9911796707
TMI Blog1989 (2) TMI 166X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 6,06,841 for the asst. yr. 1981-82 and Rs. 14,36,824 for the asst. yr. 1982-83; confirmatory letters were not called for by the ITO. (3) The assessments were completed in a hurry without proper investigation. From the above, he felt that there was an error resulting prejudice to the interests of the Revenue and thus he issued a notice dt. 25th March, 1986 calling upon the assessee to state his objections to the proposed action under s. 263 of the IT Act, on 31st March, 1986. The assessee pleaded inability to be available on 31st March, 1986 for the reason that the time given was very short and his Auditor was busy with time-barring matters and that he required time to study the records before filing an appropriate explanation. However, the Commissioner proceeded with his proposal under s. 263 and set aside the assessment orders with a direction to reframe the assessments after giving the assessee sufficient opportunity of being heard. 3. Sri Y. Ratnakar, learned counsel for the assessee, submitted that first the time given by the Commissioner was too short and perhaps he was in a hurry to pass the order under s. 263 because of the approaching time limit. Thus, there was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in prejudice to the interests of Revenue. In the consequential orders passed by the ITO, he had found that some of the credits are not genuine. Sri Ratnakar objected to bringing in materials subsequently collected for deciding the issue whether action under s. 263 was justified at the time when it was invoked. Sri Kuppuswamy also relied on the following decisions: Gee Vee Enterprises vs. Addl. CIT (1975) 99 ITR 375 (Del). Kanhaiyalal vs. CIT (1981) 20 CTR (Raj) 105 : (1982) 136 ITR 243 (Raj). Nandlal Bhandari and Sons. vs. CIT (1985) 147 ITR 710 (MP). 5. Having regard to rival submissions and the materials on record, we set aside the order of the learned CIT. The assessee had filed his returns of income alongwith profit and loss account and balance-sheet and also certain details. The ITO had called for further details in the course of assessment proceedings, which were also furnished by the assessee. One such detail is the list of creditors appearing in the books of the assessee. The ITO had compared the list and had segregated them into old credits and new credits. He had also given tick marks in the list of creditors against certain items. He did not doubt the veracity o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding the credits appearing in the books of accounts. There is always a presumption in law that the acts done by a lawful authority are equally lawful unless the contrary is proved. Therefore, there was no material before the Commissioner to come to the conclusion that the ITO had shut his eyes to the list of creditors and accepted the same blindly. On the question of whether the assessment was done in a hurry, it is pertinent to note that the assessment had to be concluded before 31st March, 1984 for the asst. yr. 1981-82 but only on 31st March, 1985 for the asst. yr. 1982-83. The learned Commissioner had erroneously felt that both the assessments had to be hurried through because of the approaching time limit for completion of the assessments. 6. The next point on which the assessments were set aside by the Commissioner is that the ITO had examined the allowability or otherwise of the expenditure in terms of r. 9B of the IT Rules in respect of films "Mogudu Kavali", "Seematapakia" and "Devudu Mamayya". Sri Kuppusamy vehemently argues that as a film distributor the assessee's profits have to be computed in terms of r. 9B and deductions are governed under sub-rr. (3) and (5) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oceed to deal with the cases cited before us. 8. In Addl. CIT vs. Mukur Corporation (1978) 111 ITR 312 (Guj), the Gujarat High Court held that the words "prejudicial to the interests of Revenue" in s. 263 have not been defined but they must mean that the orders of assessment challenged are such as are not in accordance with law in consequence whereof the lawful revenue due to the State has not been realised or cannot be realised. There cannot be any quarrel over the ratio of this case which is relied on by the learned Senior Deptl. Rep. It cannot be the case of the Revenue that the order passed by the ITO was not in accordance with law. It was a valid order. However, there is an observation in that case that where no enquiry was conducted before accepting certain deductions, such want of enquiry resulted in prejudice. In the case before us, we have found that the ITO has caused enquiries to be made before he reached the satisfaction that the credits are genuine. Therefore, this case cannot come to the assistance of the Revenue. 9. In Gee Vee Enterprises vs. Addl. CIT (1975) 99 ITR 375 (Del), it was held by the Delhi High Court that the Commissioner can regard the order as erron ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hout any checking or scrutiny. Their Lordships of the Allahabad High Court held as follows: "The orders of the ITO may be brief and cryptic, but that by itself is not sufficient reason to brand the assessments orders as erroneous and prejudicial to the interest of the Revenue. Writing an order in detail may be a legal requirement, but the order not fulfilling this requirement, cannot be said to be erroneous and prejudicial to the interest of the Revenue. It was for the Commissioner to point out as to what error was committed by the ITO in having reached the conclusion that the income of the trust was exempt in its hands and was assessable only in the hands of the beneficiaries. The Commissioner having failed to point out any error, no error can be inferred from the orders of the ITO for the simple reason that they are bereft of details. If the order is not erroneous, then it cannot be prejudicial to the interest of the Revenue." Respectfully following the ratio of the decision of the Allahabad High Court we hold that in this case also books were estimated by the ITO, the case was discussed with the assesses representative, details were called for and scrutinised but certainly t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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