial to the Revenue due to the ITO's failure to examine the diary entries. The CIT directed the ITO to redo the assessment after considering the diary entries and providing a proper opportunity for the assessee to be heard. The Tribunal upheld the CIT's decision, stating that the completion of the original assessment without examining the seized diary was indeed erroneous and prejudicial to the Revenue. The Tribunal found no reason to interfere with the CIT's order, rejecting the appeal and affirming the direction to conduct fresh assessments considering the diary entries and providing a hearing opportunity to the assessee. In conclusion, the Tribunal upheld the CIT's order under s. 263, emphasizing the importance of considering seized diary entries during assessments and ensuring proper opportunities for the assessee to be heard. The appeal was rejected, affirming the necessity for a thorough assessment process in compliance with the IT Act, 1961.
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