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TMI Blog2005 (10) TMI 437X X X X Extracts X X X X X X X X Extracts X X X X ..... ventory could not be drawn and completed. Thereafter, the IT authorities converted the survey action into search and seizure action under section 132(1) of the IT Act, 1961, and thereafter stock inventory was prepared as per which the stock worked out to Rs. 15,88,757 as on 13th March, 1993. The assessee also filed stock list indicating the value of closing stock as on 31st March, 1993, at Rs. 13,76,975. After making adjustments for the purchases and sales made during the period from 13th March, 1993 to 31st March, 1993, the Assessing Officer worked out the increase in the closing stock during the period at Rs. 2,22,514. After reducing the same from the stock shown by the assessee at Rs. 13,76,975 on 31st March, 1993, the Assessing Officer worked out the closing stock as per books on the date of survey, i.e., 13th March, 1993, at Rs. 11,54,461, i.e., (Rs. 13,76,975 - Rs. 2,22,514). Thus, the Assessing Officer found that there was difference of Rs. 4,34,297 in the stock as per books and as found on 13th March, 1993. The Assessing Officer also observed certain defects and discrepancies in the books of account. The assessee had shown GP rate of 7.49 per cent on sales of taxable go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd had not been allowed to the assessee while deciding the appeal. The Tribunal held that such order was not valid in the eyes of law and, therefore, issue was restored to the file of the CIT(A) for deciding the same afresh on merits and in accordance with law and after allowing reasonable opportunity of being heard. The relevant findings given in para 3.6 of the order of the Tribunal are as under : "3.6 We have considered the rival submissions and also gone through the material available on the records. In our view, there is merit in this contention of the learned Departmental Representative that the order of the learned CIT(A) is non-speaking order. It is well-settled that the order/judgment unsupported by reasons is not judgment in the eyes of law. It is also true that the reasons are links between the material on record and conclusion arrived at by the Court/appellate authority. In our view, the learned CIT(A) while reducing the addition from Rs. 2 lakhs to Rs. 75,000 has not assigned any cogent reason. In our view, the learned CIT(A) should have made reasoning in support of his conclusion. It is also apparent from the record that the learned CIT(A) had not afforded an opport ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resent outside the premises of the assessee till 13th March, 1993. Such inventory was drawn both on 10th March, 1993, and completed on 13th March, 1993. He further observed that the assessee misled the Assessing Officer that the GP rate did not work out at 14 per cent in respect of any of the items. He observed that the GP rate worked out at 14 per cent after the figure of Rs. 15,88,757 was adopted as closing stock. He also observed that the Assessing Officer was prevailed upon to such a degree that he framed the assessment on an imaginary statement from the side of Captain B.B. Gupta, Inspector, who was associated with the survey as well as survey party. He, therefore, had no authority, no occasion, no possibility of having stated in the manner incorrectly utilized by the Assessing Officer. He found that assessment was completed by the Assessing Officer in a collusive manner with a view to help the assessee. He also noted specific defects in para 6 on p. 7 of the impugned order. The learned CIT(A) observed that the Assessing Officer had himself pointed out variation in the closing stock to the tune of Rs. 2,22,514 for remaining period of 18 days, i.e., 13th March, 1993 to 31st M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame is as per his guidance given from the catalogues and other authoritative source. It is no doubt a part counting. The items have been counted in 10s and 100s. It implies that main bundles are properly counted but loose material is left out as also that material which remained unpacked, unopened, unsegregated and untouched (as per the open admission of appellant himself). So, I estimate the actual figure of the real stock count would be much higher. I hold on estimate basis from above observations that only 50 per cent of the stock has actually been counted. I, therefore, proceed to adopt the same figure of Rs. 31,77,514 instead of Rs. 15,88,757. 6.3 I may add here that the income-tax recognizes the word assessment of income and not computation/determination of the same. The word assessment is not defined and, therefore, we seek the assistance from dictionary entries, which provide meaning of this word as akin to estimate . So, there is no error in my resorting to estimation. 6.4 Errors do not necessarily lead to rejection of Assessing Officer s order in toto. I may also point out that merely because there is a fault in some computation/calculation/derivation-it does n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of Rs. 2,22,514 estimated by Assessing Officer for remaining 18 days of the financial year. So, as on 31st March, 1993, the figure would be Rs. 34,00,028. As against this the figure disclosed by the appellant is Rs. 13,76,975 pm 31st March, 1993. So, I make an addition of Rs. 34,00,028 - Rs. 13,76,975 = Rs. 20,23,053 for unaccounted stock not disclosed in the regular IT return. The income stands enhanced to that extent. 