1990 (3) TMI 113 - AT - Income Tax

Assessing Officer, Assessment Order, Cinema Building, Orders Prejudicial To Interests, Reference To Valuation Officer

Summary

Issues:
1. Validity of assessment order under section 143(1) based on Circulars of the Board.
2. Jurisdiction of the Commissioner under section 263 to examine assessment orders.
3. Correctness of assessment completed without waiting for Valuation Officer's report.
4. Treatment of unsecured loans in the balance sheet during assessment.

Analysis:

Issue 1: Validity of assessment order under section 143(1) based on Circulars of the Board

The assessee contended that assessments under section 143(1) based on Circulars of the Board were not erroneous or subject to proceedings under section 263. The argument relied on the binding nature of benevolent circulars and previous court decisions. However, the Tribunal clarified that while the Circulars provide guidance to Income-tax Officers, they do not prevent the Commissioner from exercising revisional jurisdiction under section 263. The Tribunal differentiated between the two sets of provisions, emphasizing the Commissioner's authority to review assessment orders even if made under section 143(1).

Issue 2: Jurisdiction of the Commissioner under section 263 to examine assessment orders

The Tribunal established that the Commissioner has the power under section 263 to scrutinize assessment orders, irrespective of whether they were completed under section 143(1) or not. The Tribunal highlighted that the Commissioner's jurisdiction is focused on the assessment order itself, not the actions of the Income-tax Officer. Previous court decisions were referenced to support the Commissioner's ability to review and correct assessment orders.

Issue 3: Correctness of assessment completed without waiting for Valuation Officer's report

The Tribunal found that an assessment completed without waiting for a Valuation Officer's report, despite a reference being made, was erroneous and prejudicial to the revenue's interests. The Tribunal emphasized that the Income-tax Officer should have conducted a thorough investigation based on the reference made to the Valuation Officer. The Tribunal concluded that the assessment order, in this case, was rightly deemed erroneous due to the incomplete assessment process.

Issue 4: Treatment of unsecured loans in the balance sheet during assessment

Regarding unsecured loans in the balance sheet, the Tribunal noted that the existence of such loans without complete addresses and confirmation letters warranted further inquiry by the assessing officer. The Tribunal highlighted that the assessment was completed without proper investigations into the genuineness of these loans, which led to the assessment being considered erroneous and prejudicial to revenue interests. Consequently, the Tribunal upheld the Commissioner's order based on these findings.

In conclusion, the Tribunal dismissed the appeal filed by the assessee, affirming the correctness of the Commissioner's decision regarding the assessment order for the relevant assessment year.