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TMI Blog2010 (6) TMI 563X X X X Extracts X X X X X X X X Extracts X X X X ..... NOS. 124 TO 126 (RAN.) OF 2008 - - - Dated:- 15-6-2010 - B. R. MITTAL, D. K. SRIVASTAVA, JJ. S.K. Poddar and M.K. Choudhary for the Appellant. Arun Kumar for the Respondent. ORDER D.K. Srivastava, Accountant Member. All the three appeals filed by the assessee are barred by limitation by 14 days. At the time of hearing, it was submitted by the learned counsel for the assessee that the delay in filing the appeal was caused by the fact that the assessee was in jail following his involvement in AHD scam and hence his signature on the appeal memos could not be obtained in time. Considering the nominal period of delay of 14 days, we consider it appropriate, after hearing both the parties, to condone the delay in filing the present bunch of appeals following the Judgment of the Hon'ble Supreme Court in Collector, Land Acqulsition v. Mst. Katiji [1987] 167 ITR 471 in which it has been held that a justifiably liberal approach has to be adopted on principle in matters; involving condonation of delay. We therefore condone the delay and admit the appeals for decision on merits. Facts giving rise to the appeals 2. Common order under section 263 was originally passe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee was employed in the Department of Animal Husbandry of the State Government. Search and seizure operations were carried out on or around 1-2-1993 in the case of the assessee and his family members during the course of which incriminating papers and documents were found and seized. Resultantly notice under section 148 of the Income-tax Act, 1961 was issued on 5-1-1995 calling upon the assessee to file his return of income. In compliance, the assessee filed his return of income on 30-1-1995 declaring his total income at Rs. 30,390. Assessment under section 143(3) of the Income-tax Act, 1961 was completed on 29-3-1995 accepting the returned income. The entire assessment order passed by the Assessing Officer for assessment year 1991-92 on 29-3-1995 reads as under : "The return of income for the assessment year 1991-92 was filed on 30-1-1995, in response to the notice under section 148 issued on 5-1-1995, showing income of Rs. 30,390. Notice under section 143(2) was issued on 6-2-1995 and received duly by the assessee. In response to the departmental notices, Shri R.K. Kaushal, FCA appeared as authorized representative from time to time. The search and seizure operation w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1996 and the assessee was requested to comply by 13-9-96. A copy was sent to the above address of the assessee by registered post as well. However, about a month has passed since then and there is no compliance by the assessee to the show cause notice. This shows that the assessee has got no explanation to offer. In the circumstances, it is a fit case were assessment were completed contradictory to the finding of the investigation wing based on the materials found during the course of search and illegal return of the father of the assessee were admitted, although, the date of the filing of the return had expired, only to accommodate the assessee. In the circumstances the assessment of the assessee for the assessment years 1991-92, 92-93 and 93-94 is found to be erroneous and prejudicial to the interest of revenue. They are, therefore, set aside to be framed a fresh after considering the material found during the course of search and the report of the investigation wing." 6. As stated earlier, the aforesaid order passed by the ld. Commissioner was challenged before the Hon'ble High Court of Patna upon which the Hon'ble High Court set aside the aforesaid order passed by the ld. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... papers contained income and expenditure account for the period 30-10-1992 and 23-11-1992 in the assessee's own handwriting in coded language which, according to the ld. Commissioner were receipts in lakhs from various suppliers to the Animal Husbandry Department. It is also the case of the Department that the expenses noted in the said statement reflected investment in purchase of properties. 8. The ld. Commissioner also noted that the only person having established source of income was the assessee and therefore the Assessing Officer was obliged to make proper inquiries to find out as to whether the investments in the properties including deposits in the bank accounts standing in the names of his family members were made by the assessee himself in their names and if so to consider them for assessment in the hands of the assessee alone. According to him, the Assessing Officer ought to have verified the correctness of the self-serving affidavit filed by the father of the assessee and the details submitted by others to ascertain the truth. According to the learned Commissioner, failure on the part of the Assessing Officer to do so has rendered the assessment order passed by him er ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Ltd. [2007] 295 ITR 2822 (SC); (iii) CIT v. Smt. D. Valliammal [1998] 230 ITR 695 (Mad.); (iv) Sigma Search Lights Ltd. v. ITO [2004] 82 TTJ 9563 (Kol.) and (v) Chroma Business Ltd. v. Dy. CIT [2004] 82 TTJ 5404 (Kol.) 13. Per contra, the ld. authorized representative for the Department supported the order passed by the ld. Commissioner under section 263 of the Income-tax Act, 1961. He submitted that the assessment orders were passed by the Assessing Officer without application of mind which was evident from the fact that the information collected by the Assessing Officer were not subjected to