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TMI Blog1987 (8) TMI 139X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the assessee in the return and the papers accompanying it without any enquiry regarding sources of income and its ownership is not sufficient to come to the conclusion that the ITO s order is erroneous and prejudicial to the interest of revenue and that something more should be shown indicating loss of revenue and if this is not done, the order of the CIT could be said to be suffering from legal infirmity ? 3. Whether the decisions of the Allahabad High Court in the cases of J.P. Srivastava Sons (Kanpur) Ltd. v. CIT [1978] 111 ITR 326 and that of Punjab and Haryana High Court in the case of CIT v. R.K. Metal Works [1978] 112 ITR 145 have been correctly applied in the facts and circumstances of this case ? 4. Whether the Hon ble Tribunal is legally justified in rejecting the decisions of the Supreme Court and the High Courts quoted extensively in the Annexure A to the CIT s order under section 263 and whether its interpretation of the ratio decidendi in these cases is correct ? 5. Whether the fact that in circumstances similar to this case, the Hon ble Tribunal in the two cases mentioned in the statement of facts, has itself found the Commissioner s orders under sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this question even if referred to their lordships will not be able to change the effect of the order of the Tribunal. According to the Tribunal, it was not merely an error committed by the ITO which entitled the CIT to proceed under section 263 of the Act. The CIT must show that the error was prejudicial to the interest of revenue. CIT has not brought out anywhere in his order that the erroneous order passed by the ITO had been prejudicial to the interest of revenue. Unless this was established that the errors had been to the interest of revenue it is not possible for us to hold that CIT would be justified for assuming jurisdiction under section 263 and cancel the assessment order. Taking this view of the matter we are of the view that no useful purpose will be served by referring this question to their Lordships. 3. As far as question Nos. 3 and 4 are concerned these are in our opinion vague and full of ambiguity. These are, in our view undoubtedly unsuitable for being referred to their Lordships. 4. As none of the questions sought to be referred has been found to be an eligible question the request of the applicant Commissioner to refer the questions cannot be allowed. 5. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his acceptance of whichever has been said by the assessee in the return and the papers accompanying it without any enquiry regarding sources of income and its ownership is not sufficient to come to the conclusion that the ITO s order is erroneous and prejudicial to the interest of revenue and that something more should be shown indicating loss of revenue and if this is not done, the order of the CIT could be said to be suffering from legal infirmity ? 3. Whether the decisions of the Allahabad High Court in the cases of J.P. Srivastava Sons (Kanpur) Ltd. v. CIT [1978] 111 ITR 326 and that of Punjab and Haryana High Court in the case of CIT v. R.K. Metal works [1978] 112 ITR 445 have been correctly applied in the facts and circumstances of the case ? 4. Whether the Hon ble Tribunal is legally justified in rejecting the decisions of the Supreme Court and the High Courts quoted extensively in the Annexure A to the CIT s order u/s 263 and whether its interpretation of the ratio decidendi in these cases is correct ? 5. Whether on the facts and in the circumstances of the case, the Hon ble Tribunal in the two cases mentioned in the statement of facts has itself found the Commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs agreed that they need not be referred to the High Court as questions of law arising out of the order of the Tribunal. There was thus a difference of opinion with regard to the question No. 1 while Judicial Member holds that that was a question of fact, the learned Accountant Member holds that that was a question of law. Now the matter is before me as a Third Member to express my opinion on this matter. 2. Before I express my opinion, it is necessary to notice a few facts which are material for the purpose of disposal of this difference of opinion. This difference of opinion arose in respect of assessments made for the assessment years 1981-82, 1982-83 and 1983-84. These appeals are disposed of by the Tribunal by a consolidated order. The assessee was assessed in the status of AOP for the assessment years under consideration, returns were filed by the assessee on11th August, 1981,25th August, 1982respectively for these three years. The assessments under section 143(3) of the IT Act, 1961 were completed on6th October, 1982for the first two years and on17th July, 1983for the third year. Subsequently the CIT held the view that these assessments were made in a hurry and haste and p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by him could not be said to be erroneous. Still the CIT held that the assessments made were erroneous and prejudicial to the interests of the revenue without giving any finding thereon in his order passed u/s. 263. Reliance was placed upon the decision of the Allahabad High Court in the case J.P. Srivastava Sons (Kanpur) Ltd. v. CIT [1978] 111 ITR 326 where the Allahabad High Court held that in proceedings u/s. 263, the CIT should examine the case on merits and that he could take action only if he had rejected the pleas raised on behalf of the assessee. Reliance was also placed before the Tribunal on an order passed by the Tribunal in another case namely Gauri Shanker (P.) Family Trust,Agrawhere under similar circumstances the orders passed by the CIT u/s. 263 were set aside by the Tribunal as not being prejudicial to the interests of the revenue. The Tribunal after considering all the material and the cases relied upon, came to the conclusion that the orders passed by the ITO could not be said to be orders passed without proper enquiry much less in haste and hurry. The categorical finding given by the Tribunal was that the CIT was wrong in saying that that the assessments made b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t justified in setting aside the assessments. 3. In my view, the findings recorded by the Tribunal that the orders passed by the ITO were neither erroneous nor prejudicial to the interests of the revenue were pure findings of fact based upon ample material. It cannot be said on the facts of this case that the ITO had not examined the evidence and then completed the assessments in haste and hurry. All the findings recorded by the Tribunal in its order go to justify the improper exercise of jurisdiction by the CIT u/s. 263 and that the findings recorded by the Tribunal were pure findings of fact. 4. In my view, therefore, those findings of fact do not give rise to any question of law. As I have already mentioned in the beginning, that there is a difference of opinion between my learned brothers only with regard to question No. 1 and in my opinion, and for the reasons mentioned above even that question is a pure question of fact and not a mixed question of law and fact requiring reference to the Hon ble High Court for its opinion. Therefore, these reference applications are liable to be rejected. 5. The matter will now go before the Regular Bench to pass the final order in accor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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