7.1 Although it may seem so at first glance, it is not a high-pitched addition. The manner in which the appellant permitted hooligans to operate from inside his premises the instance of illegally pushing the entire team of survey out of the building owned and occupied by the appellant and humiliating the ITO/officials and letting them wait outside for days and nights and much more together leads to one solitary conclusion, i.e., the appellant had extremely high stakes in true disclosure of full facts. Moreover, the time during which the survey team was forced to remain outside the premises left ample scope for manipulations. Lest this order be accused of being based on surmises and guess, may here clarify that even Hon ble Supreme Court permits estimation, g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stored to the file of the CIT(A), the jurisdiction of the CIT(A) was confined only to the issue restored to his file. He could not have exceeded his jurisdiction in enhancing the income as the same was beyond his powers. He relied on the following judgments : (1) CIT v. Late Jawahar Lal Nagpal [1988] 171 ITR 136 (MP) (2) Surendra Overseas Ltd. v. CIT [1979] 120 ITR 872 (Cal.) (3) CIT v. Mahindra Co. [2004] 269 ITR 426 (Raj.) (4) CIT v. S.V. Divakar [1993] 201 ITR 914 (Ori.) (5) Elel Hotels Investments Ltd. v. Jt. CIT [2005] 2 SOT 659 (Mum.) Thus, he submitted that the learned CIT(A) exceeded his powers for enhancing the income while deciding the appeal remanded by the Tribunal. 7. The learned Departmental Representative, on the other hand, heavily relied on the order of the CIT(A) and submitted that once the mater was restored to the file of the CIT(A) he was competent to enhance the income of the assessee. 8. We have heard both the parties and carefully considered the rival submissions with reference to facts, evidence and material on record. We have also gone through the orders of the authorities below. From the facts discussed above, it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this infirmity. 9. Besides, once the order was restored by the Tribunal, the scope of powers of the CIT(A) was limited to decide the specific issue restored to his file. He could not have travelled beyond the scope of the directions given by the Tribunal. The following judgments also support this view : (1)In the case of Surrendra Overseas Ltd. ( supra ), it was held that during the course of set aside assessment proceedings, the scope of powers of the ITO was limited only to the direction given by the first appellate authority. He could not conduct enquiry beyond the direction and make fresh assessment. (2)In the case of Late Jawahar Lal Nagpal ( supra ), the Hon ble High Court held that once the assessment was set aside by the AAC with direction to ITO to afford opportunity to assessee to be heard with regard to specific items of income, ITO had no jurisdiction to add new sources of income in fresh assessment. (3)Similar view was taken by the Rajasthan High Court in the case of Mahindra Co. ( supra ) and Hon ble Orissa High Court in the case of S.V. Divakar ( supra ). All these judgments, no doubt deal with the scope of powers of the Assessing Officer in set ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as also the view of the Hon ble Calcutta High Court in the case of Kathiar Jute Mills (P.) Ltd. v. CIT [1979] 120 ITR 861, where it was also held that once an assessment is set aside by AAC and case remanded to ITO, entire assessment does not become open. The power of the ITO is confined to the point on which the case was remanded. Neither the ITO can deal with such point nor the AAC on appeal can consider such point on remand. Even the apex Court in the case of Pulipati Subbarao Co. v. AAC [1959] 35 ITR 673 (AP) has held that the scope of powers of the ITO in a case where the matter is remanded by the appellate authority is confined only to consider only that issue which has been referred to him. In case the Assessing Officer covers some other issues not remanded to him, he would certainly be transgressing the limits set down by the law. In the case of CIT v. Hope Textiles Ltd. [1997] 143 CTR (MP) 33 : (1997) 225 ITR 993 (MP), the Hon ble Madhya Pradesh High Court has also held that when the matter is set aside by the appellate authority on a specific issue, the Assessing Officer cannot make further additions on points which have not been restored to his file by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not befit to a quasi-judicial authority of the rank of a CIT(A). If the assessee had obstructed the IT authorities in the legal discharge of their functions, it amounts to an offence for which prosecution proceedings could be separately launched against the assessee. Even action under the criminal law could be taken against him. But this does not and ought not affect the mind of CIT(A) while deciding the appeal. Such approach affect the merits of such order. In any case there were other provisions of the Act where action could be taken by the appropriate authorities under section 147 or 263 if the facts of the case so warrant. It is not necessary that such action can be taken only by CIT(A) more so, when he was dealing with limited issue of addition of Rs. 1,25,000 restored by the Tribunal. 11. Even on merits, we do not find any justification of enhancing the income by Rs. 13,20,564 mentioned in the enhancement notice. The Assessing Officer had made an addition of Rs. 2 lakhs by applying GP rate of 8.5 per cent. Now, even if GP rate of 14 per cent was to be applied on turnover of Rs. 1.07 crore, further addition on this account would have worked out to Rs. 5.85 lakhs. As per A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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