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TMI Blog1990 (5) TMI 66X X X X Extracts X X X X X X X X Extracts X X X X ..... 44,534 respectively. The assessment order was framed on16-12-1983under section 143(3) of the Act at an income of Rs. 55,603 for the first period and at Rs. 41,734 for the second period. Thus aggregate income for both the periods was of Rs. 97,337. 4. The assessment record for this year was subsequently the subject-matter of examination by the learned CIT,New Delhi. It was noticed by him that the learned ITO did not examine the materials seized during the course of search operations conducted on24-5-1983. According to the learned CIT at the time of search two papers bearing revenue stamps without signature were found and seized. One of those papers showed that on Chaitsudi 8, Samvat 2039, a sum of Rs. 3,19,448 was due to the firm from Smt. Hem Lata. According to the learned CIT the learned ITO did not examine these papers. The learned ITO was not seen to have made any enquiries regarding the resources out of which the above amount was advanced by the assessee. Thus the assessment order framed by the learned ITO was considered as erroneous and prejudicial to the interest of revenue. A show-cause notice dated24-2-1986was sent to the assessee incorporating the learned CIT's intentio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng heard to the assessee." 5. The present appeal by the assessee before us on the ground mentioned hereinabove is against that finding. Shri K.P. Bhatnagar, the learned advocate on behalf of the assessee took us through various pages of the paper book especially pages I to 21, 24, 26,27, 31 32. According to him whatever was required during the assessment proceedings was supplied to the learned ITO and notices were duly complied with. He contended that papers made mention of by the learned CIT since were not before the learned ITO at the time of framing the assessment, their non-discussion by him could not render the assessment order erroneous and prejudicial to the interest of revenue and thus the learned CIT was not justified to operate section 263 on the basis of two papers which did not constitute the part of the assessment record. Shri Bhatnager submitted that section 263 could not be the answer to the situation and at the most section 148 of the Act could be looked into. According to him the learned CIT did not examine the 'record' which was before the learned ITO. It was also pointed out that the receipts were not on record. It was also submitted that the said papers had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proper enquiry by the learned ITO and thus was erroneous and prejudicial authorising the learned CIT to operate section 263. In this connection reliance by the learned departmental representative was placed on the ratio in the case of Gee Vee Enterprises v. Addl. CIT [1975] 99 ITR 375 (Delhi). 9. It was further pointed out by the learned departmental representative that the case laws made mention of by the learned counsel since dealt with the issues not discussed and, decided by the learned CIT, were of the point and need no consideration. It was also explained that the merit of the papers mentioned by the learned CIT will be looked into by the learned ITO only while framing the fresh assessment and thus the learned CIT could not be considered as under legal obligation to comment upon the merit of the papers. 10. Rival submissions have been heard and considered. The search was conducted on24-5-1983on the assessee's premises. Material was taken into possession including the two papers made mention of by the learned CIT. Thus those papers were, in our view, the parts of the assessment record. It is further seen from the revenue's paper book that the learned ITO had the knowledge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 143(3) of the Income-tax Act without examining the materials seized during the course of the search. During the course of search, a paper bearing revenue stamps without signature was found and seized. This paper showed that on Chaitsudi 8, Samvat 2039 a sum of Rs. 3,19,448 was due to the firm from Smt. Hem Lata. The Income-tax Officer has not examined this paper. He did not make any enquiry regarding the sources out of which the sum of Rs. 3,19,448 could be advanced by the assessee firm." 16.1 The assessee replied in writing, the relevant portion of written submissions is reproduced below for the purpose of appreciating the facts and controversy correctly :--- "With reference to the above notice we submit that we have nothing to do with the paper bearing revenue stamps without signature, which stated that on Chaitsudi 8, 2039 a sum of Rs. 3,19,448 was due to the firm from Smt. Hem Lata. No paper of that nature was recovered or seized from our shop and therefore, we have absolutely no knowledge of the same. Moreover, the paper does not contain any signature of any partner of the firm and therefore, it has no veracity, authority or authenticity about it at all. Any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appropriate inquiries. 16.6 In my opinion, the Commissioner of Income-tax has no jurisdiction legally. From the order passed by the Commissioner of Income-tax it is clear that papers were found from the residence of Smt. Hem Lata, i.e., one of the partners. Therefore, it cannot be said the papers found formed part of assessment record, that would be only in the case of Smt. Hem Lata. Partner is a different entity other than the partnership firm. It cannot, therefore, be said that these papers formed part of the assessment records at the time of assessment. 16.7 On perusal of the papers submitted by the Departmental Representative, I find that the papers are in connection with retention of documents seized from the residential premises of Rama Nath Goel c/o Rama Nath Goel Co. I do not know how this advances the case of the revenue. On the contrary, I find from the papers placed before us in the Paper Book filed by the assessee that even in February, 1984 the inquiries Were going on in connection with the papers lying with Assistant Director of Inspection (Investigation). I also see on page 33 that the Assistant Director of Inspection, Mayur Bhavan, New Delhi, issued summons u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inally :--- "Whether, on the facts and in the circumstances of the case, the orders passed by the Commissioner of Income-tax assuming jurisdiction under section 263 of the Income-tax Act, 1961 are required to be upheld?" 