any scrutiny or verification. He further submitted that the case of the assessee was picked up for scrutiny as a result of searches carried out at his premises as well as at the premises of his relatives and therefore the Assessing Officer ought to have acted carefully and cautiously before accepting the returned income. According to him, the Assessing Officer ought to have made proper enquiries and verification before accepting the case of the assessee. He submitted that the returns were filed by Shri Ramcharitar Singh and Smt. Nirmala Singh after searches were carried out. Rely ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revenue on the ground that, in the circumstances of the case, the Assessing Officer should have made further inquiries before accepting the claim made by the assessee in his return. The reason is obvious. Unlike the Civil Court which is neutral in giving a decision on the basis of evidence produced before it, the role of an Assessing Officer under the Income-tax Act is not only that of an adjudicator but also of an investigator. He cannot remain passive in the face of a return, which is apparently in order but calls for further enquiry. He must discharge both the roles effectively, In other words, he must carry out investigation where the facts of the case so require and also decide the matter judiciously on the basis of materials collected by him as also those produced by the assessee before him. The Assessing Officer is therefore, required to act fairly while accepting or rejecting the claim of the assessee in cases of scrutiny assessments. He should be fair not only to the assessee but also to the Public Exchequer. The Assessing Officer has got to protect, on one hand, the interest of the assessee in the sense that he is not subjected to any amount of tax in excess of what is le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the principles of natural justice or without application of mind." Thus non-reasoned or non-speaking orders passed by the Assessing Officer as also the orders passed by him mechanically or without making relevant inquiries in accordance with law or without application of mind would fall in the category of orders passed without applying the principles of natural justice or "without application of mind". 18. The judgments of the Hon'ble Supreme Court in Rampyari Devi Saraogi's case (supra) and Smt. Tara Devi Aggrawal's case (supra) have been noted by the Hon'ble Patna High Court, which was also the jurisdictional High Court prior to the establishment of the Hon'ble Jharkhand High Court. In CIT v. Pushpa Devi [1987] 164 ITR 6397 (Pat.), the Commissioner had set aside the assessments and remanded the case to the ITO "with a direction to frame assessments after making a close scrutiny as to the extent of initial capital and the actual income earned by the assessee for the years in question." In that case also, the assessment order passed by the Assessing Officer was a non-reasoned or non-speaking order. On these facts, the Hon'ble Patna High Court has held that an assessment withou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly, it excludes chances or arbitrariness and ensures a degree of fairness in the process of decision-making. The said purpose would apply equally to all decisions and its application cannot be confined to decisions which are subject to appeal, revision or judicial review. In our opinion, therefore, the requirement that reasons be recorded should govern the decisions of an administrative authority exercising quasi-judicial functions irrespective of the fact whether the decision is subject to appeal, revision or judicial review. It may, however, be added that it is not required that the reasons should be as elaborate as in the decision of a court of law. The extent and nature of the reasons would depend on particular facts and circumstances. What is necessary is that the reasons are clear and explicit so as to indicate that the authority has given due consideration to the points in controversy. The need for recording of reasons is greater in a case where the order is passed at the original stage. The appellate or revisional authority, if it affirms such an order, need not give separate reasons if the appellate or revisional authority agrees with the reasons contained in the order und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and also after search. The Assessing Officer is not only adjudicator but also investigator. He ought to have examined the father of the assessee who had filed self-serving affidavit before accepting the same. But he did not do so. The assessment orders passed by the Assessing Officer are highly cryptic and show complete lack of application of mind. It is quite evident on bare perusal of the assessment orders passed by the Assessing Officer that the Assessing Officer had collected certain information. There is however no indication in the assessment order as to how the information so collected was examined or verified by him in the light of materials available on record. The order passed by the Assessing Officer can hardly be said to be a reasoned order dealing with ail the relevant aspects of the case and more particularly those aspects of the case which the learned Commissioner has highlighted in his order under appeal. The Assessing Officer ought to have looked into all the relevant aspects of the case including those highlighted by the learned Commissioner in view of the fact that the assessee was an employee of the Animal Husbandry Department of the Government of Bihar and was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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