1988 (6) TMI 77 - AT - Income Tax

Summary

Issues Involved:
1. Validity of re-opening the assessment under section 143(2).
2. Jurisdiction of the ITO, B-Ward, Shillong.
3. CIT (Appeals)'s decision to pass an ex parte order.
4. Compliance with section 250(6) by CIT (Appeals).
5. Merits of the additions made under sections 69C, 40A(3), and 68.

Issue-Wise Detailed Analysis:

1. Validity of Re-opening the Assessment under Section 143(2):
The assessee contended that the CIT (Appeals) erred in holding that re-opening of the assessment under section 143(2) was valid, ignoring the fact that the original assessment was made under the summary assessment scheme. The ITO, with the approval of the IAC, re-opened the summary assessment and issued notice under section 143(2) to the assessee, who failed to comply. The ITO provided sufficient time for the assessee to produce materials and accounts, and after impounding the books, the assessee filed a revised return under the Amnesty Scheme. The ITO questioned the sufficiency of the disclosed amount to cover total payments and added back the difference under section 69C as unexplained sources.

2. Jurisdiction of the ITO, B-Ward, Shillong:
The assessee argued that the ITO, B-Ward, Shillong, lost jurisdiction after the revised return showed an income exceeding Rs. 1,00,000, which should fall under the jurisdiction of ITO, A-Ward, Shillong. The CIT (Appeals) rejected this claim, stating that the assessee did not challenge the jurisdiction during the assessment proceedings. The Tribunal held that the ITO, B-Ward, originally had jurisdiction and continued to have it despite the revised return. Jurisdictional changes cannot be presumed without express statutory provisions, and the ITO, B-Ward, retained jurisdiction to complete the assessment.

3. CIT (Appeals)'s Decision to Pass an Ex Parte Order:
The assessee contended that the CIT (Appeals) erred in deciding the case ex parte, influenced by the assessee's non-appearance. The CIT (Appeals) fixed several hearing dates and granted adjournments, but ultimately proceeded ex parte due to non-appearance. The Tribunal found that the CIT (Appeals) gave sufficient opportunities, and the decision to proceed ex parte was justified based on the materials on record.

4. Compliance with Section 250(6) by CIT (Appeals):
The assessee argued that the CIT (Appeals) did not provide sufficient reasons for his conclusions, violating section 250(6), which requires a speaking order. The CIT (Appeals) briefly upheld the additions made by the ITO without detailed reasoning. The Tribunal agreed that the CIT (Appeals)'s order was too short and cryptic, lacking proper attention to substantial grounds raised. The Tribunal set aside this part of the order for fresh disposal by the CIT (Appeals) with detailed reasoning and after giving the assessee a reasonable opportunity to be heard.

5. Merits of the Additions Made under Sections 69C, 40A(3), and 68:
The ITO made additions under sections 69C (unexplained expenditure), 40A(3) (disallowance for cash payments exceeding prescribed limits), and 68 (unexplained cash credits). The CIT (Appeals) upheld these additions briefly. The Tribunal directed the CIT (Appeals) to re-examine these additions in detail, considering the substantial amounts involved and the necessity for a thorough evaluation.

Conclusion:
The Tribunal found that the re-opening of the assessment under section 143(2) was valid and the ITO, B-Ward, Shillong, retained jurisdiction. However, the CIT (Appeals) erred in passing a cryptic order without sufficient reasoning and was directed to re-examine the merits of the additions in detail. The appeal by the assessee was treated as allowed for statistical purposes, with specific directions for prompt disposal by the CIT (Appeals).