2. The facts gathered from the order of the Commissioner of Income-tax are that this relates to the assessment year 1982-83 and in this case, the assessment was completed on a total income of Rs. 97,337. There was a search operation conducted on24-5-1983on the premises of Smt. Hem Lata a partner in the assessee firm when certain materials were seized in which two papers bearing revenue stamps without signatures were found. One of these papers showed that on Chait Sudi 8, Samvat 2039, a sum of Rs. 3,19,448 was due to the assessee firm from Smt. Hem Lata (one of the partners). According to the CIT, the Income-tax Officer did not examine this paper not nude any enquiries regarding the source out of which the said sum of Rs. 3,19,448 was advanced by the assessee firm to the said Hem Lata. From this he inferred that the order of assessment framed by the Income-tax Officer was erroneous in so far as it was prejudicial to the interest of the revenue. Thereafter a noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He, therefore, disagreeing with the contentions advanced on behalf of the assessee, set aside the order passed by the ITO with a direction to him to make a fresh assessment, after proper enquiry and examination. 3. It was to this order that objection was taken and an appeal was filed before the Tribunal. The same contentions as were raised before the CIT were reiterated. In particular, it was pointed out that when the seized material was not before the ITO, it was not proper for the CIT to say that the seized material constituted the record of the assessee-firm and, therefore, the non-enquiry to that material resulted in causing prejudice to the interest of the revenue. The Departmental Representative, however, pointed out that the seized material was conveyed to the ITO long before the date of assessment and it was the fault of the ITO in not having discussed this seized material and, therefore, that non-discussion caused prejudice to the interest of the revenue, inasmuch as the relevant papers from the seized material constituted the record of the assessment of the firm. The ITO was under legal obligation to peruse those records before finalising assessment and he having faile ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estigation) in whose custody the seized papers were lying was making enquiries as to which ITO the papers should be sent for making proper assessment which shows that the seized material could not have been with the ITO. Further those papers related to the documents seized from the residential premises of Rama Nath Goel c/o Rama Nath Goel Co., who is different from either Hem Lata or the assessee-firm. Thus there was not only non communication of the papers to the concerned ITO and even otherwise the communication was with reference to a different party and that could not constitute the assessment record of the assessee firm and, therefore, the CIT was not justified in observing that the assessing officer knew about the search operations, the seized material and the paper containing the figure of Rs. 3,19,448 said to have been the money advanced by the assessee-firm to the said Hem Lata. Thus he could not agree with the view expressed by the learned Judicial Member and held that the order passed by the CIT was not proper and deserves to be cancelled. It was thus the above difference of opinion arose and the matter was referred to me as Third Member. 4. I have heard Shri K.P. Bh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T with the proposal for grant of permission to retain the documents beyond 180 days. How can the reference be construed as a reference as to form part of the record of the assessee firm. The Asstt. Director of Inspection was by then still seized of the matter. 5. In the 4th paper which is the last paper of the paper book filed by the department, there was a letter written by Assistant Director of Inspection (Inv.) on5-11-1983addressed to the ITO Distt. III. B(2) which again related to Prem Nath Goel, partner of M/s. Prem Nath Goel Co., Lajpat Nagar,New Delhi. It was mentioned in this letter that action under section 132(1) was taken on 24-5-1983 at the residential premises of Shri Prem Nath Goel at 7715, Ram Nagar, Pahar Ganj, and certain records were seized as per annexures C, D, F, K L and also a Panchnama was recorded on that date and a request was made to obtain the necessary permission of the CIT well in time for the retention of those documents beyond the period of 180 days and it was no doubt true that Panchnama and annexures A to Q which must have included annexure 'K' must have been forwarded to the ITO. Here again this is only in connection with the search conducted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions. There is also nothing to suggest from the records that the statement recorded from Hem Lata was forwarded to the concerned ITO on7-11-1983but on the other hand, there was evidence to show that even after the assessment was made, the Asstt. Director of Inspection (Inv.), Mayur Bhavan, was enquiring as to whom the seized material was to be sent for making the assessment, which shows that the Asstt. Director of Inspection was in the custody of the material and he had cot sent the papers to the concerned ITO. It is, therefore, very difficult to agree that the ITO was in possession of the seized material before making the assessment. Though it can be said he might had the knowledge but is that record. May be that after having a look into the combined records of the assessee-firm and its partners it may be possible to draw a conclusion that the transactions of the assessee-firm as reflected in the seized papers in the raids conducted at the premises of the partners was not properly enquired into before making the assessment on the assessee-firm but the records of the partners do not constitute the records of the assessee-firm. It is, therefore, in my opinion incorrect to state tha ..... 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